One of the groundbreaking enactments of the recent times is the Insolvency and Bankruptcy Code, 2016 (“IBC”). IBC from the legislative point of view is still recognized as evolving jurisprudence that aims to achieve its purported objectives including to promote time bound reorganization and resolution of the companies under corporate insolvency resolution process (“CIRP”), for their maximization of value of assets, availability of credit and balancing the interests of all stakeholders. Under such evolution of this legislation, Hon’ble Supreme Court of India including appellate tribunal and adjudicating authority, time to time intervene in the CIRPs of the corporate debtors and ensure sanctity of code by adjudicating on areas of conflict and interpretation.

Hon’ble Supreme Court of India, in its recent judgment of K. Sashidhar Vs. Indian Overseas Bank & Ors. settled a prolonged issue pertaining to wisdom and powers of Committee of Creditors (“CoC”) along with fencing of the role of resolution professionals and adjudicating authorities under CIRP. In the aforesaid matter, Hon’ble Supreme Court of India observed that IBC has not endowed the adjudicating authority with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC and has only allowed to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditor. It was held that “the commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the CIRP within the timelines prescribed under IBC”. It was also observed that while collating and enacting the IBC, “the legislature has consciously not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the adjudicating authority”.

Further, in the said matter, the apex court interlined the role of resolution professional and adjudicating authority, by observing as that “CoC is called upon to consider the resolution plan under section 30(4) of the IBC, only after it is vetted and verified by resolution professional, as being compliant with all the statutory requirements specified under section 30(2) of the IBC and IBC does not envisage one assuming the role of the other”. It was further observed that, “the resolution professional is not required to express his opinion on matters within the domain of the financial creditors, to approve or reject the resolution plan, under section 30(4) of the IBC”.

With this welcoming judicial precedent, one can hope to for some reduction in initiation of litigations before the adjudicating authority particularly in relation to challenging of the CoC’s approval or rejection of resolution plan including approval for liquidation and other commercial decisions like termination of related party contracts, raising of interim finance or other key decisions as may be approved by the CoC. This should also result in better transparency and efficacy of process.

Similarly, in another matter of Swiss Ribbons Pvt. Ltd. & Anr Vs. Union of India &Ors, Hon’ble Supreme Court of India declared IBC to constitutionally be valid as a whole and observed that “the resolution professional has no adjudicatory powers under the IBC and has only administrative powers as opposed to quasi-judicial powers” Under the aforesaid matter, Hon’ble Supreme Court also observed that the resolution professional is the facilitator of the resolution process, whose administrative functions are overseen by the CoC and adjudicating authority.

Furthermore, appellate tribunal in the matter of Bhaskara Agro Agencies Vs. Super Agri Seeds Pvt. Ltd. Similarly observed that “So far as the viability or feasibility of “resolution plan” is concerned, the adjudicating authority or the appellate tribunal cannot sit in appeal over the decision of the CoC. They are the experts to find out the viability and the feasibility of a plan and the matrix. As the aforesaid factors are technical in nature which can be determined by experts like the ‘Financial Creditors’, we are not inclined to sit in appeal over the decision of the CoC to find out whether one or other “resolution plan” is viable and feasible or not.”

Hence, in light with aforesaid cases and in an attempt to avoid the further chaos amongst the stakeholders, Insolvency and Bankruptcy Board of India (“IBBI”) vide its notification dated March 1, 2019 bearing no. Facilitation/002/2019, in light of all applicable sections, rules and regulations of the IBC, issued an indicative charter of responsibility of interim resolution professional, resolution professional and the CoC (“Charter of Responsibilities”). Such Charter of Responsibilities mainly divide the role of stakeholders into three categories: Firstly, actions and obligations having direct responsibility of interim resolution professional/ resolution professional (“Responsibilities of IRP/RP”); Secondly actions and obligations having direct responsibility of CoC (“Responsibilities of CoC”); and Lastly, such responsibilities of interim resolution professional/ resolution profession which require approval of CoC (“Responsibilities of IRP/RP subject to approval of CoC”).

As per the Charter of Responsibilities laid down by the IBBI, inter-alia the following are the key responsibilities;