INSOLVENCY AND BANKRUPTCY CODE, 2016
(1) This Code may be called the Insolvency and Bankruptcy Code, 2016.
(2) It extends to the whole of India:
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(3) It shall come into force on such date2 as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Code and any reference in any such provision to the commencement of this Code shall be construed as a reference to the commencement of that provision.
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1. The proviso omitted by the Jammu and Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, vide notification No. S.O. 1123(E) dated (18-3-2020) and vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification No. S.O. 3774(E), dated (23
Section 1 of the Insolvency and Bankruptcy Code, 2016 (IBC) sets the stage for the entire legislation, providing the title, scope, and commencement details. It signifies the unification of insolvency laws into a single comprehensive framework aimed at promoting entrepreneurship, ensuring the availability of credit, and balancing the interests of all stakeholders.
Section 1 states:- Short title of the Act: "Insolvency and Bankruptcy Code, 2016."- Extent of application: It applies to the whole of India.- Commencement: The Act came into force on 28th May 2016.- It consolidates laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals.- The section underscores the legislation’s objective of time-bound resolution of insolvency and bankruptcy proceedings.
Section 1 itself does not prescribe any punishment. However, violations of the provisions of the IBC, including false declarations, concealment of assets, or non-compliance with the resolution process, attract penalties under other sections such as:- Imprisonment for a term between 3 to 5 years.- Fine ranging from ₹1 lakh to ₹1 crore.- Penalties for misconduct during resolution processes, including falsification of records or contravention of moratorium provisions, are specified in subsequent sections like Sections 70 and 74.
This concise commentary highlights the legislative intent, scope, and significance of Section 1 of the Insolvency and Bankruptcy Code, 2016, as the foundational provision underpinning the entire insolvency regime in India.
The provisions of this Code shall apply to—
(b) any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act;
(c) any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009);
(d) such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf; 1***
2[(e) personal guarantors to corporate debtors;
(f) partnership firms and proprietorship firms; and
(g) individuals, other than persons referred to in clause (e),]
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The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to consolidate and amend the laws relating to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner. Section 2 of the IBC provides essential definitions that are foundational to the application and interpretation of the Code.
Section 2 of the IBC outlines the definitions of key terms used throughout the Code. This includes definitions for terms such as "corporate debtor," "financial creditor," "operational creditor," and "insolvency resolution process," among others. These definitions are crucial for understanding the scope and applicability of the IBC.
The scope of Section 2 extends to all entities and individuals that fall under the purview of the IBC. It establishes the foundational terminology that governs the entire Code, ensuring that all stakeholders have a clear understanding of their rights and obligations.
While Section 2 itself does not prescribe punishments, it lays the groundwork for understanding the legal framework within which penalties and liabilities may arise under other sections of the IBC.
This commentary provides a comprehensive overview of Section 2 of the Insolvency and Bankruptcy Code, 2016, highlighting its significance in the broader context of insolvency law in India.
In this Code, unless the context otherwise requires,—
(2) “bench” means a bench of the Adjudicating Authority;
(3) “bye-laws” mean the bye-laws made by the insolvency professional agency under section 205;
(4) “charge” means an interest or lien created on the property or assets of any person or any of its undertakings or both, as the case may be, as security and includes a mortgage;
(5) “Chairperson” means the Chairperson of the Board;
(6) “claim” means—
(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;
(b) right to remedy for breach of contract under any law for the time being in force,
The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to consolidate and amend the laws relating to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals. Section 3 of the IBC provides essential definitions that are foundational to understanding the application of the Code.
Section 3 of the IBC contains various definitions crucial for interpreting the provisions of the Code. It defines terms such as "corporate debtor," "financial creditor," "operational creditor," "debt," and "claim," among others. These definitions help delineate the roles and rights of different stakeholders in insolvency proceedings.
The scope of Section 3 is broad as it lays the groundwork for the entire IBC framework. It ensures that all parties involved in insolvency proceedings have a clear understanding of their definitions and roles, which is critical for the effective functioning of the insolvency resolution process.
While Section 3 itself does not prescribe punishments, it is integral to the application of other sections that may involve penalties for non-compliance or fraudulent activities during insolvency proceedings.
(1) This Part shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is 1[one crore rupees]:
Provided that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.
2[Provided further that the Central Government may, by notification, specify such minimum amount of default of higher value, which shall not be more than one crore rupees, for matters relating to the pre-packaged insolvency resolution process of corporate debtors under Chapter III-A.]
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1. Subs. by Notification No. S.O. 1205(E), for “one lakh rupees” (w.e.f. 24-3-2020).
2. Ins. by Act 26 of 2021, s. 2 (w.e.f. 4-4-2021).
In this Part, unless the context otherwise requires,—
(2) “auditor” means a chartered accountant certified to practice as such by the Institute of Chartered Accountants of India under section 6 of the Chartered Accountants Act, 1949 (38 of 1949);
1[(2A) “base resolution plan” means a resolution plan provided by the corporate debtor under clause (c) of sub-section (4) of section 54A;]
(3) “Chapter” means a Chapter under this Part;
(4) “constitutional document”, in relation to a corporate person, includes articles of association, memorandum of association of a company and incorporation document of a Limited Liability Partnership;
(5) “corporate applicant” mean
The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to consolidate and amend the laws relating to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner. Section 5 of the IBC provides essential definitions that are crucial for understanding the framework of insolvency proceedings, particularly the classifications of creditors.
Section 5 of the IBC defines key terms such as "financial creditor," "operational creditor," and "financial debt." It establishes the criteria for distinguishing between different types of creditors, which is fundamental for the application of the Code.
The scope of Section 5 is broad, as it lays the groundwork for the classification of creditors, which directly impacts their rights and remedies under the IBC. It is particularly significant in determining who can initiate insolvency proceedings and how claims are treated during the resolution process.
While Section 5 itself does not prescribe punishments, it is integral to the application of other sections of the IBC that may involve penalties for non-compliance or fraudulent activities related to the definitions provided.
This commentary highlights the critical role of Section 5 in the IBC, emphasizing its definitions and their implications for creditors in insolvency proceedings.
Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter.
(1) A financial creditor either by itself or jointly with 1[other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government,] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.
2[Provided that for the financial creditors, referred to in clauses (a) and (b) of sub-section (6A) of section 21, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. of the total number of such creditors in the same class, whichever is less:
Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency re
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor—
(b) the 2[payment] of unpaid operational debt—
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or
(ii) by sendin
(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.
(3) The operational creditor shall, along with the application furnish—
(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operat
Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) provides a mechanism for operational creditors to initiate the corporate insolvency resolution process (CIRP) against defaulting corporate debtors. It plays a crucial role in facilitating timely recovery for operational creditors and maintaining the financial health of corporate entities. The section emphasizes the importance of the existence of a default and the absence of pre-existing disputes to invoke insolvency proceedings.
Section 9 empowers operational creditors to file an application before the Adjudicating Authority (NCLT) for initiating CIRP when there is a default in payment of operational debt. The section stipulates that:- The operational creditor must serve a demand notice under Section 8(1).- The application can be filed if the debtor fails to pay the debt within ten days of receipt of the notice.- The application must be accompanied by necessary documentation, including proof of default.- The section also details procedural requirements, including the need for a dispute to be genuine and not spurious.
Section 9's scope is confined to operational creditors and operational debts. It does not extend to financial creditors, which are governed by Section 7. The section aims to prevent abuse by ensuring that only genuine operational debts without bona fide disputes are subject to insolvency proceedings. The scope also emphasizes procedural compliance, including service of demand notices and proof of default, and restricts applications where a genuine dispute exists.
While Section 9 itself does not prescribe specific punishments, violations such as filing frivolous or vexatious applications, misrepresentation, or suppressing material facts can attract penalties under other provisions of the IBC or IPC. For example:- Section 68 of the IBC prescribes imprisonment for officers of the corporate debtor for contraventions.- Penalties for false or misleading information may include fines or imprisonment, as per applicable laws.- Misuse of proceedings can lead to contempt proceedings or costs imposed on the applicant.
Section 9 of the IBC serves as a vital tool for operational creditors to recover dues efficiently and maintain the financial ecosystem. Its effectiveness hinges on strict adherence to procedural requirements, genuine existence of debt, and absence of bona fide disputes. Courts have consistently emphasized that the section is not a substitute for civil recovery but a specialized insolvency process aimed at resolving insolvency efficiently and preventing misuse.
Note: The references are based on the provided sources and relevant case law summaries. For detailed jurisprudence, consulting the full judgments and authoritative legal commentaries is recommended.
(1) Where a corporate debtor has committed a default, a corporate applicant thereof may file an application for initiating corporate insolvency resolution process with the Adjudicating Authority.
(2) The application under sub-section (1) shall be filed in such form, containing such particulars and in such manner and accompanied with such fee as may be prescribed.
1[(3) The corporate applicant shall, along with the application, furnish—
(b) the information relating to the resolution professional proposed to be appointed as an interim resolution professional; and
(c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total number of partners of the corporate
The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:—
1[(aa) a financial creditor or an operational creditor of a corporate debtor undergoing a pre-packaged insolvency resolution process; or]
(b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or
1[(ba) a corporate debtor in respect of whom a resolution plan has been approved under Chapter III-A, twelve months preceding the date of making of the application; or]
(c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan wh
(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of 1[sixty-six] per cent. of the voting shares.
(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, b
(1) The Adjudicating Authority, after admission of the application under section 7 or section 9 or section 10, shall, by an order—
(b) cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims under section 15; and
(c) appoint an interim resolution professional in the manner as laid down in section 16.
(2) The public announcement referred to in clause (b) of sub-section (1) shall be made immediately after the appointment of the interim resolution professional.
