In the Committee of Creditors of Think & Learn Pvt. Ltd. v. Riju Ravindran & Ors., the Hon’ble National Company Law Appellate Tribunal (NCLAT) has clarified that the Committee of Creditors (CoC), though not a juristic person in the classical sense, is not barred from litigating in its own name under the Insolvency and Bankruptcy Code, 2016.
The appeal arose from an order of the Adjudicating Authority refusing to implement the Committee of Creditors in an application seeking removal of GLAS Trust from the CoC in the corporate insolvency resolution process of Think & Learn Pvt. Ltd.
The appellant CoC contended that it was a necessary party to the proceedings as the outcome of the application would directly impact the composition and functioning of the CoC.
The Hon’ble NCLAT examined the legal character of the Committee of Creditors under the framework of the Insolvency and Bankruptcy Code, 2016.
The Hon’ble Appellate Tribunal observed as follows:
The CoC is a statutory body constituted by operation of law and is not a juristic person in the classical sense.
It cannot be equated with companies, partnerships, trusts or other legal entities having independent corporate personality.
The CoC has been recognised in practice as litigating in its own name in proceedings under the IBC.
There is no bar under the IBC preventing the CoC from pursuing litigation in matters concerning its functioning.
The Resolution Professional and the CoC are distinct entities with separate roles and responsibilities under the Code.
The Hon’ble NCLAT further held that the CoC is not a necessary or proper party in proceedings concerning the removal of an individual financial creditor, which is required to be examined independently on the basis of the creditor’s relationship with the corporate debtor and the existence of a financial debt.
Accordingly, the Hon’ble NCLAT found no merit in the appeal and upheld the order of the Adjudicating Authority refusing impleadment of the CoC.
The judgment reiterates that while the Committee of Creditors does not possess independent juristic personality, it is not precluded from litigating in its own name within the framework of the Insolvency and Bankruptcy Code, 2016, subject to the nature of the proceedings.
