Committee of creditors
Section 21 of the Insolvency and Bankruptcy Code, 2016 deals with committee of creditors. The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. The Act was enacted on 28 May 2016.
(1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors.
(2) The committee of creditors shall comprise all financial creditors of the corporate debtor:
Provided that a 1[financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the committee of creditors.
2[Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares 3[or completion of such transactions as may be prescribed,] prior to the insolvency commencement date.];
(3) 4[Subject to sub-sections (6) and (6A), where] the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them.
(4) Where any person is a financial creditor as well as an operational creditor,---
(a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor;
(b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor.
(5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer.
(6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility 5*** provide for a single trustee or agent to act for all financial creditors, each financial creditor may---
(a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share;
(b) represent himself in the committee of creditors to the extent of his voting share;
(c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or
(d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally.
6[(6A) Where a financial debt---
(a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;
(b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors;
(c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors,
and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.
(6B) The remuneration payable to the authorised representative---
(i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and
(ii) under clause (b) of sub-section (6A) shall be as specified which shall form part of the insolvency resolution process costs];
7[(7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A).
(8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified.]
(9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process.
(10) The resolution professional shall make available any financial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition.
Section 21, The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 7
- s. 7 Initiation of corporate insolvency resolution process by financial creditor
- s. 24 Meeting of committee of creditors
- s. 25A Rights and duties of authorised representative of financial creditors
- s. 33 Initiation of liquidation
- s. 54-I Committee of creditors
- s. 239 Power to make rules
- s. 240 Power to make regulations
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Uppal Chadha Hi Tech Developers Pvt. LTD vs Union of India
Court's Decision & Legal Precedent
Real estate allottees are 'financial creditors' within the meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016, as they advance money against consideration for the time value of money to finance real estate construction projects. The Explanation to Section 5(8)(f) inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, is constitutionally valid as it is clarificatory of the original provision's language and does not infringe Articles 14, 19(1)(g), or 300-A of the Constitution. Allottees are entitled to trigger insolvency proceedings under Section 7 of the Code against real estate developers, and their inclusion as financial creditors does not violate principles of reasonable classification or legislative objects. The Code and RERA operate harmoniously in different spheres providing concurrent remedies to home buyers.
On this section: Where financial debts are owed to a large class of creditors (like home buyers), an authorized representative is appointed by the NCLT. The Court upholds this provision as ensuring meaningful representation while managing practical concerns.
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Spaze Towers Private Limited vs Union of India
Court's Decision & Legal Precedent
Amendments to the Insolvency and Bankruptcy Code 2016 classifying allottees of real estate projects as financial creditors and allowing them to trigger insolvency proceedings against developers are constitutionally valid. These amendments do not violate Articles 14, 19(1)(g) read with Article 19(6), or 300-A of the Constitution. Allottees constitute a distinct class of financial creditors with intelligible differentia from operational creditors due to their role in financing real estate projects through installment payments, their vital interest in the company's well-being, and their similarity to other individual financial creditors like deposit and debenture holders. The amendments have rational nexus with the Code's objects of maximizing asset value and rehabilitating corporate debtors. Section 5(8)(f) as originally enacted already subsumed allottees within the definition of financial debt as a residuary provision covering transactions having the commercial effect of borrowing. The explanation added by the Amendment Act is merely clarificatory. The Code and RERA provide concurrent remedies and must be read harmoniously with the Code prevailing in case of conflict. Representation of allottees through authorized representatives under Section 21(6A) and 25A is constitutionally valid. The legislature has free play in the joints when enacting economic legislation and courts must accord deference to such experimentation.