(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:—
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(d) the recovery of any property by
(1) The public announcement of the corporate insolvency resolution process under the order referred to in section 13 shall contain the following information, namely:—
(b) name of the authority with which the corporate debtor is incorporated or registered;
(c) the last date for submission of 1[claims, as may be specified];
(d) details of the interim resolution professional who shall be vested with the management of the corporate debtor and be responsible for receiving claims;
(e) penalties for false or misleading claims; and
(f) the date on which the corporate insolvency resolution process shall close, which shall be the one hundred and eightieth day from the date of the admission of the application under sections 7, 9 or section
(1) The Adjudicating Authority shall appoint an interim resolution professional 1[on the insolvency commencement date].
(2) Where the application for corporate insolvency resolution process is made by a financial creditor or the corporate debtor, as the case may be, the resolution professional, as proposed respectively in the application under section 7 or section 10, shall be appointed as the interim resolution professional, if no disciplinary proceedings are pending against him.
(3) Where the application for corporate insolvency resolution process is made by an operational creditor and—
(b) a proposal for an interim resolution profession
(1) From the date of appointment of the interim resolution professional,—
(b) the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional;
(c) the officers and managers of the corporate debtor shall report to the interim resolution professional and provide access to such documents and records of the corporate debtor as may be required by the interim resolution professional;
(d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution profes
The interim resolution professional shall perform the following duties, namely:—
(i) business operations for the previous two years;
(ii) financial and operational payments for the previous two years;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified;
(b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and 15;
(c) constitute a committee of creditors;
(d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is ap
(1) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the corporate debtor.
(2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the interim resolution professional does not assist or cooperate, the interim resolution professional may make an application to the Adjudicating Authority for necessary directions.
(3) The Adjudicating Authority, on receiving an application under sub-section (2), shall by an order, direct such personnel or other person to comply with the instructions of the resolution professional and to cooperate with him in collection of information and management of the corporate debtor.
(1) The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern.
(2) For the purposes of sub-section (1), the interim resolution professional shall have the authority—
(b) to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered into before the commencement of corporate insolvency resolution process;
(c) to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor without the prior consent of the creditors whose debt is secured over such encumbered property:
Provided that no prior consent of the c
(1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors.
(2) The committee of creditors shall comprise all financial creditors of the corporate debtor:
Provided that a 1[financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the committee of creditors.
2[Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt int
(1) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors.
(2) The committee of creditors, may, in the first meeting, by a majority vote of not less than 1[sixty-six] per cent. of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional.
(3) Where the committee of creditors resolves under sub-section (2)—
(b) to replace
(1) Subject to section 27, the resolution professional shall conduct the entire corporate insolvency resolution process and manage the operations of the corporate debtor during the corporate insolvency resolution process period.
1[Provided that the resolution professional shall continue to manage the operations of the corporate debtor after the expiry of the corporate insolvency resolution process period, until an order approving the resolution plan under sub-section (1) of section 31 or appointing a liquidator under section 34 is passed by the Adjudicating Authority.]
(2) The resolution professional shall exercise powers and perform duties as are vested or conferred on the interim resolution professional under this Chapter.
(3) In case of any appointment of a resolution professional under sub-section (4) of section 22, the interim resolution professional shall provide all the information, d
(1) The members of the committee of creditors may meet in person or by such electronic means as may be specified.
(2) All meetings of the committee of creditors shall be conducted by the resolution professional.
(3) The resolution professional shall give notice of each meeting of the committee of creditors to—
(b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be;
(c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent. of the debt.
(4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may
(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor.
(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:—
(b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings;
(c) raise interim finances subject to the approval of the committee of creditors under section 28;
(d) appoint accountants, legal or other professionals in the manner as specified by Board;
(e) maintain an updated lis
The filing of an avoidance application under clause (j) of sub-section (2) of section 25 by the resolution professional shall not affect the proceedings of the corporate insolvency resolution process.
(1) Where, at any time during the corporate insolvency resolution process, the committee of creditors is of the opinion that a resolution professional appointed under section 22 is required to be replaced, it may replace him with another resolution professional in the manner provided under this section.
1[(2) The committee of creditors may, at a meeting, by a vote of sixty-six per cent. of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form.]
(3) The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority.
(4) The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a resolution professiona
(1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely:—
(b) create any security interest over the assets of the corporate debtor;
(c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of securities or buying back or redemption of issued securities in case the corporate debtor is a company;
(d) record any change in the ownership interest of the corporate debtor;
(e) give instructions to financial institutions maintaining accounts of the corpora
(1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan.
(2) The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes—
(b) to protect any intellectual property of the corporate debtor it may have access to; and
(c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with.
Explanation.—For the purposes of this section, “relevant information” means the information required by the resolution applicant to make the r
(1) A resolution applicant may submit a resolution plan 1[along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum.
(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan—
3[(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than—
(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or
(ii) the amount that would have been paid to such creditors, if t
(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, 1[including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan.
2[Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.]
(2) Where the Adjudicating Authority is satisfi
Any appeal from an order approving the resolution plan shall be in the manner and on the grounds laid down in sub-section (3) of section 61.
(1) Where the Adjudicating Authority,—
(b) rejects the resolution plan under section 31 for the non-compliance of the requirements specified therein,
it shall—
(i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;
(ii) issue a public announcement stating that the corporate debtor is in liquidation; and
(iii) require such order to be sent to the authority with which the corporate debtor is registered.
(2) Where
Legal Comments
"Section 33(5) moratorium" - Section 33(5) prohibits suits or legal proceedings against the corporate debtor after liquidation order, with a caveat that liquidator may institute with prior Adjudicating Authority approval - Source: ["Sunil Katiyal @ Sunil Katial, S/o. Late Harbans Lal Katiyal VS State of Jharkhand - 2022 0 Supreme(Jhk) 653"] (Encroachment case) and ["Amit Kumar Sarawgi @ Amit Sarawgi, S/o Late Ashok Sarawgi vs State of Jharkhand - 2025 0 Supreme(Jhk) 45"] (General discussion of 33(5))
"Purpose of IBC Section 33" - IBC as a beneficiary statute aimed at revival and going-concern, not merely creditor recovery; liquidation is last resort when no viable resolution plan exists - Source: ["Swiss Ribbons Pvt. Ltd. VS Union of India - 2019 2 Supreme 524"]
"Going concern during CIRP and liquidation" - Liquidator may manage assets to keep going concern; post-approval liquidation, going-concern approach still guided by law and Sections 230 CA 2013 in Swiss Ribbons/Meghal lines - Source: ["S. C. Sekaran VS Amit Gupta - 2019 0 Supreme(NCLAT) 444"]
"Appeals and timelines under Section 31/Section 33" - CoC responsibilities and timeline (270 days, extendable); courts emphasize timely resolution, with liquidation if no viable plan; appellate path preserves CoC commercial wisdom subject to IBC constraints - Source: ["K. Sashidhar VS Indian Overseas Bank - 2019 6 Supreme 386"], ["S. C. Sekaran VS Amit Gupta - 2019 0 Supreme(NCLAT) 444"], ["ARCELORMITTAL INDIA PRIVATE LIMITED VS SATISH KUMAR GUPTA - 2018 0 Supreme(SC) 965"]
"Treatment of related parties under Section 29A" - Section 29A bars certain promoters/related parties from bidding in resolution plans; Section 29A deemed retrospective by some judgments but primarily prospective for eligibility at time of submission; corporate veil lifting for concerted action - Source: ["Swiss Ribbons Pvt. Ltd. VS Union of India - 2019 2 Supreme 524"], ["ARCELORMITTAL INDIA PRIVATE LIMITED VS SATISH KUMAR GUPTA - 2018 0 Supreme(SC) 965"]
"Section 29A and NPAs NPAs link" - Proviso to 29A ties eligibility to NPAs and clearances; assets cannot be bid by ineligible persons; consequences include liquidation if no eligible plan arises - Source: ["ARCELORMITTAL INDIA PRIVATE LIMITED VS SATISH KUMAR GUPTA - 2018 0 Supreme(SC) 965"], ["Swiss Ribbons Pvt. Ltd. VS Union of India - 2019 2 Supreme 524"]
"Trade unions as operational creditors" - Trade unions can be operational creditors if they satisfy 3(23) definitions; NCLAT reversal to allow union petitions; harmonize with 5(8)(f) real-estate clarifications - Source: ["YARLAGADA SHIVARAMPRASAD VS STATE OF GUJARAT - 2022 0 Supreme(Guj) 672"]
"Trade-off between civil and criminal proceedings in IBC context" - Criminal proceedings (Section 138 NI Act) not barred by IBC moratorium; Section 14 moratorium covers civil debts, not penal acts; regulatory penalties under Consumer Protection Act not stayed under IBC moratorium - Source: ["YARLAGADA SHIVARAMPRASAD VS STATE OF GUJARAT - 2022 0 Supreme(Guj) 672"], ["Saranga Anilkumar Aggarwal VS Bhavesh Dhirajlal Sheth - 2025 4 Supreme 535"]
"Section 32A – pre-CIRP offences and resolution plans" - Once an IBC resolution plan is approved, liability for offences committed prior to commencement may cease for corporate debtor, affecting criminal/remote liability; relevant to quashing/criminal proceedings against corporate debtor under IBC - Source: ["Sunil Katiyal @ Sunil Katial, son of Late Harbans Lal Katiyal VS State of Jharkhand - 2022 0 Supreme(Jhk) 1249"]
