IBC Section 193: Member not to participate in meetings in certain cases

Section 193 of Insolvency and Bankruptcy Code, 2016: Member not to participate in meetings in certain cases

Official Bare Act Text

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

Any member, who is a director of a company and who as such director has any direct or indirect pecuniary interest in any matter coming up for consideration at a meeting of the Board, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Board, and the member shall not take any part in any deliberation or decision of the Board with respect to that matter.

Legal Commentary & Landmark Judgments: Section 193

Section 193 mandates that any Board member having a direct or indirect personal or financial interest in a matter must disclose such interest and recuse himself from meetings.

Mandatory Conflict Disclosure: Any member who is a director or shareholder of a company or has any direct or indirect pecuniary interest in any matter coming up for consideration must disclose the interest immediately.
Total Recusal Requirement: The interested member cannot take part in any deliberation or decision of the Board with respect to that matter.
Integrity of Regulatory Action: A violation of Section 193 vitiates the resolution and constitutes a statutory ground for removal under Section 190.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court held that strict conflict-of-interest rules are indispensable for maintaining market trust in regulatory oversight of distressed enterprises.
Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: Affirmed that regulatory probity under the Code requires absolute recusal of interested decision-makers.

Courtroom Practice & Strategic Litigation Guidance:

Parties appearing before or affected by IBBI determinations should review the declared disclosures of participating members; failure to recuse provides a viable ground to invalidate the decision on the rule against bias.