On this section: Provides mechanism for appointment of authorized representatives when class of financial creditors exceeds specified number
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Raman Prakash Mangla vs Anuj Jain
Court's Decision & Legal Precedent
The Adjudicating Authority has limited jurisdiction in approving a resolution plan, circumscribed by Sections 30(2) and 31 of the Insolvency and Bankruptcy Code, 2016. The Authority cannot interfere with the commercial aspects of the decision taken by the Committee of Creditors. If the Adjudicating Authority finds shortcomings in the resolution plan vis-à-vis the specified parameters of keeping the corporate debtor as a going concern, maximizing the value of its assets, and taking care of interests of all stakeholders, it must send the plan back to the Committee of Creditors for reconsideration, not modify the plan itself. Payment to dissenting financial creditors must be in monetary terms, not in kind or through transfer of equity or land. Once homebuyers as a class vote in favor of a resolution plan through their authorized representative, individual homebuyers cannot challenge the plan as dissenting creditors or aggrieved persons. The INR 750 crores deposited by the holding company pursuant to Supreme Court orders in Chitra Sharma is the property of the holding company, not the corporate debtor, and cannot be appropriated by the corporate debtor or the resolution applicant.
On this section: Committee of Creditors composition and voting procedures
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Landmark Apartments Pvt. LTD vs Union of India
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, which deems allottees of real estate projects as financial creditors under Section 5(8)(f) and provides for their representation on Committee of Creditors through authorized representatives under Sections 21(6A) and 25A, is constitutionally valid under Articles 14, 19(1)(g), and 300-A of the Constitution of India. The amendment does not violate Article 14 as allottees, who finance their own apartment projects and provide consideration for time value of money through installment-based advance payments, constitute a rationally distinct class of financial creditors similar to debenture holders and fixed deposit holders, with intelligible differentia bearing nexus to the Code's object of maximizing creditor recovery and protecting stakeholders in corporate rehabilitation. The amendment does not infringe Article 19(1)(g) as it is a reasonable restriction in public interest for protecting millions of home buyers with substantial invested amounts. The amendment does not deprive developers of property without constitutional authority as it operates through valid legal process respecting due process and defenses. The explanation to Section 5(8)(f) merely clarifies that allottees already fell within the definition's ambit and is not substantively enlarging the scope. The classification does not offend the UNCITRAL Legislative Guide as allottees are recognized as financial creditors based on genuine financing characteristics. The Code and RERA can harmoniously coexist as parallel remedies serving different purposes, with Code taking primacy due to its later non-obstante clause. Parliament's legislative judgment in treating allottees as financial creditors is entitled to judicial deference as an economic experiment within free play in joints doctrine.
On this section: Mechanism for representation of financial creditors exceeding specified number through authorized representative appointed by NCLT
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Sds Infracon PVT LTD vs Union of India
Court's Decision & Legal Precedent
Amendments to the Insolvency and Bankruptcy Code 2016 treating real estate project allottees as financial creditors are constitutionally valid under Articles 14 19 1 g and 300 A of the Constitution. Real estate allottees genuinely finance projects by advancing payments for future delivery of apartments and constitute financial creditors under Section 5 8 f as amounts raised have commercial effect of borrowing considering time value of money. The explanation to Section 5 8 f is clarificatory in nature and allottees would fall within this provision even without it. Allottees have right to trigger insolvency proceedings under Section 7 by filing applications before NCLT. Code and RERA provide concurrent and complementary remedies not conflicting jurisdictions. There is no violation of Article 14 as legitimate intelligible differentia exists between allottees and other operational creditors. There is no violation of Article 19 1 g as restriction on right to business is reasonable being in public interest of protecting allottee investments.