"Interplay with SARFAESI/other statutes" - IBC Section 238 prevails over inconsistent laws; SARFAESI interplay illustrated in case law; private sale/going-concern approach must align with IBC mandates - Source: ["Arrow Business Development Consultants Pvt. Ltd. vs Union Bank of India - 2025 0 Supreme(Bom) 1384"]
"Liquidation order as discharge for officers/employees" - Section 33 liquidation order is sometimes described as giving discharge-like effect for officers/employees; but real-world effect depends on statute and subsequent orders; not a blanket discharge in all contexts - Source: ["Amit Kumar Sarawgi @ Amit Sarawgi, S/o Late Ashok Sarawgi vs State of Jharkhand - 2025 0 Supreme(Jhk) 45"]
"Section 12A withdrawal and CoC consent" - Withdrawal of claims under Section 12A requires 90% consent of CoC; safeguards exist to prevent arbitrary withdrawal and protect overall creditor interests - Source: ["ARCELORMITTAL INDIA PRIVATE LIMITED VS SATISH KUMAR GUPTA - 2018 0 Supreme(SC) 965"]
"Role of Resolution Professional (RP) post-approval" - RP acts as facilitator; real decisions lie with the CoC; RP’s duties governed by Regulations, with due diligence and reporting to Adjudicating Authority; accountability remains with CoC/AA - Source: ["ARCELORMITTAL INDIA PRIVATE LIMITED VS SATISH KUMAR GUPTA - 2018 0 Supreme(SC) 965"]
"Minority/majority creditor dynamics in resolution plans" - Distinction between financial vs operational creditors is intended to balance value maximization; CoC voting thresholds (75% originally; 66% after amendments) reflect policy evolution; impairment of operational creditor rights is mitigated by minimum payments and protections in 5(8)(f) explanations - Source: ["Sunil Kumar Jain VS Sundaresh Bhatt - 2022 0 Supreme(SC) 348"], ["ARCELORMITTAL INDIA PRIVATE LIMITED VS SATISH KUMAR GUPTA - 2018 0 Supreme(SC) 965"]
"Section 33(5) as a bar, with exceptions for liquidator actions" - While 33(5) bars suits against the corporate debtor, the liquidator may initiate necessary actions with the AA's approval; courts emphasize the need for prior approval for suits by liquidator - Source: ["Haravtar Singh Arora VS Navneet Gupta - 2018 0 Supreme(NCLAT) 67"], ["Amit Kumar Sarawgi @ Amit Sarawgi, S/o Late Ashok Sarawgi vs State of Jharkhand - 2025 0 Supreme(Jhk) 45"]
"Section 33 and execution of arbitral awards" - IBC can supersede arbitration enforcement timelines; funds deposited or awards adjudicated prior to CIRP may be distributed under Section 53 and interconnected with CIRP proceeds - Source: ["Cholamandalam Investment and Finance Company Ltd. VS Navrang Roadlines Private Limited - 2022 0 Supreme(Mad) 921"]
"Section 33(1)/(2) liquidation orders and remedy options" - If a resolution plan is found viable later, orders may be revisited; otherwise, liquidation proceeds with NCLT/NCLAT oversight; anti-avoidance through 29A and 12A interplay - Source: ["R. Vijay Kumar VS Kasi Viswanathan - 2019 0 Supreme(NCLAT) 947"], ["K. Sashidhar VS Indian Overseas Bank - 2019 6 Supreme 386"]
"Public auction vs private sale under Section 33" - NCLT/NCLAT endorse liquidator’s discretion to maximize value, including private sale after failed e-auctions, subject to regulatory compliance and protections for creditors - Source: ["R. K. Industries (Unit-II) LLP VS H. R. Commercials Private Limited - 2022 0 Supreme(SC) 854"]
"Moratorium scope under 33(5) vs 96 IBC" - Corporate moratorium under 14 is broader; personal/individual moratorium under 96 is narrower; penalties/regulatory actions fall outside IBC debt moratorium in many contexts - Source: ["Saranga Anilkumar Aggarwal VS Bhavesh Dhirajlal Sheth - 2025 4 Supreme 535"]
"Section 238 supremacy and harmonious construction" - When conflicting provisions arise with other statutes (e.g., Companies Act, Real Estate Act), the IBC’s спe cial nature and Section 238 supremacy guide interpretation; harmonization is limited where statutes are in conflict - Source: ["Chennai Metro Rail Limited, Represented by the Chief General Manager, (Arbitration & Contract Management) VS Lanco Infratech Limited Represented by the Liquidator - 2020 0 Supreme(Mad) 1286"]
"Creditors’ rights to manage claims during CIRP" - The Code emphasizes maximization of asset value, going concern, and proportional distributions; CoC’s commercial decisions are generally insulated from judicial re-writing unless illegality is shown - Source: ["Swiss Ribbons Pvt. Ltd. VS Union of India - 2019 2 Supreme 524"], ["S. C. Sekaran VS Amit Gupta - 2019 0 Supreme(NCLAT) 444"]
"Gratuity and employee welfare during CIRP and liquidation" - Gratuity funds remain contentious; tribunals recognize that gratuity funds are not always corporate debtor assets; distribution of gratuity requires proper authority and may be left to appropriate bodies - Source: ["Devendra Padamchand Jain VS State Bank of India - 2018 0 Supreme(NCLAT) 570"]
(1) Where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process under 1[Chapter II 2[or for the pre-packaged insolvency resolution process under Chapter III-A] shall, subject to submission of a written consent by the resolution professional to the Adjudicatory Authority in specified form,] act as the liquidator for the purposes of liquidation unless replaced by the Adjudicating Authority under sub-section (4).
(2) On the appointment of a liquidator under this section, all powers of the board of directors, key managerial personnel and the partners of the corporate debtor, as the case may be, shall cease to have effect and shall be vested in the liquidator.
(3) The personnel of the corporate debtor shall extend all assistance and cooperation to the liquidator as may be requ
(1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely:—
(b) to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;
(c) to evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report;
(d) to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary;
(e) to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;
(f) subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power
(1) For the purposes of liquidation, the liquidator shall form an estate of the assets mentioned in sub-section (3), which will be called the liquidation estate in relation to the corporate debtor.
(2) The liquidator shall hold the liquidation estate as a fiduciary for the benefit of all the creditors.
(3) Subject to sub-section (4), the liquidation estate shall comprise all liquidation estate assets which shall include the following:—
(b) assets that may or may not be in posse
(1) Notwithstanding anything contained in any other law for the time being in force, the liquidator shall have the power to access any information systems for the purpose of admission and proof of claims and identification of the liquidation estate assets relating to the corporate debtor from the following sources, namely:—
(b) credit information systems regulated under any law for the time being in force;
(c) any agency of the Central, State or Local Government including any registration authorities;
(d) information systems for financial and non-financial liabilities regulated under any law for the time being in force;
(e) information systems for securities and assets posted as security interest regulated under any law for the time being in force;
(f) any database maintained by the Board; and
(1) The liquidator shall receive or collect the claims of creditors within a period of thirty days from the date of the commencement of the liquidation process.
(2) A financial creditor may submit a claim to the liquidator by providing a record of such claim with an information utility:
Provided that where the information relating to the claim is not recorded in the information utility, the financial creditor may submit the claim in the same manner as provided for the submission of claims for the operational creditor under sub-section (3).
(3) An operational creditor may submit a claim to the liquidator in such form and in such manner and along with such supporting documents required to prove the claim as may be specified by the Board.
(4) A creditor who is partly a financial creditor and partly an operational creditor shall submit claims to the liquidator to the extent of his fin
(1) The liquidator shall verify the claims submitted under section 38 within such time as specified by the Board.
(2) The liquidator may require any creditor or the corporate debtor or any other person to produce any other document or evidence which he thinks necessary for the purpose of verifying the whole or any part of the claim.
(1) The liquidator may, after verification of claims under section 39, either admit or reject the claim, in whole or in part, as the case may be:
Provided that where the liquidator rejects a claim, he shall record in writing the reasons for such rejection.
(2) The liquidator shall communicate his decision of admission or rejection of claims to the creditor and corporate debtor within seven days of such admission or rejection of claims.
The liquidator shall determine the value of claims admitted under section 40 in such manner as may be specified by the Board.
A creditor may appeal to the Adjudicating Authority against the decision of the liquidator 1[accepting or] rejecting the claims within fourteen days of the receipt of such decision.
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1. Ins. by Act 26 of 2018, s. 27 (w.e.f. 6-6-2018).
Section 42 of the IBC, 2016, forms part of the liquidation process under Chapter III of Part II. It provides a mechanism for creditors aggrieved by the liquidator's decision on claims to seek redressal from the Adjudicating Authority (NCLT). This section ensures transparency and fairness in claim verification during liquidation, balancing the liquidator's role with creditor rights. It mandates a 14-day appeal window from the liquidator's decision, with the Authority deciding within 60 days, promoting time-bound resolution.
Section 42 states:Appeal against the decision of liquidator.—A creditor may appeal to the Adjudicating Authority against the decision of the liquidator accepting or rejecting the claims within fourteen days of the receipt of such decision.The Adjudicating Authority shall decide such appeal within sixty days of its receipt.
Section 42 is narrowly scoped to post-verification appeals during liquidation. It does not permit appeals against non-decisions (e.g., ignored claims) or pre-liquidation matters. It upholds the liquidator's primacy in claim collation (Sections 38-40) while providing judicial oversight. Judicial interpretation emphasizes strict timelines and limited review, preventing delays in asset distribution (Section 53). It excludes writ jurisdiction interference, channeling disputes through NCLT/NCLAT.
No specific punishment under Section 42. Non-compliance (e.g., frivolous appeals delaying liquidation) may attract general penalties under Sections 70 (misconduct in CIRP/liquidation) or 236 (offences). Liquidators face accountability under Section 45A; creditors risk costs for abuse.
(1) Where the liquidator or the resolution professional, as the case may be, is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions and in such manner as laid down in sub-section (2) to any persons as referred to in sub-section (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred to in section 44.
(2) A corporate debtor shall be deemed to have given a preference, if—
(b) the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would
Section 43 of the Insolvency and Bankruptcy Code, 2016 (IBC) deals with preferential transactions and relevant time. It is a crucial provision aimed at avoiding certain transactions that give undue preference to some creditors over others, thereby ensuring equitable distribution of assets among all creditors during the insolvency resolution or liquidation process. The provision operates during both the Corporate Insolvency Resolution Process (CIRP) and the liquidation process, forming part of the Code's mechanism to protect the interests of all stakeholders.
