Insolvency governance guidelines may be directed without disturbing the committee of creditors' protected commercial wisdom.

The insolvency framework permits courts to require procedural safeguards for the committee of creditors where the statutory scheme supports regulatory guidance, but it does not allow interference with the committee's commercial wisdom. The Delhi HC treated the request as limited to a code of conduct or guidelines for effective monitoring and functioning of creditors, and held that any such framework must respect fairness, reasonableness, proportionality, and natural justice. It recognised the regulator's power to specify mechanisms for regulatory functioning and accepted the request in principle, directing suitable guidelines to be framed or finalised within a reasonable time while preserving the primacy of commercial decision-making under the Insolvency and Bankruptcy Code.

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Issues: Whether, in the absence of any existing framework, the Court could direct the insolvency regulator to frame or finalise a code of conduct or guidelines for the functioning of the committee of creditors without trenching upon the commercial wisdom protected under the insolvency regime.

Analysis: The dispute was confined to the prayer seeking a framework for effective monitoring and functioning of the committee of creditors. The Court reiterated that the Insolvency and Bankruptcy Code is designed to revive the corporate debtor in a time-bound manner, maximise value, and leave core business decisions to the committee of creditors. At the same time, the Court held that wide decisional power must be accompanied by fairness, reasonableness, proportionality, and observance of natural justice. The statutory scheme empowering the insolvency regulator to specify guidelines and mechanisms for regulatory functioning was treated as sufficiently broad to support a code of conduct for creditors without disturbing the substantive commercial domain of the committee of creditors.

Conclusion: The request for a regulatory framework was accepted in principle, and the insolvency regulator was directed to frame or finalise suitable guidelines within a reasonable time.

Final Conclusion: The petition succeeded only to the extent of requiring a code of conduct or guidelines for the functioning of the committee of creditors, while preserving the primacy of commercial wisdom under the insolvency framework.

Ratio Decidendi: Courts may direct the framing of procedural guidelines for insolvency governance where the statutory scheme permits regulatory action, provided such directions do not intrude into the non-justiciable commercial wisdom of the committee of creditors.

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