2019 Supreme(SC) 98

SUPREME COURT OF INDIA
R.F. NARIMAN, NAVIN SINHA, JJ.
VIJAY KUMAR JAIN – APPELLANT
VERSUS
STANDARD CHARTERED BANK & ORS. – RESPONDENT
CIVIL APPEAL NO.8430 OF 2018 WITH WRIT PETITION (CIVIL) NO.1266 OF 2018
Decided on : 31-01-2019

IMPORTANT POINTS
Notes on Clause 24 cannot be relied upon for interpreting section 24.
Members of erstwhile Board of Directors are entitled to notice of the meeting, its agenda and all documents including resolution plan.
Not all Directors but only the Directors who are related parties of the corporate debtor being financial creditor held entitled to get documents.
Period utilized in these proceedings must be excluded from the period of the resolution process.

Headnote:(a) Insolvency and Bankruptcy Code, 2016 – Section 24 – Notes on clauses – Prescribing modalities for meeting of the committee of creditors – Stating that ‘the meeting gives an opportunity for the committee of creditors and the resolution professional to seek information that they may require to assess the financial position of the corporate debtor and prepare a resolution plan’ – Section 24 deals with meeting of CoC – Resolution professional does not seek information u/s 24 but u/s 29 before preparing an information memorandum – Seeking information by Resolution professional has nothing to do with section 24 – Secondly, resolution professional does not prepare a resolution plan as mentioned in the Notes on Clause 24 – Resolution plan is prepared by resolution applicants u/s 30. (Para 12)

       (2018) 1 SCC 353 – Referred

       (b) Insolvency and Bankruptcy Code, 2016 – Section 30 and 31 r/w Regulation 36(2)(f), 37(d) and 7(2)(h), Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Members of the erstwhile Board of Directors, often guarantors and obliged to pay security interest are vitally interested in resolution plan as it binds and affects them – Members of erstwhile Board of Directors being participant in meeting of CoC entitled to notice of the meeting, its agenda and all documents including resolution plan – In case of confidential documents, members of erstwhile Board of Directors may be required to give undertaking to maintain confidentiality. (Para 13, 14, 15)

       (c) Insolvency and Bankruptcy Code, 2016 – Section 21(2) – Not all Directors but only the Directors who are related parties of the corporate debtor being financial creditor held entitled to get documents. (Para 16)

       (d) Insolvency and Bankruptcy Code, 2016 – Section 31 – Period utilized in these proceedings – Must be excluded from the period of the resolution process. (Para 18)

       Civil Appeal Nos. 9402-9405/2018 – Relied upon

       Facts of the case:

       Company Petition Nos.1371 and 1372 were filed by Standard Chartered Bank Ltd. and DBS Bank Ltd., being financial creditors of the corporate debtor, Ruchi Soya Industries Ltd. These two company petitions were admitted by the National Company Law Tribunal. One Shri Shailendra Ajmera of Ernst and Young was appointed as the Interim Resolution Professional in both petitions. The CoC was constituted, and the appellant being a member of the suspended Board of Directors was given notice and the agenda for the first CoC meeting, and was permitted to attend the aforesaid meeting.

       The appellant filed Miscellaneous Application before the NCLT in order that the appellant be allowed to effectively participate in the CoC meetings. In the tenth meeting the appellant executed a nondisclosure agreement for sharing resolution plans of the corporate debtor. Under the said agreement, the appellant undertook to indemnify the resolution professional and keep information that is received as to the resolution plan strictly confidential.

       The NCLT dismissed the application with liberty to the appellant to attend CoC meetings but not to insist upon being provided information considered confidential either by the resolution professional or the committee of creditors. Against this order, the appellant filed an appeal before the Appellate Tribunal which recognized the appellant’s right to attend and participate in CoC meetings, but denied the appellant’s prayer to access certain documents, most particularly, the resolution plans. Thereafter, an application for modification/clarification of the Appellate Tribunal’s order was also dismissed.

       Finding of the Court:

       The resolution applicant in each of these cases will then convene a meeting of the CoC within two weeks thereafter, which will include the appellants as participants.

       Result: Petition and appeal allowed.