Section 43 of the IBC defines a "preferential transaction" as a transfer of property or an interest in property by a corporate debtor in favor of a creditor, surety, or guarantor, which puts such person in a better position than they would have been if the corporate debtor went into liquidation. The section provides that such transactions, if made during the "relevant time," shall be deemed to be a preference given at a relevant time and shall not be countenanced.
The scope of Section 43 extends to both the liquidation process and the Corporate Insolvency Resolution Process (CIRP). The Resolution Professional is obligated to file applications for avoidance of such transactions. The provision is to be construed strictly, without losing sight of the underlying principles and the object of the Code.
Section 43 itself does not prescribe criminal punishment. However, if the transactions are avoided under Section 43, the consequences are provided under Section 44, which includes orders for vesting of property, restoration of the position, and other remedial measures. Criminal liability may arise under Section 66 (fraudulent trading or wrongful trading) or other provisions if the transactions involve fraudulent intent.
Beneficial Legislation - The IBC is a beneficial legislation to put the corporate debtor on its feet, not a mere recovery legislation for creditors. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 16]
CIRP Applicability - Section 43 provisions relating to preferential transactions, though occurring in Chapter III of Part II relating to liquidation, equally operate over the corporate insolvency resolution process. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 16]
Resolution Professional's Obligation - The Resolution Professional is obligated to file an application for avoidance of stated transactions under Section 43, which comes into full effect in CIRP. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 16]
Fraudulent Preference Defined - Fraudulent preference under Companies Act, 2013 means parting with assets of the corporate person in favor of one or a few of its creditors, having the effect of defeating the claim of other creditors. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 17]
Deeming Provision - Transactions falling within the parameters of Section 43 shall be deemed to be a preference given at a relevant time, and such transactions with certain exceptions shall not be countenanced. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 17, 18]
Strict Construction - Sections 43 and 44 are to be construed strictly, without losing sight of the underlying principles and the object of the Code. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 18]
Relevant Time Period - The relevant time is two years preceding insolvency commencement in case of a related person, and one year in case of a third party. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 18, 19]
Deeming Provision Purpose - The purpose of a deeming provision is to deem what may or may not be in reality, thereby requiring the subject-matter to be treated as if real. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 19]
Look-back Period Not Retrospective - The relevant look-back period of two/one year preceding commencement of proceeding does not make the provision retrospective. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 23]
Re-mortgage as New Mortgage - Every re-mortgage is a new mortgage, and a preference given to a related party during a relevant time would be hit by Section 43(4)(a). [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 24]
Ordinary Course of Business - Business is an activity in a course of dealings with a profit motive, falling in place as part of common flow of business done and not arising out of any special or particular situation. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 25]
No Estoppel - Disclosure of securities created in Annual Reports or absence of creditor dissent does not operate as estoppel and would not take the transaction out of the purview of the legal fiction predicated in Section 43. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 25]
Composite Application Not Appropriate - Parameters and requisite enquiries as also the consequences in relation to preferential (Section 43), undervalued (Section 45), and fraudulent (Section 66) transactions being explicitly different, a composite application under all sections is not an appropriate course. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 29]
Avoidance Applications Post-CIRP - Avoidance applications can be adjudicated after the CIRP has concluded, and such proceedings are essential for the benefit of creditors and are independent of the resolution process. [Tata Steel Bsl Limited VS Venus Recruiter Private Limited - 2023 0 Supreme(Del) 1945, Para 1, 2, 3, 5, 73, 88, 90]
Willful Defaulter and Natural Justice - Principles of natural justice require that borrowers and promoters be given an opportunity of personal hearing before being declared willful defaulters. [Hemant Shantilal Shah VS Reserve Bank Of India - 2023 0 Supreme(Guj) 379]
Exhaustive Definition - An exhaustive definition is exhaustive only for the purposes of interpretation of a statute by the Courts; the Legislature is not precluded from inserting words into even an exhaustive definition by way of amendment. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 41]
Interpretation of Judgment - Observations of the Court in a judgment are always required to be read in the context in which they appear. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 41]
Means and Includes - 'Means' makes the definition restrictive and exhaustive, giving natural meaning to the word; 'Includes' makes it extensive, and the inclusive part of the definition cannot prevent the main provision from receiving its natural meaning. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 42]
Financial Creditor - A financial creditor is akin to a guardian of the corporate debtor, having direct engagement in its functioning from the beginning. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 47]
Mortgage for Third Party Debt - Property mortgaged by a corporate debtor to secure debts of a third party may be a debt but not its financial debt, and such mortgagees are not financial creditors of the corporate debtor. [ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VS AXIS BANK LIMITED ETC. ETC. - 2020 0 Supreme(SC) 191, Para 47, 48]
The Adjudicating Authority, may, on an application made by the resolution professional or liquidator under sub-section (1) of section 43, by an order:
(b) require any property to be so vested if it represents the application either of the proceeds of sale of property so transferred or of money so transferred;
(c) release or discharge (in whole or in part) of any security interest created by the corporate debtor;
(d) require any person to pay such sums in respect of benefits received by him Adjudicating Authority may direct;
(e) direct any guarantor, whose financial debts or operational debts owed to any person were released or discharged (in whole or in part) by the giving of the preference, to be under such new or revived financial d
The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to consolidate and amend the laws relating to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals. Section 44 specifically addresses the orders that can be made by the Adjudicating Authority in cases of preferential transactions during the insolvency process.
Section 44 of the IBC empowers the Adjudicating Authority to pass orders regarding transactions that are deemed preferential. It allows for the avoidance of such transactions if they are found to be detrimental to the interests of creditors.
While Section 44 itself does not prescribe specific punishments, related sections of the IBC outline penalties for misconduct during the insolvency resolution process, including fines and imprisonment for providing false information.
This commentary provides an overview of Section 44 of the Insolvency and Bankruptcy Code, 2016, highlighting its significance in the insolvency resolution process and its implications for corporate debtors and creditors alike.
(1) If the liquidator or the resolution professional, as the case may be, on an examination of the transactions of the corporate debtor referred to in sub-section (2) 1*** determines that certain transactions were made during the relevant period under section 46, which were undervalued, he shall make an application to the Adjudicating Authority to declare such transactions as void and reverse the effect of such transaction in accordance with this Chapter.
(2) A transaction shall be considered undervalued where the corporate debtor—
(b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor,
and such transaction has not taken place in the ordin
(1) In an application for avoiding a transaction at undervalue, the liquidator or the resolution professional, as the case may be, shall demonstrate that—
(ii) such transaction was made with a related party within the period of two years preceding the insolvency commencement date.
(2) The Adjudicating Authority may require an independent expert to assess evidence relating to the value of the transactions mentioned in this section.
(1) Where an undervalued transaction has taken place and the liquidator or the resolution professional as the case may be, has not reported it to the Adjudicating Authority, a creditor, member or a partner of a corporate debtor, as the case may be, may make an application to the Adjudicating Authority to declare such transactions void and reverse their effect in accordance with this Chapter.
(2) Where the Adjudicating Authority, after examination of the application made under sub-section (1), is satisfied that—
(b) liquidator or the resolution professional, as the case may be, after having sufficient information or opportunity to avail information of such transactions did not report such transaction to the Adjudicating Authority,
it shall pass an order—
The order of the Adjudicating Authority under sub-section (1) of section 45 may provide for the following:—
(b) release or discharge (in whole or in part) any security interest granted by the corporate debtor;
(c) require any person to pay such sums, in respect of benefits received by such person, to the liquidator or the resolution professional as the case may be, as the Adjudicating Authority may direct; or
(d) require the payment of such consideration for the transaction as may be determined by an independent expert.
Where the corporate debtor has entered into an undervalued transaction as referred to in sub-section (2) of section 45 and the Adjudicating Authority is satisfied that such transaction was deliberately entered into by such corporate debtor—
(b) in order to adversely affect the interests of such a person in relation to the claim,
the Adjudicating Authority shall make an order—
(ii) protecting the interests of persons who are victims of such transactions:
Provided that an order under this section—
(1) Where the corporate debtor has been a party to an extortionate credit transaction involving the receipt of financial or operational debt during the period within two years preceding the insolvency commencement date, the liquidator or the resolution professional as the case may be, may make an application for avoidance of such transaction to the Adjudicating Authority if the terms of such transaction required exorbitant payments to be made by the corporate debtor.
(2) The Board may specify the circumstances in which a transactions which shall be covered under sub-section (1).
Explanation.—For the purpose of this section, it is clarified that any debt extended by any person providing financial services which is in compliance with any law for the time being in force in relation to such debt shall in no event be considered as an extortionate credit transaction.
Where the Adjudicating Authority after examining the application made under sub-section (1) of section 50 is satisfied that the terms of a credit transaction required exorbitant payments to be made by the corporate debtor, it shall, by an order—
(b) set aside the whole or part of the debt created on account of the extortionate credit transaction;
(c) modify the terms of the transaction;
(d) require any person who is, or was, a party to the transaction to repay any amount received by such person; or
(e) require any security interest that was created as part of the extortionate credit transaction to be relinquished in favour of the liquidator or the resolution professional, as the case may be.
(1) A secured creditor in the liquidation proceedings may—
(b) realise its security interest in the manner specified in this section.
(2) Where the secured creditor realises security interest under clause (b) of sub-section (1), he shall inform the liquidator of such security interest and identify the asset subject to such security interest to be realised.
(3) Before any security interest is realised by the secured creditor under this section, the liquidator shall verify such security interest and permit the secured creditor to realise only such security interest, the existence of which may be proved either—
(1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority and within such period and in such manner as may be specified, namely:—
(b) the following debts which shall rank equally between and among the following:—
(i) workmen’s dues for the period of twenty-four months preceding the liquidation commencement date; and
(ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52;
(c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commenc
(1) Where the assets of the corporate debtor have been completely liquidated, the liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate debtor.
(2) The Adjudicating Authority shall on application filed by the liquidator under sub-section (1) order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly.
