Commercial Wisdom V. Judicial Review: Redefining Boundaries Under The Insolvency And Bankruptcy Code, 2016
- IJLLR Journal
- Dec 29, 2025
- 2 min read
Gopika S Syam, Symbiosis Law School, Hyderabad
1. INTRODUCTION
The Insolvency and Bankruptcy Code, 2016 (IBC) was a catalyst in the historical journey of the corporate legal sector because it became a complete system of settling the insolvency of companies in a systematic and time-managed fashion. The doctrine of commercial wisdom is one of the most significant elements of this framework, which gives the Committee of Creditors (CoC) (mainly consisting of financial creditors) the power to make significant decisions regarding the revival or liquidation of the corporate debtor. These decisions are essential not only because they affect the further existence of the business but also because they condition the chances of recovery of different stakeholders. The concept makes financial decisions to be made by the most financially exposed and experienced, and the decision-making process is economically motivated, not derailed by many legal formalities. The CoC has been given specific authority to make any resolution plan during the corporate insolvency resolution process (CIRP). However, the decision taken by the committee might not be inclusive, which leads to a situation that is unfair to other stakeholders. The judiciary has the power to examine the decision of the CoC only to the extent that the decisions violate the provisions of law. On one side, the CoC is exercising the power of commercial wisdom conferred on it. On the other side, the judiciary can only deal with matters contradictory to the law. The rest of the creditors who are not part of CoC are the ones who are affected. Simultaneously, it identifies the strains that follow when such wisdom is exercised to create perceptions of inequity or other procedural anomalies, particularly to parties who are not members of the CoC, including operational creditors or dissenting financial creditors. The changing role of the judiciary is also explored in the paper, as it is becoming increasingly burdened with balancing the autonomy of creditors with the necessity to promote legality, procedural fairness, and protection of stakeholders. The current paper provides a complete picture of how commercial wisdom works in practice by examining statutory provisions, developments in regulation, and interpretative practices. The paper explores the challenges faced by the stakeholders and tries to find a possible solution for them by interpreting the statutory provisions and following the purposive interpretative approach so that the other stakeholders are treated fairly
