IBC Section 108: Conduct of meeting of creditors

Section 108 of Insolvency and Bankruptcy Code, 2016: Conduct of meeting of creditors

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The meeting of the creditors shall be conducted in accordance with the provisions of this section and sections 109,110 and 111.

(2) In the meeting of the creditors, the creditors may decide to approve, modify or reject the repayment plan.

(3) The resolution professional shall ensure that if modifications are suggested by the creditors, consent of the debtor shall be obtained for each modification.

(4) The resolution professional may for a sufficient cause adjourn the meeting of the creditors for a period of not more than seven days at a time.

Legal Commentary & Landmark Judgments: Section 108

Section 108 regulates the conduct and proceedings of the meeting of creditors summoned to consider the repayment plan, empowering creditors to approve, modify, or reject the proposal.

Conduct by RP: The resolution professional shall act as the chairperson of the meeting of creditors.
Creditor Powers: The creditors may approve, modify, or reject the repayment plan.
Debtor's Consent for Modifications: Any modification of the repayment plan proposed by creditors requires the express consent of the debtor.
Adjournment Limit: The meeting may be adjourned from time to time, but cannot be adjourned for a period exceeding seven days at a time.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court affirmed that Section 108 ensures mutual consensus; creditors can negotiate modifications, but no modified plan can be imposed on the debtor without his consent.
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531: Reaffirmed the supremacy of creditor voting in evaluating restructuring viability.

Courtroom Practice & Strategic Litigation Guidance:

During the Section 108 meeting, the debtor should actively engage with institutional lenders. If banks demand higher upfront payments or personal collateral, negotiate mutually acceptable amendments and record written consent in the meeting minutes.