(3) A copy of an order under sub-section (2) shall within seven days from the date of such order, be forwarded to the authority with which the corporate debtor is registered.
Section 54 of the Insolvency and Bankruptcy Code, 2016 (IBC) provides the legal framework for the dissolution of a corporate debtor after the complete liquidation of its assets. It marks the culmination of the insolvency resolution process, ensuring the formal closure of the corporate entity once all assets have been liquidated and liabilities settled, thereby promoting finality and certainty in insolvency proceedings.
Section 54 stipulates that once the assets of the corporate debtor have been fully liquidated, the liquidator shall apply to the Adjudicating Authority (National Company Law Tribunal - NCLT) for an order of dissolution. Upon such an application, the NCLT shall pass an order for dissolution, leading to the legal end of the corporate debtor’s existence. The section also details procedural aspects, including the requirement for the liquidator to seek approval before passing the dissolution order .
Section 54 applies exclusively after the liquidation process has been completed, i.e., when all assets have been liquidated and liabilities settled or provided for. It is applicable to companies undergoing liquidation under the IBC. The section aims to provide a legal mechanism for the formal dissolution of the corporate debtor, ensuring that the process is orderly and transparent. It does not apply during insolvency or resolution stages but only at the conclusion .
Section 54 itself does not prescribe any punishment; rather, it provides a procedural mechanism for dissolution. However, any fraudulent or mala fide application or non-compliance with procedural requirements may attract penalties under other provisions of the IBC or related laws, such as Section 70(2), which deals with contraventions by insolvency professionals, including penalties of imprisonment and fines .
In summary, Section 54 of the IBC provides a structured, procedural pathway for the dissolution of a corporate debtor once all assets are liquidated, ensuring legal finality. It emphasizes the role of the liquidator and the NCLT, and though it does not prescribe penalties directly, compliance is essential for lawful dissolution. The section aligns with the overarching objective of the IBC to facilitate efficient insolvency resolution and orderly winding-up of corporate entities.
(1) A corporate insolvency resolution process carried out in accordance with this Chapter shall be called as fast track corporate insolvency resolution process.
(2) An application for fast track corporate insolvency resolution process may be made in respect of the following corporate debtors, namely:—
(b) a corporate debtor with such class of creditors or such amount of debt as may be notified by the Central Government; or
(c) such other category of corporate persons as may be notified by the Central Government.
(1) Subject to the provisions of sub-section (3), the fast track corporate insolvency resolution process shall be completed within a period of ninety days from the insolvency commencement date.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the fast track corporate insolvency resolution process beyond ninety days if instructed to do so by a resolution passed at a meeting of the committee of creditors and supported by a vote of seventy five per cent. of the voting share.
(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that fast track corporate insolvency resolution process cannot be completed within a period of ninety days, it may, by order, extend the duration of such process beyond the said period of ninety days by such further period, as it thinks fit, but not exce
An application for fast track corporate insolvency resolution process may be filed by a creditor or corporate debtor as the case may be, along with—
(b) such other information as may be specified by the Board to establish that the corporate debtor is eligible for fast track corporate insolvency resolution process.
The process for conducting a corporate insolvency resolution process under Chapter II and the provisions relating to offences and penalties under Chapter VII shall apply to this Chapter as the context may require.
(1) A corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under the provisions of this Chapter.
(2) The voluntary liquidation of a corporate person under sub-section (1) shall meet such conditions and procedural requirements as may be specified by the Board.
(3) Without prejudice to sub-section (2), voluntary liquidation proceedings of a corporate person registered as a company shall meet the following conditions, namely:—
(i) they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and
(1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located.
(2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or 1[liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor] shall be filed before such National Company Law Tribunal.
(3) An insolvency resolution process or 1[liquidation or bankruptcy proceeding of a corporate guarant
Section 60 of the Insolvency and Bankruptcy Code, 2016 (IBC) is a pivotal provision that delineates the jurisdiction and procedural framework for insolvency and liquidation proceedings involving corporate persons, including corporate debtors and personal guarantors. It centralizes the authority of the National Company Law Tribunal (NCLT) to adjudicate disputes, claims, and applications arising out of insolvency processes, ensuring a unified legal mechanism for corporate insolvency resolution.
Section 60 establishes that:- The NCLT is the principal adjudicating authority for insolvency and liquidation cases concerning corporate entities and their personal guarantors.- The section empowers the NCLT to entertain applications, disputes, and questions of law or fact related to insolvency proceedings.- Subsection (6) clarifies that the period during which a moratorium is in operation shall be excluded while computing limitation periods.- The section also provides for transfer of proceedings and claims across jurisdictions, and integration with other laws, notably overriding provisions of the Limitation Act, 1963.
While Section 60 itself primarily deals with jurisdiction and procedural matters, violations related to procedural lapses, false declarations, or contraventions under the IBC, including false claims or non-disclosure of disputes, can attract penalties:- Imprisonment: Up to 6 months for deliberate contravention or false information by insolvency professionals or parties [Sources: ""].- Fines: Penalties up to Rs. 5 lakh for contraventions under the IBC [Sources: ""].- Punishment for Non-disclosure: Failing to disclose disputes or defaults can lead to penal consequences, ensuring integrity of proceedings [Sources: ""].
Jurisdiction - The NCLT is vested with exclusive jurisdiction over insolvency and liquidation cases concerning corporate persons and guarantors, centralizing adjudication and avoiding conflicting proceedings [Sources: ""].
Overriding Effect - Section 60(6) clarifies that the limitation periods are to be computed excluding the moratorium period, and the provisions of the IBC override other laws such as the Limitation Act, 1963, ensuring time-bound resolution [Sources: ""].
Scope of Questions - The section empowers the NCLT to decide questions of law or fact arising out of insolvency proceedings, including disputes over claims, assets, or procedural issues [Sources: ""].
Transfer of Proceedings - The provision facilitates transfer of cases and claims between jurisdictions, ensuring procedural continuity and judicial efficiency [Sources: ""].
Interaction with Other Laws - The section explicitly states that the provisions of the IBC shall have overriding effect over laws like the Companies Act, 2013, and the Limitation Act, 1963, to prevent procedural delays and ensure swift resolution [Sources: ""].
Application to Guarantors - Proceedings against personal guarantors are also covered under Section 60, provided the insolvency relates to the corporate debtor, with the tribunal having jurisdiction to adjudicate such matters [Sources: ""].
Question of Natural Justice - The courts have emphasized that natural justice principles must be adhered to, especially regarding hearing rights and fair claims adjudication in proceedings under Section 60 [Sources: ""].
Penalties for Contravention - Deliberate violations, such as false disclosures or non-disclosure of disputes, can lead to penalties including imprisonment and fines, reinforcing accountability [Sources: ""].
Legal Certainty - Section 60 aims to provide legal certainty by establishing clear jurisdiction, procedural rules, and the scope of authority for the NCLT, thereby strengthening the insolvency framework [Sources: ""].
Overriding Effect - The explicit overriding clause ensures that the IBC's provisions take precedence over conflicting laws, notably the Limitation Act, to facilitate timely resolution [Sources: ""].
Dispute Resolution - The section enables the NCLT to resolve both legal and factual disputes, including claims, assets, and procedural objections, thus serving as a comprehensive adjudicatory forum [Sources: ""].
Procedural Fairness - Courts have underscored the importance of procedural fairness, including the right to be heard, especially in cases involving claims and disputes under Section 60 [Sources: ""].
Penalty for False Claims - Subsection penalties deter parties from submitting false or frivolous claims or disclosures, thus maintaining the integrity of the insolvency process [Sources: ""].
Legal Hierarchy - Section 60 establishes the NCLT as the primary forum, with the authority to decide all relevant issues, and explicitly states the supremacy of the IBC over other laws [Sources: ""].
Transfer of Cases - The provision facilitates transfer of proceedings to appropriate jurisdictions, ensuring judicial efficiency and consistency in insolvency resolution [Sources: ""].
Time Exclusion - The exclusion of moratorium periods from limitation calculations under Section 60(6) ensures that procedural delays do not prejudice parties, aligning with principles of natural justice [Sources: ""].
Legal Certainty & Efficiency - Overall, Section 60 consolidates jurisdiction, streamlines procedures, and emphasizes timely resolution, aligning with the objectives of the Insolvency and Bankruptcy Code [Sources: ""].
Section 60 of the Insolvency and Bankruptcy Code, 2016, is a comprehensive provision that centralizes jurisdiction, enhances procedural clarity, and ensures the effective adjudication of insolvency disputes involving corporate persons and guarantors. Its emphasis on overriding other laws, exclusion of limitation periods during moratorium, and penalties for violations collectively aim to promote a swift, fair, and predictable insolvency resolution framework, aligning with the legislative intent of the Code to facilitate rehabilitation and orderly liquidation of distressed corporate entities.
Note: The references are based on the provided sources, which include judicial pronouncements, legal commentaries, and authoritative interpretations.
(1) Notwithstanding anything to the contrary contained under the Companies Act 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal.
(2) Every appeal under sub-section (1) shall be filed within thirty days before the National Company Law Appellate Tribunal:
Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days.
(3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:—
(1) Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order.
(2) The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within forty-five days, allow the appeal to be filed within a further period not exceeding fifteen days.
No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code.