On this section: Mechanism for representation of large classes of financial creditors through appointed insolvency professional
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Rajesh Gupta vs Nbcc (india) LTD
Court's Decision & Legal Precedent
The Adjudicating Authority's jurisdiction in approving a resolution plan is limited to verifying compliance with the mandatory requirements specified in Section 30(2) of the Insolvency and Bankruptcy Code, 2016. The Authority cannot modify the commercial terms of a resolution plan approved by the Committee of Creditors by the requisite majority (66% or more of voting share). If the Authority finds that the resolution plan does not meet the specified parameters (keeping corporate debtor as going concern, maximizing asset value, protecting stakeholder interests), it must remit the plan back to the Committee of Creditors for reconsideration rather than modifying it itself. The commercial wisdom of the Committee of Creditors is non-justiciable and cannot be interfered with by the Adjudicating Authority or Appellate Authority on equitable or quantitative grounds. Dissenting financial creditors must receive payment in monetary terms (cash) equivalent to their liquidation value, not in kind through equity or land transfers. The INR 750 crores deposited by the holding company JAL pursuant to Supreme Court orders in the Chitra Sharma case remains the property of JAL and cannot be treated as an asset of the corporate debtor JIL for purposes of the resolution plan. Homebuyers as a class are bound by the decision of their authorized representative in the Committee of Creditors under Section 25A(3A), and individual homebuyers cannot maintain separate challenges to the resolution plan. The Insolvency and Bankruptcy Code prevails over the Real Estate (Regulation and Development) Act, 2016 in case of conflict, though both statutes must be interpreted harmoniously. Concession Agreements with statutory authorities are not statutory contracts and their material terms cannot be modified without the consent of the other contracting party. Security interests not avoided under Section 43 of the Code cannot be unilaterally extinguished through a resolution plan.
On this section: Composition of Committee of Creditors, voting share determination, and authorized representative provisions
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Vinay Kumar Mittal vs Dewan Housing Finance Corporation LTD
Court's Decision & Legal Precedent
The claims made by depositors in a corporate insolvency resolution process of a financial service provider shall be considered by the Committee of Creditors and the Administrator independently and without being influenced by interim orders passed by courts in related proceedings, and depositors have the right to raise all contentions before the Committee of Creditors, the Administrator, and the NCLT to ensure their interests are protected in accordance with the Insolvency and Bankruptcy Code.
On this section: Classification of public depositors as a class of creditors; applied to include depositors in the insolvency process
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
5 instruments name this provision in its title or its text without being made under it.
- Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2022Regulation 2022
- IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021Regulation 2021
- Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2021.Regulation 2021
- The Insolvency and Bankruptcy Code (Amendment) Act, 2020Statute 2020
- The Insolvency and Bankruptcy Code (Amendment) Act, 2019Statute 2019
Questions about Section 21
What have the courts held on Section 21 of the Insolvency and Bankruptcy Code?
Uppal Chadha Hi Tech Developers Pvt. LTD vs Union of India (09 Aug 2019) is the leading judgment on this section among those set out below: Where financial debts are owed to a large class of creditors (like home buyers), an authorized representative is appointed by the NCLT. The Court upholds this provision as ensuring meaningful representation while managing practical concerns. Another 6 judgments on this section are set out below, all of them from the Supreme Court. They run from 2019 to 2021.
How do I find court cases under Section 21 of the Insolvency and Bankruptcy Code?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Insolvency and Bankruptcy Code 21, section 21 Insolvency and Bankruptcy Code, section 21 of the Insolvency and Bankruptcy Code. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 7 reported judgments on this section are set out on this page, beginning with Uppal Chadha Hi Tech Developers Pvt. LTD vs Union of India (09 Aug 2019).
What should I read with Section 21 of the Insolvency and Bankruptcy Code, and has it changed?
Its own text turns on section 24 (Meeting of committee of creditors), so none of them can safely be read on its own. 7 other provisions in this corpus refer back to it. 5 instruments name it without being made under it, most recently Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2022 (2022), then IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021 (2021).
When was Section 21 of the Insolvency and Bankruptcy Code enacted?
Section 21 of the Insolvency and Bankruptcy Code, cited as Insolvency and Bankruptcy Code 21, was enacted on 28 May 2016 as Act 31 of 2016. It is in force as at the date shown on this page.
Other sections of this Act
- 240. Power to make regulations2349 words
- 5. Definitions2326 words
- 3. Definitions1381 words
- 29A. Person not eligible to be resolution applicant1152 words
- 239. Power to make rules963 words
- 196. Powers and functions of Board942 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.