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Vijay Kumar Jain v. Standard Chartered Bank

Civil Appeal · 2019 INSC 122Decided 31 Jan 2019
Civil Appeal No. 8430 of 2018
Justice Rohinton Fali Nariman · Justice Navin Sinha

Background

Vijay Kumar Jain was a member of the suspended board of directors of Ruchi Soya Industries Ltd., a company undergoing insolvency resolution. He was allowed to attend meetings of the Committee of Creditors (CoC) but was denied access to the actual resolution plans being considered, even though his personal interests (including as a possible guarantor) were affected by the outcome. The National Company Law Tribunal and Appellate Tribunal both refused to direct that he be given copies of the resolution plans.

Decision Breakdown

The Supreme Court held that although former directors are not voting members of the CoC, the Insolvency Code and its regulations entitle them, as "participants," to receive copies of all documents relevant to matters being discussed at CoC meetings, including the resolution plans themselves, along with the meeting notice. The Court reasoned that these directors, often personal guarantors for the company's debts, are vitally affected by what the resolution plan ultimately contains, and genuine participation requires seeing the material under discussion, subject to confidentiality undertakings. The appeal and writ petition were allowed and the Appellate Tribunal's order was set aside, with directions to furnish the plans within two weeks.

Lesson Learnt

Being allowed to "attend" an important meeting about your company's future is not meaningful if you are kept in the dark about what is actually being decided: the law requires real access to the relevant documents, not just a seat in the room.

Official source (sci.gov.in)View Judgment (PDF)

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