Legal Comments
"Section 63" - Civil court not to have jurisdiction - Bar on civil courts from entertaining suits/ proceedings in matters within NCLT/NCLAT jurisdiction - [IBC 2016, Section 63]
"Purpose of Section 63" - to ensure exclusive jurisdiction of NCLT/NCLAT in insolvency matters and avoid parallel litigation - [IBC 2016, Section 63; ArcelorMittal v. Gupta, 2019]
"Section 63 vs. pending suits" - Moratorium provisions (Section 33(5) for liquidation) do not automatically suspend all civil suits unless specifically covered; Section 63 bars civil courts from suits within IBC scope - [SESH NATH SINGH VS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. - 2021 4 Supreme 496; Elecon Engineering Company Limited vs Energo Engineering Projects Limited - Delhi (2022); Sterling Sez And Infrastructure Limited VS State Of Gujarat - 2024 0 Supreme(Guj) 2123]
"Relation to Section 33(5) moratorium" - While Section 33(5) imposes moratorium during liquidation, it is separate from Section 63; civil suits may continue only if not covered, but assets/liabilities under IBC remain under NCLT/NCLAT control - [Elecon Engineering Company Limited vs Energo Engineering Projects Limited - Delhi (2022); Sterling Sez And Infrastructure Limited VS State Of Gujarat - 2024 0 Supreme(Guj) 2123]
"Hierarchy with other statutes" - IBC Section 238 prevails over conflicting laws; when a provision like 63 overlaps with other statutes or pending proceedings in High Courts, IBC overrides under Section 238 - [Pr. Commissioner Of Income Tax VS Monnet Ispat And Energy Ltd. - 2018 0 Supreme(SC) 1345; Sri. Krishnakanth Textiles Pvt. Ltd. VS Registrar National Company Law Tribunal Corporate Bavan - 2018 0 Supreme(Mad) 3014]
"Civil remedy barred by Section 63" - Suit by a director against IRP/other IBC entities generally barred if it concerns matters within NCLT/NCLAT; jurisdictional bar applies to actions within IBC scope - [Amit Ranjan Mukherjee VS State Bank Of India - 2020 0 Supreme(Cal) 68; Nag Leathers Pvt. Ltd, Rep. by its Managing Director, Chockalingam Pillai, Vellore District VS Saroj Leathers, Rep. By its Proprietor, C. Narayanan - 2019 0 Supreme(Mad) 1037]
"Exclusive jurisdiction principle" - Non-obstante clauses aim to vest exclusive jurisdiction in NCLT/NCLAT; civil courts cannot entertain applications/appeals relating to CIRP or liquidation unless specifically permitted - [Amira Pure Foods Private Limited VS Canara Bank - 2019 0 Supreme(Del) 1490; Hero Exports VS Tiffins Barytes - 2019 0 Supreme(Del) 1652]
"Pendency of arbitration/arbitral awards" - Section 63 does not categorically bar all arbitration-related issues; the IBC framework may supersede other routes, but certain proceedings (e.g., criminal) can proceed; Section 63 focuses on civil procedures within IBC domain - [Pioneer Urban Land and Infrastructure Limited VS Union of India - 2019 0 Supreme(SC) 843; Pnd Infrastructure Private Limited VS Fab Leathers Limited - 2020 0 Supreme(Cal) 609]
"Costs and remedies" - Where Section 63 applies, relief should be sought before NCLT/NCLAT; civil courts lack jurisdiction to grant relief on matters covered by IBC; ex lege transfer/recognition order may flow from NCLT/NCLAT decisions - [Rishi Ganga Power Corporation Ltd. VS Assistant Commissioner of Income Tax - 2023 0 Supreme(Del) 5343; Psl Limited VS . - 2018 0 Supreme(Bom) 2217]
"Retroactivity of amendments" - Amendments under IBC (e.g., 2019 amendments) interact with Section 63 and must be read harmoniously; no retroactive undermining of CoC decisions; Section 63 continues to bar civil court meddling in IBC matters - [Pioneer Urban Land and Infrastructure Limited VS Union of India - 2019 0 Supreme(SC) 843; M. K. Resly S/o M. S. Kochuthampi VS Union Bank of India, Erattupetta Branch - 2021 0 Supreme(Ker) 1024]
"Punishments under IBC relate to offences" - Section 63 does not itself prescribe penalties; penalties for IBC offences are set under other sections; Section 63 is a procedural ouster clause ensuring exclusivity of NCLT/NCLAT - [; AUSIL CORPORATION PRIVATE LIMITED VS ASSISTANT/DEPUTY COMMISSIONER OF INCOME TAX, RAJKOT - 2024 0 Supreme(Guj) 2109]
"Jurisdictional tests for civil courts" - Courts consistently hold that where NCLT/NCLAT jurisdiction is engaged, civil courts must refrain; exceptions exist only for non-IBC matters or where statutory carve-outs apply - [Hero Exports VS Tiffins Barytes - 2019 0 Supreme(Del) 1652; Amit Ranjan Mukherjee VS State Bank Of India - 2020 0 Supreme(Cal) 68]
"Interplay with other Acts and overlapping regimes" - When a matter falls under both IBC and another statute (e.g., SARFAESI, DRT, Tax), Section 238 and the hierarchy of statutes determine which forum adjudicates; IBC prevails for IBC-related claims - [Pr. Commissioner Of Income Tax VS Monnet Ispat And Energy Ltd. - 2018 0 Supreme(SC) 1345; Amira Pure Foods Private Limited VS Canara Bank - 2019 0 Supreme(Del) 1490]
"Transfer of pending proceedings" - Provisions allowing transfer of certain proceedings to NCLT under Rules; but Section 63 continues to bar civil jurisdiction over IBC matters unless saved by law - [Psl Limited VS . - 2018 0 Supreme(Bom) 2217; Hindustan Construction Company Limited VS Union of India - 2019 0 Supreme(SC) 1302]
"Practical impact on creditors and debtors" - Section 63 protects the integrity of CIRP by centralizing adjudication; prevents piecemeal litigation that could derail resolution timelines - [Swiss Ribbons Pvt. Ltd. VS Union of India - 2019 2 Supreme 524; 01100143611]
"Jurisdictional guidance from courts" - Supreme Court and High Courts have reinforced that Section 63 excludes civil court jurisdiction over IBC matters; NCLT/NCLAT are the proper fora for determinations under the Code - [Hero Exports VS Tiffins Barytes - 2019 0 Supreme(Del) 1652; Akshay Jhunjhunwala VS Union of India through the Ministry of Corporate Affairs - 2018 0 Supreme(Cal) 85]
"Limitations on enforcement actions" - While 63 bars civil suits, execution of arbitration awards or criminal proceedings may operate outside IBC bar, depending on the statutory framework; 14(1) moratorium targets civil suits; criminal proceedings can proceed without violating IBC - [Pnd Infrastructure Private Limited VS Fab Leathers Limited - 2020 0 Supreme(Cal) 609; Nag Leathers Pvt. Ltd. , Rep. by its Managing Director, Chockalingam Pillai, Vellore District VS Dynamic Marketing, Partnership Rep. by its Partners J. L. Sobhana - 2019 0 Supreme(Mad) 1035]
"Resignation of jurisdiction post-resolution plan" - After approval of a resolution plan, Section 31(1) binding effect implies that disputes should be resolved within IBC framework; civil suits concerning such claims are extinguished or subsumed - [Committee of Creditors of Essar Steel India Limited Through Authorised Signatory VS Satish Kumar Gupta - 2019 0 Supreme(SC) 1271; Sumitra Devi Shah VS Tata Steel BSL Ltd. - 2021 0 Supreme(Cal) 189]
"Section 63 as pari materia to earlier statutes" - Courts have treated Section 63 as aligning with similar ouster concepts in older insolvency regimes; enables a uniform approach across corporate insolvencies - [Tamilnadu Mercantile Bank Ltd. , rep. by its Authorised Officer, Elampillai Branch VS Sub-Registrar, Mallasamudram - 2021 0 Supreme(Mad) 3227; Nag Leathers Pvt. Ltd, Rep. by its Managing Director, Chockalingam Pillai, Vellore District VS Saroj Leathers, Rep. By its Proprietor, C. Narayanan - 2019 0 Supreme(Mad) 1037]
"Key protective takeaway" - Section 63 is a critical ouster clause ensuring that civil courts do not encroach on the exclusive domain of NCLT/NCLAT in insolvency and liquidation processes; any deviation requires explicit statutory support - [Hero Exports VS Tiffins Barytes - 2019 0 Supreme(Del) 1652; Pr. Commissioner Of Income Tax VS Monnet Ispat And Energy Ltd. - 2018 0 Supreme(SC) 1345]
"Note on enforcement outside IBC" - Where a matter is not squarely within IBC or where an alternative regime applies (e.g., criminal or regulatory actions), civil courts may retain limited jurisdiction; otherwise, Section 63 bars jurisdiction - [Nag Leathers Pvt. Ltd. , Rep. by its Managing Director, Chockalingam Pillai, Vellore District VS Dynamic Marketing, Partnership Rep. by its Partners J. L. Sobhana - 2019 0 Supreme(Mad) 1035; Sterling Sez And Infrastructure Limited VS State Of Gujarat - 2024 0 Supreme(Guj) 2123]
(1) Where an application is not disposed of or an order is not passed within the period specified in this Code, the National Company Law Tribunal or the National Company Law Appellate Tribunal, as the case may be, shall record the reasons for not doing so within the period so specified; and the President of the National Company Law Tribunal or the Chairperson of the National Company Law Appellate Tribunal, as the case may be, may, after taking into account the reasons so recorded, extend the period specified in the Act but not exceeding ten days.
(2) No injunction shall be granted by any court, tribunal or authority in respect of any action taken, or to be taken, in pursuance of any power conferred on the National Company Law Tribunal or the National Company Law Appellate Tribunal under this Code.
(1) If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
(2) If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees.
1[(3) If any person initiates the pre-packaged insolvency resolution process—
(b) with the intent to defraud any person,
the
(1) If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit.
(2) On an application made by a resolution professional during the corporate insolvency resolution process, the Adjudicating Authority may by an order direct that a director or partner of the corporate debtor, as the case may be, shall be liable to make such contribution to the assets of the corporate debtor as it may deem fit, if—
(1) Where the Adjudicating Authority has passed an order under sub-section (1) or sub-section (2) of section 66, as the case may be, it may give such further directions as it may deem appropriate for giving effect to the order, and in particular, the Adjudicating Authority may—
(b) from time to time, make such further directions as may be necessary for enforcing any charge imposed under this section.
