Section 28: Approval of Committee of Creditors for Certain Actions

Section 28 of the Insolvency and Bankruptcy Code, 2016 (IBC) restricts a resolution professional from taking specified significant actions during the corporate insolvency resolution process (CIRP) without the prior approval of the committee of creditors (CoC). The provision protects creditor control over decisions that can materially affect the assets, financing, ownership, management or contractual position of the corporate debtor.

Current Text of Section 28 of the IBC

Meaning and Scope of Section 28

Section 28 is a creditor-control provision within CIRP. Although the resolution professional conducts the process and performs the duties prescribed by the Code, specified decisions of substantial financial or structural importance cannot be taken unilaterally. Prior approval of the CoC is mandatory for each action listed in section 28(1).

The opening non-obstante clause - "Notwithstanding anything contained in any other law for the time being in force" - gives the statutory restriction overriding operation where another law might otherwise permit the resolution professional or management to undertake the relevant action. The requirement applies during the corporate insolvency resolution process.

Actions Requiring Prior CoC Approval

• Interim finance: Finance exceeding the amount already permitted by the CoC requires prior approval.
• Security interest: A security interest cannot be created over corporate debtor assets without prior CoC approval.
• Capital structure: Issuing additional securities, creating a new class of securities, buy-back or redemption, and other covered changes to capital structure require approval.
• Ownership interest: Any covered change in the ownership interest of the corporate debtor requires approval.
• Bank account debits: Debit instructions exceeding limits fixed by the CoC require approval.
• Related party transactions: The resolution professional cannot undertake a related party transaction without the approval prescribed by section 28.
• Constitutional documents: Amendments to constitutional documents of the corporate debtor require approval.
• Delegation: Delegation of the resolution professional's authority is included among the restricted actions.
• Share disposal: Disposal of shares of shareholders or their nominees to third parties is covered by clause (i).
• Management: Changes in management of the corporate debtor or its subsidiary require approval.
• Material contracts: Transfers of rights, financial debts or operational debts under material contracts otherwise than in the ordinary course of business require approval.
• Specified personnel and auditors: Changes in appointments or contractual terms of personnel specified by the CoC, statutory auditors or internal auditors require approval.

Sixty-Six Percent Voting Threshold

Under section 28(3), an action specified in section 28(1) cannot be approved unless the proposal receives at least sixty-six percent of the voting shares of the committee of creditors. The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 reduced this threshold from the original seventy-five percent to sixty-six percent.

The resolution professional must first convene a CoC meeting and seek the creditors' vote before taking the action. The statutory sequence therefore requires approval to precede the action; subsequent ratification does not replace the express requirement of prior approval under the section.

Effect of Acting Without CoC Approval

Section 28(4) expressly provides that an action covered by sub-section (1), if taken by the resolution professional without seeking CoC approval in the manner required by section 28, is void. This is a direct statutory consequence and makes compliance with the approval mechanism essential.

In addition, section 28(5) permits the committee of creditors to report such conduct to the Insolvency and Bankruptcy Board of India (IBBI) for necessary action under the Code. The provision therefore combines transaction-level consequences with the possibility of regulatory action against the resolution professional.

Related Party Transactions under Section 28(1)(f)

Clause (f) specifically includes related party transactions among the actions requiring prior approval. The expression "related party", in relation to a corporate debtor, is defined in section 5(24) of the IBC. Whether a person or transaction falls within that definition depends on the statutory relationships and circumstances specified by the Code.

During CIRP, a resolution professional should therefore examine the relationship between the corporate debtor and the proposed counterparty before undertaking a transaction and obtain the prescribed CoC approval where section 28(1)(f) applies.

Relationship with Section 25

Section 25 sets out the duties of the resolution professional. Section 25(2)(c), for example, permits the resolution professional to raise interim finance subject to approval of the committee of creditors under section 28. Section 28 accordingly operates as an important statutory control on the exercise of specified powers during CIRP.

Related IBC Provisions

Official Legal Resources

For the authoritative legislation and amendments, refer to the IBBI Acts page. Current regulations, notifications, circulars and other instruments are available through the IBBI Legal Framework. The current regulatory framework for corporate insolvency resolution is available from the IBBI updated legal framework.

Last updated: 30 September 2026. This article provides general legal information. The Code, applicable regulations, notifications and judicial decisions should be checked for the facts of a particular matter.