Section 135 - Voting Rights of Creditors under the Insolvency and Bankruptcy Code 2016

Section 135 of the Insolvency and Bankruptcy Code, 2016 governs voting by creditors at the meeting of creditors in the bankruptcy process. It links voting entitlement to the list of creditors prepared under Section 132 and to the voting share assigned to each creditor.

Key rule: A creditor appearing in the Section 132 list, or the creditor's proxy, is entitled to vote on resolutions at the creditors' meeting according to the voting share assigned to that creditor, subject to the statutory exclusions in Section 135.

Section 135 - Statutory requirements

Section 135(1): Every creditor mentioned in the list under Section 132, or the creditor's proxy, is entitled to vote on resolutions at the meeting of creditors in accordance with the voting share assigned to that creditor.

Section 135(2): The bankruptcy trustee determines the voting share assigned to each creditor in the manner specified by the Insolvency and Bankruptcy Board of India.

Section 135(3): A creditor is not entitled to vote in respect of a debt for an unliquidated amount.

Section 135(4): The following creditors are not entitled to vote under this section:

(a) creditors who are not mentioned in the list of creditors under Section 132 and creditors who have not been given notice by the bankruptcy trustee; and

(b) creditors who are associates of the bankrupt.

Who is entitled to vote?

Voting entitlement begins with the list prepared under Section 132. A creditor appearing in that list may vote personally or through a proxy, subject to the restrictions contained in Section 135.

Meaning of voting share

The voting share determines the weight attached to a creditor's vote on resolutions considered at the meeting. Under Section 135(2), the bankruptcy trustee determines each creditor's voting share in the manner specified by the Insolvency and Bankruptcy Board of India.

Unliquidated debt

Section 135(3) excludes voting in respect of a debt for an unliquidated amount. An unliquidated amount is an amount that has not been ascertained or fixed as a definite monetary sum for the purpose relevant to the voting entitlement.

Creditors excluded from voting

Section 135(4) excludes creditors who do not satisfy the statutory list and notice requirements. It also excludes creditors who are associates of the bankrupt. These restrictions apply even though other provisions of the bankruptcy process may otherwise concern the creditor or the debt.

Connection with the creditors' meeting

Section 133 governs summoning of the meeting and proxy voting arrangements. Section 134 governs conduct of the meeting and the business on which resolutions may be passed. Section 135 determines who may vote and the voting share applicable to those resolutions.

Related provisions

Section 131 - Registration of claims Section 132 - Preparation of list of creditors Section 133 - Summoning of meeting of creditors Section 134 - Conduct of meeting of creditors Section 136 - Administration and distribution Section 137 - Completion of administration

Official legal resources

For the current statutory text, commencement notifications and applicable subordinate legislation, refer to India Code, the Insolvency and Bankruptcy Board of India - Acts and the IBBI Updated Legal Framework.

Important: Bankruptcy provisions concerning individuals and partnership firms operate subject to the relevant commencement notifications and applicable rules and regulations for the particular category of debtor. Current official material should be checked for the proceeding concerned.

This page is intended as a legal information resource and should be read with the current official Code, notifications, rules and regulations.