Explanation.—For the purposes of this section, “assignee” includes a person to whom or in whose
Where any officer of the corporate debtor has,—
(a) wilfully concealed any property or part of such property of the corporate debtor or concealed any debt due to, or from, the corporate debtor, of the value of ten thousand rupees or more; or
(b) fraudulently removed any part of the property of the corporate debtor of the value of ten thousand rupees or more; or
(c) wilfully concealed, destroyed, mutilated or falsified any book or paper affecting or relating to the property of the corporate debtor or its affairs, or
(d) wilfully made any false entry in any book or paper affecting or relating to the property of the corporate debtor or its affairs; or
(e) fraudulently parted with, altered or made any omission in any document affecting or relating to th
1[If] an officer of the corporate debtor or the corporate debtor—
(b) has concealed or removed any part of the property of the corporate debtor within two months before the date of any unsatisfied judgment, decree or order for payment of money obtained against the corporate debtor,
such officer of the corporate debtor or the corporate debtor, as the case may be, shall be punishable with imprisonment for a term which shall not be less than one year, but which may extend to five years, or with fine, which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both:
Provided that a person shall not be punishable under this section if the acts mentioned in
(1) On or after the insolvency commencement date, where an officer of the corporate debtor—
(b) does not deliver to the resolution professional all or part of the property of the corporate debtor in his control or custody and which he is required to deliver; or
(c) does not deliver to the resolution professional all books and papers in his control or custody belonging to the corporate debtor and which he is required to deliver; or
(d) fails to inform there solution professional the information in his knowledge that a debt has been falsely proved by any person during the corporate insolvency resolution process; or
(e) prevents the productio
On and after the insolvency commencement date, where any person destroys, mutilates, alters or falsifies any books, papers or securities, or makes or is in the knowledge of making of any false or fraudulent entry in any register, books of account or document belonging to the corporate debtor with intent to defraud or deceive any person, he shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
Where an officer of the corporate debtor makes any material and wilful omission in any statement relating to the affairs of the corporate debtor, he shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
Where any officer of the corporate debtor—
(b) prior to the insolvency commencement date, has made any false representation, or committed any fraud, for that purpose,
he shall be punishable with imprisonment for a term which shall not be less than three years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
(1) Where the corporate debtor or any of its officer violates the provisions of section 14, any such officer who knowingly or wilfully committed or authorised or permitted such contravention shall be punishable with imprisonment for a term which shall not be less than three years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to three lakh rupees, or with both.
(2) Where any creditor violates the provisions of section 14, any person who knowingly and wilfully authorised or permitted such contravention by a creditor shall be punishable with imprisonment for a term which shall not be less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
(3) Where the corporate debtor, any of its officers or creditors or any person on whom the approved resolution plan is binding under
Where any person furnishes information in the application made under section 7, which is false in material particulars, knowing it to be false or omits any material fact, knowing it to be material, such person shall be punishable with fine which shall not be less than one lakh rupees, but may extend to one crore rupees.
Where—
(b) any person who knowingly and wilfully authorised or permitted such concealment under clause (a),
such operational creditor or person, as the case may be, shall be punishable with imprisonment for a term which shall not be less than one year but may extend to five years or with fine which shall not be less than one lakh rupees but may extend to one crore rupees, or with both.
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1. Subs. by Act 26 of 2018, s. 31, for “repayment” (w.e.f. 6-6-2018).
Where—
(b) any person who knowingly and wilfully authorised or permitted the furnishing of such information under sub-clause (a),
such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both.
1* * * * *
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1. The Explanation omitted by Act 26 of 2021, s. 12 (w.e.f. 4-4-2021).
This Part shall apply to matters relating to fresh start, insolvency and bankruptcy of individuals and partnership firms where the amount of the default is not less than one thousand rupees:
Provided that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one lakh rupees.
In this Part, unless the context otherwise requires,—
(2) “associate” of the debtor means—
(a) a person who belongs to the immediate family of the debtor;
(b) a person who is a relative of the debtor or a relative of the spouse of the debtor;
(c) a person who is in partnership with the debtor;
(d) a person who is a spouse or a relative of any person with whom the debtor is in partnership;
(e) a person who is employer of the debtor or employee of the debtor;
(f) a person who is a trustee of a trust in which the beneficiaries of the trust include a debtor, or the terms of the trust confer a power o
(1) A debtor, who is unable to pay his debt and fulfils the conditions specified in sub-section (2), shall be entitled to make an application for a fresh start for discharge of his qualifying debt under this Chapter.
(2) A debtor may apply, either personally or through a resolution professional, for a fresh start under this Chapter in respect of his qualifying debts to the Adjudicating Authority if—
(b) the aggregate value of the assets of the debtor does not exceed twenty thousand rupees;
(c) the aggregate value of the qualifying debts does not exceed thirty-five thousand rupees;
(d) he is not an undischarged bankrupt;
(e) he does not own a dwelling unit, irrespective of whether it is encumbered or not;
(f) a fresh start process, i
(1) When an application is filed under section 80 by a debtor, an interim-moratorium shall commence on the date of filing of said application in relation to all the debts and shall cease to have effect on the date of admission or rejection of such application, as the case may be.
(2) During the interim-moratorium period,—
(ii) no creditor shall initiate any legal action or proceedings in respect of such debt.
(3) The application under section 80 shall be in such form and manner and accompanied by such fee, as may be prescribed.
(4) The application under sub-section (3) shall contain the following information supported by an affidavit, namely:—
(1) Where an application under section 80 is filed by the debtor through a resolution professional, the Adjudicating Authority shall direct the Board within seven days of the date of receipt of the application and shall seek confirmation from the Board that there are no disciplinary proceedings against the resolution professional who has submitted such application.
(2) The Board shall communicate to the Adjudicating Authority in writing either—
(b) rejection of the appointment of the resolution professional who filed an application under sub-section (1) and nominate a resolution professional suitable for the fresh start process.
(3) Where an application under section 80 is filed by the debtor himself and not through the resolution professional, the Adjudic
(1) The resolution professional shall examine the application made under section 80 within ten days of his appointment, and submit a report to the Adjudicating Authority, either recommending acceptance or rejection of the application.
(2) The report referred to in sub-section (1) shall contain the details of the amounts mentioned in the application which in the opinion of the resolution professional are—
(b) liabilities eligible for discharge under sub-section (3) of section 92.
(3) The resolution professional may call for such further information or explanation in connection with the application as may be required from the debtor or any other person who, in the opinion of the resolution professional, may provide such information.
(4) The debtor or any other person, as the case may be, shall furnish such information or expla
(1) The Adjudicating Authority may within fourteen days from the date of submission of the report by the resolution professional, pass an order either admitting or rejecting the application made under sub-section (1) of section 81.
(2) The order passed under sub-section (1) accepting the application shall state the amount which has been accepted as qualifying debts by the resolution professional and other amounts eligible for discharge under section 92 for the purposes of the fresh start order.
(3) A copy of the order passed by the Adjudicating Authority under sub-section (1) along with a copy of the application shall be provided to the creditors mentioned in the application within seven days of the passing of the order.
(1) On the date of admission of the application, the moratorium period shall commence in respect of all the debts.
(2) During the moratorium period—
(b) subject to the provisions of section 86, the creditors shall not initiate any legal action or proceedings in respect of any debt.
(3) During the moratorium period, the debtor shall—
(b) not dispose of or alienate any of his assets;
(c) inform his business partners that he is undergoing a fresh start process;
(d) be required to inform prior to entering into any financial
(1) Any creditor mentioned in the order of the Adjudicating Authority under section 84 to whom a qualifying debt is owed may, within a period of ten days from the date of receipt of the order under section 84, object only on the following grounds, namely:—
(b) incorrectness of the details of the qualifying debt specified in the order under section 84.
(2) A creditor may file an objection under sub-section (1) by way of an application to the resolution professional.
(3) The application under sub-section (2) shall be supported by such information and documents as may be prescribed.
(4) The resolution professional shall consider every objection made under this section.
(5) The resolution professional shall examine the objections under sub-section (2) and either accept or reject the o
(1) The debtor or the creditor who is aggrieved by the action taken by the resolution professional under section 86 may, within ten days of such decision, make an application to the Adjudicating Authority challenging such action on any of the following grounds, namely:—
(b) that the resolution professional colluded with the other party in arriving at the decision; or
(c) that the resolution professional has not complied with the requirements of section 86.
(2) The Adjudicating Authority shall decide the application referred to in sub-section (1) within fourteen days of such application, and make an order as it deems fit.
(3) Where the application under sub-section (1) has been allowed by the Adjudicating Authority, it shall for
The debtor shall—
(b) inform the resolution professional as soon as reasonably possible of—
(i) any material error or omission in relation to the information or document supplied to the resolution professional; or
(ii) any change in financial circumstances after the date of application, where such change has an impact on the fresh start process.
(1) Where the debtor or the creditor is of the opinion that the resolution professional appointed under section 82 is required to be replaced, he may apply to the Adjudicating Authority for the replacement of such resolution professional.
(2) The Adjudicating Authority shall within seven days of the receipt of the application under sub-section (1) make a reference to the Board for replacement of the resolution professional.
(3) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (2), recommend the name of an insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are pending.
(4) The Adjudicating Authority shall appoint another resolution professional for the purposes of the fresh start process on the basis of the recommendation by the Board.
(5) The Adjudicating Authority may give
(1) The resolution professional may apply to the Adjudicating Authority for any of the following directions, namely:—
(b) compliance of the duties of the debtor referred to in section 88, in case of non-compliance by the debtor.
(2) The resolution professional may apply to the Adjudicating Authority for directions in relation to any other matter under this Chapter for which no specific provisions have been made.
(1) The resolution professional may submit an application to the Adjudicating Authority seeking revocation of its order made under section 84 on the following grounds, namely :—
(b) non-compliance by the debtor of the restrictions imposed under sub-section (3) of section 85; or
(c) if the debtor has acted in a mala fide manner and has wilfully failed to comply with the provisions of this Chapter.
