Committee Of Creditors Not Barred From Litigating In Own Name Under IBC: NCLAT In Byju's Parent Insolvency Case

The National Company Law Appellate Tribunal (NCLAT) at Chennai has held that a Committee of Creditors (CoC) can litigate in its own name under the Insolvency and Bankruptcy Code, even though it does not possess juristic personality in the classical sense.

The ruling came in proceedings involving Think and Learn Pvt. Ltd., the parent company of edtech firm Byju's.

A bench of Judicial Member Justice N Seshasayee and Technical Member Jatindranath Swain observed, “Therefore, since CoC is a statutory body and a decision- making entity, to deny it it's legal existence for all purposes merely because it is neither a juristic person might be akin to throwing the baby out with the bathwater.”

The bench further said, "It should not be forgotten that principal feature of a law is its functionality, and if a practice, even though not approved in jurisprudence, has enabled and ensured its functional efficacy and practical utility, it need not be unnecessarily disturbed. This tribunal, even as it acknowledges the jurisprudential wisdom behind the contention of the respondent, it still cannot jettison the pragmatism required of its judicial approach to the issue at hand. Therefore, we hold that for the purpose of working of the IBC and to deal with litigious issues which require to be remedied within the framework of IBC are concerned, we find no reason to bar the CoC, a creation of the very IBC, to litigate in its name"

The tribunal however, clarified that this recognition is subject to certain limitations. It held:

• Where the CoC is run by a single member, it does not matter whether the CoC litigates or the lone member litigates in its own name.

• Where there is a multi-member CoC and there is unanimity among its members, it may institute proceedings in its name.

• Where a multi-member CoC is to be arrayed as a respondent, every member of the CoC must be arrayed independently.

The tribunal noted that the requirement of arraying members independently would apply prospectively to avoid procedural complications.

Think and Learn Pvt. Ltd. was admitted into the corporate insolvency resolution process under Section 9 of the IBC. On 21 August 2024, the resolution professional constituted a four member Committee of Creditors.

On August 31, 2024, the CoC was reconstituted by dropping two members, including US based lender GLAS Trust Company LLC, which held 99.41 percent voting share, and Aditya Birla Capital Limited. Both creditors challenged their removal. On 29 January 2025, their applications were allowed, and they were restored to the CoC.

Subsequently, a suspended director filed an application seeking removal of GLAS Trust from the CoC. In that proceeding, the CoC filed an application seeking to implead itself. The Bengaluru bench of the National Company Law Tribunal dismissed that application on two grounds. It held that the CoC does not have legal character and can be represented only by the resolution professional. It also held that since the application was essentially directed against GLAS Trust, the CoC was not a necessary party.

Before the appellate tribunal, the CoC relied on Section 3(23)(g) of the IBC, which includes within the definition of “person” any entity established under a statute. It argued that since the CoC is constituted under Section 21, it is a statutory creation and should therefore be permitted to maintain proceedings in its own name.

The respondents disagreed. They said the CoC does not have juristic personality and cannot sue or be sued independently. They also questioned the maintainability of the appeal, arguing that the power of attorney holder of GLAS Trust had not been specifically authorised to initiate proceedings on behalf of the CoC.

Examining the statutory scheme, the appellate tribunal noted that the CoC is a collective of financial creditors brought together by operation of law rather than by voluntary association.

It rejected comparisons with companies, partnerships, trusts, and clubs. It held that the CoC does not possess corporate personality in the classical sense.

At the same time, it noted that CoCs have been litigating in their own name for a decade, including before the Supreme Court in the Essar Steel matter. It held that for the purpose of working of the IBC and to deal with litigious issues within its framework, there is no reason to bar the CoC from litigating in its name. This was, however, made subject to several limitations.

Subsequently, it held, “We are not in agreement with the Adjudicating Authority's view that only RP has the authority to represent the CoC.” It observed that the Code constitutes the CoC and the resolution professional as distinct entities with separate roles and responsibilities.

However, on the facts of the case, the tribunal agreed with the adjudicating authority that the CoC was neither a necessary nor a proper party in the application seeking removal of GLAS Trust. It observed that when GLAS Trust's presence in the CoC is challenged, it is required to be tested only with reference to the nature of the contractual relationship it has established with the corporate debtor and whether it has given rise to a financial debt.

The tribunal concluded, “We find no merit in this appeal and it is dismissed and the order of the Adjudicating Authority in I.A. 466 of 2025 in C.P.149/BB/2023 stands confirmed."