Committee of Creditors under IBC : Expanding Their Roles

Committee of Creditors under IBC : Expanding Their Roles 

Sec. 21 (2) of IBC, 2016 clarifies that the committee of creditors shall comprise all financial creditors of the corporate debtor. S. 21 (9) of IBC gives lot of powers to CoC and says that the committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process.

In an important and recent finding [Rakshit Dhirajlal Doshi v. Sumedha Management Solutions Pvt. Ltd [2024] GCtR 2105 (NCLAT)], the importance of CoC was more pronounced. It was observed that "the CoC has taken a commercial decision, basis their discussion within the lenders and also with the Appellant and they have come to a conclusion for liquidation of the CD. Commercial wisdom of the CoC has been exercised in a clear and forthright manner. The NCLT has also relied upon that." NCLAT stated that it "cannot find any irregularity on the part of CoC or Adjudicating Authority" and the averments of the material irregularity and arbitrariness cannot be sustained.

The background of the case was that the appeal in this case was filed by the Suspended Directors of the Corporate Debtor against the Order passed by the National Company Law Tribunal as per which the DPL has been admitted into liquidation under Section 33 of IBC. 

The important observations made in Rakshit Dhirajlal Doshi v. Sumedha Management Solutions Pvt. Ltd [2024] GCtR 2105 (NCLAT) were that CoC, in the Legislative Scheme, has been empowered to take decision to liquidate the Corporate Debtor, any time after its constitution and before confirmation of the resolution plan.

It is worth remembering that S.22 (1) of IBC lays down that the first meeting of the committee of creditors shall be held within 7 days of the constitution of the committee of creditors. Rakshit Dhirajlal Doshi v. Sumedha Management Solutions Pvt. Ltd [2024] GCtR 2105 (NCLAT) points out the manner and approach of NCLAT towards the decisions which were taken by CoC.