suspended

In the case of Vijay Kumar Jain vs Standard Chartered Bank and others(Civil Appeal No.8430 Of 2018) the main issue before the Hon’ble Supreme Court is whether erstwhile board of directors of the Corporate Debtor should be given confidential documents like resolution plan.

Standard Chartered Bank Ltd. and DBS Bank Ltd. who were the financial creditors of Ruchi Soya Industries filed a company petition in September 2017. After admission of the matter, the Committee of Creditors (CoC) was formed according to Section 21 of the Insolvency and Bankruptcy Code, 2016. The Appellant was who was the member of the suspended board of directors contented that even though he was given the agenda and allowed to attend the meeting of the CoC, he was denied participation. For the Appellant to be allowed to participate effectively in the CoC he filed a Miscellaneous Application before the NCLT. It was also stated that the Appellant executed  a non-disclosure agreement for sharing of the resolution plans.[1] The NCLT dismissed the same stating the appellant can attend the meeting but shouldn’t insist on confidential information being provided to him. The NCLAT also held the same thing.

The Appellant aggrieved by the order appealed before the Hon’ble Supreme Court. Meanwhile a resolution plan was approved by the CoC and the same was submitted to the Adjudicating Authority. The Hon’ble Supreme Court passed an interim order stating that the adjudicating authority can continue with the proceedings but cannot pass an order till the matter is pending before the Hon’ble Supreme Court.

The Hon’ble Supreme Court after hearing both sides came to the conclusion that the Board of Directors are also participants and according to Regulation 21(3)(iii) of the CIRP Regulations they should be given documents related to what is being discussed, including the resolution plans. It was stated that concerns about confidentiality an undertaking which may be in the form of non-disclosure agreement and this power is derived from Regulation 7(2)(h) of the IBC. Also, according to section 21(2) only directors who are related to the corporate debtor do not have the right of representation and not director simplicitor or directors who are financial creditors. The directors may be interested in the proceedings mainly due to them being guarantors and as they are well informed about the affairs of the company and can assist the CoC.

[1] CIVIL APPEAL NO.8430 OF 2018