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Resolution Plans Should Be Given To Former Directors Of Corporate Debtor To Attend CoC Meetings

In CIVIL APPEAL NO. 8430 OF 2018, VIJAY KUMAR JAIN vs STANDARD CHARTERED BANK & ORS., the appellants had originally approached the NCLT to be provided with all relevant documents by the RP and to attend the COC meeting. 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. The Appellate Tribunal while recognising attendance rights, denied the appellant’s prayer to access certain documents, most particularly, the resolution plans.

The Supreme Court rejected the contention of the defendants referring to Notes on Clauses to Section 24, and stated that the said clause which holds that members of suspended Board of Directors are permitted to participate in CoC meetings only for the purpose of giving information regarding the financial status of the debtor is misconceived since even assuming that the Notes on Clause 24 may be read as being a one-way street by which erstwhile members of the Board of Directors are only to provide information, Section 31(1) of the Code would make it clear that such members of the erstwhile Board of Directors, who are often guarantors, are vitally interested in a resolution plan as such resolution plan then binds them.

The Court also noted that every participant is entitled to a notice of every meeting of the committee of creditors. Such notice of meeting must contain an agenda of the meeting, together with the copies of all documents relevant for matters to be discussed and the issues to be voted upon at the meeting vide Regulation 21(3)(iii).

The Supreme Court decided that a combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of "documents" that have to be furnished along with the notice of such meetings.

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