(2) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (1), may by order admit or reject the application.
(3) On passing of the order admitting the application referred to in sub-section (1), the moratorium and the fresh start process shall cease to have effect.
(1) The resolution professional shall prepare a final list of qualifying debts and submit such list to the Adjudicating Authority at least seven days before the moratorium period comes to an end.
(2) The Adjudicating Authority shall pass a discharge order at the end of the moratorium period for discharge of the debtor from the qualifying debts mentioned in the list under sub-section (1).
(3) Without prejudice to the provisions of sub-section (2), the Adjudicating Authority shall discharge the debtor from the following liabilities, namely:—
(b) interest including penal interest in respect of the qualifying debts from the date of application till the date of the discharge order; and
(c) any other sums owed under any contract in respect of the
Section 92 of the Insolvency and Bankruptcy Code (IBC), 2016, deals with the discharge process at the conclusion of the insolvency resolution, emphasizing the final settlement of qualifying debts and the legal effects thereof. It plays a crucial role in providing a "fresh start" to debtors after successful resolution, ensuring the closure of proceedings and release from liabilities.
This concise commentary underscores the importance of Section 92 in providing a legal mechanism for the final settlement of debts, ensuring closure and facilitating a fresh start for the debtor, while emphasizing procedural compliance and accountability.
The resolution professional shall perform his functions and duties in compliance with the code of conduct provided under section 208.
(1) A debtor who commits a default may apply, either personally or through a resolution professional, to the Adjudicating Authority for initiating the insolvency resolution process, by submitting an application.
(2) Where the debtor is a partner of a firm, such debtor shall not apply under this Chapter to the Adjudicating Authority in respect of the firm unless all or a majority of the partners of the firm file the application jointly.
(3) An application under sub-section (1) shall be submitted only in respect of debts which are not excluded debts.
(4) A debtor shall not be entitled to make an application under sub-section (1) if he is—
(b) undergoing a fresh start process;
(c) undergoing an insolvency resolution process; or
(d) undergoing a bankruptcy process.
(1) A creditor may apply either by himself, or jointly with other creditors, or through a resolution professional to the Adjudicating Authority for initiating an insolvency resolution process under this section by submitting an application.
(2) A creditor may apply under sub-section (1) in relation to any partnership debt owed to him for initiating an insolvency resolution process against—
(b) the firm.
(3) Where an application has been made against one partner in a firm, any other application against another partner in the same firm shall be presented in or transferred to the Adjudicating Authority in which the first mentioned application is pending for adjudication and such Adjudicating Authority may give such directions for consolidating the proceedings under the applications as it thinks just.
(4) An a
(1) When an application is filed under section 94 or section 95—
(b) during the interim-moratorium period—
(i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and
(ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt.
(2) Where the application has been made in relation to a firm, the interim-moratorium under sub-section (1) shall operate against all the partners of the firm as on the date of the application.
(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with a
(1) If the application under section 94 or 95 is filed through a resolution professional, the Adjudicating Authority shall direct the Board within seven days of the date of the application to confirm that there are no disciplinary proceedings pending against resolution professional.
(2) The Board shall within seven days of receipt of directions under sub-section (1) communicate to the Adjudicating Authority in writing either—
(b) rejecting the appointment of the resolution professional and nominating another resolution professional for the insolvency resolution process.
(3) Where an application under section 94 or 95 is filed by the debtor or the creditor himself, as the case may be, and not through the resolution professional, the Adjudicating Authority shall direct the Board, within seven days of the fili
(1) Where the debtor or the creditor is of the opinion that the resolution professional appointed under section 97 is required to be replaced, he may apply to the Adjudicating Authority for the replacement of such resolution professional.
(2) The Adjudicating Authority shall within seven days of the receipt of the application under sub-section (1) make a reference to the Board for replacement of the resolution professional.
(3) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (2), recommend the name of the resolution professional to the Adjudicating Authority against whom no disciplinary proceedings are pending.
(4) Without prejudice to the provisions contained in sub-section (1), the creditors may apply to the Adjudicating Authority for replacement of the resolution professional where it has been decided in the meeting of the creditors, t
(1) The resolution professional shall examine the application referred to in section 94 or section 95, as the case may be, within ten days of his appointment, and submit a report to the Adjudicating Authority recommending for approval or rejection of the application.
(2) Where the application has been filed under section 95, the resolution professional may require the debtor to prove repayment of the debt claimed as unpaid by the creditor by furnishing—
(b) evidence of encashment of a cheque issued by the debtor; or
(c) a signed acknowledgment by the creditor accepting receipt of dues.
(3) Where the debt for which an application has been filed by a creditor is registered with the information utility, the debtor shall not be entitled to dispute the validity o
(1) The Adjudicating Authority shall, within fourteen days from the date of submission of the report under section 99 pass an order either admitting or rejecting the application referred to in section 94 or 95, as the case may be.
(2) Where the Adjudicating Authority admits an application under sub-section (1), it may, on the request of the resolution professional, issue instructions for the purpose of conducting negotiations between the debtor and creditors and for arriving at a repayment plan.
(3) The Adjudicating Authority shall provide a copy of the order passed under sub-section (1) along with the report of the resolution professional and the application referred to in section 94 or 95, as the case may be, to the creditors within seven days from the date of the said order.
(4) If the application referred to in section 94 or 95, as the case may be, is rejected by the Adjudicating Authority on the b
(1) When the application is admitted under section 100, a moratorium shall commence in relation to all the debts and shall cease to have effect at the end of the period of one hundred and eighty days beginning with the date of admission of the application or on the date the Adjudicating Authority passes an order on the repayment plan under section 114, whichever is earlier.
(2) During the moratorium period—
(b) the creditors shall not initiate any legal action or legal proceedings in respect of any debt; and
(c) the debtor shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein;
(3) Where an order admitting the application under section 96 has been made in relation to a firm, the mora
(1) The Adjudicating Authority shall issue a public notice within seven days of passing the order under section 100 inviting claims from all creditors within twenty-one days of such issue.
(2) The notice under sub-section (1) shall include—
(b) particulars of the resolution professional with whom the claims are to be registered; and
(c) the last date for submission of claims.
(3) The notice shall be—
(b) affixed in the premises of the Adjudicating Authority; and
(c) placed on the website of the Adjudicating Authority.
(1) The creditors shall register claims with the resolution professional by sending details of the claims by way of electronic communications or through courier, speed post or registered letter.
(2) In addition to the claims referred to in sub-section (1), the creditor shall provide to the resolution professional, personal information and such particulars as may be prescribed.
(1) The resolution professional shall prepare a list of creditors on the basis of—
(b) claims received by the resolution professional under section 102.
(2) The resolution professional shall prepare the list mentioned in sub-section (1) within thirty days from the date of the notice.
(1) The debtor shall prepare, in consultation with the resolution professional, a repayment plan containing a proposal to the creditors for restructuring of his debts or affairs.
(2) The repayment plan may authorise or require the resolution professional to—
(b) realise the assets of the debtor; or
(c) administer or dispose of any funds of the debtor.
(3) The repayment plan shall include the following, namely:—
(b) provision for payment of fee to the resolution professional;
(c) such other matters as may be specified.
(1) The resolution professional shall submit the repayment plan under section 105 along with his report on such plan to the Adjudicating Authority within a period of twenty-one days from the last date of submission of claims under section 102.
(2) The report referred in sub-section (1) shall include that—
(b) the repayment plan has a reasonable prospect of being approved and implemented; and
(c) there is a necessity of summoning a meeting of the creditors, if required, to consider the repayment plan:
Provided that where the resolution professional recommends that a meeting of the creditors is not required to be summoned, reasons for the same shall be provided.
(3) The report referred to in sub-section (2) shall also specify the da
(1) The resolution professional shall issue a notice calling the meeting of the creditors at least fourteen days before the date fixed for such meeting.
(2) The resolution professional shall send the notice of the meeting to the list of creditors prepared under section 104.
(3) The notice sent under sub-section (1) shall state the address of the Adjudicating Authority to which the repayment plan and report of the resolution professional on the repayment plan has been submitted and shall be accompanied by—
(b) a copy of the statement of affairs of the debtor;
(c) a copy of the said report of the resolution professional; and
(d) forms for proxy voting.
(4) The proxy voting, including electronic proxy voting shall take place in such manner and form as may be specified.
(1) The meeting of the creditors shall be conducted in accordance with the provisions of this section and sections 109, 110 and 111.
(2) In the meeting of the creditors, the creditors may decide to approve, modify or reject the repayment plan.
(3) The resolution professional shall ensure that if modifications are suggested by the creditors, consent of the debtor shall be obtained for each modification.
(4) The resolution professional may for a sufficient cause adjourn the meeting of the creditors for a period of not more than seven days at a time.
(1) A creditor shall be entitled to vote at every meeting of the creditors in respect of the repayment plan in accordance with the voting share assigned to him.
(2) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
(3) A creditor shall not be entitled to vote in respect of a debt for an unliquidated amount.
(4) A creditor shall not be entitled to vote in a meeting of the creditors if he—
(b) is an associate of the debtor.
(1) Secured creditors shall be entitled to participate and vote in the meetings of the creditors.
(2) A secured creditor participating in the meetings of the creditors and voting in relation to the repayment plan shall forfeit his right to enforce the security during the period of the repayment plan in accordance with the terms of the repayment plan.
(3) Where a secured creditor does not forfeit his right to enforce security, he shall submit an affidavit to the resolution professional at the meeting of the creditors stating—
(b) the estimated value of the unsecured part of the debt.
(4) In case a secured creditor participates in the voting on the repayment plan by submitting an affidavit under sub-section (3), the secured and unsecur
The repayment plan or any modification to the repayment plan shall be approved by a majority of more than three-fourth in value of the creditors present in person or by proxy and voting on the resolution in a meeting of the creditors.
(1) The resolution professional shall prepare a report of the meeting of the creditors on repayment plan.
(2) The report under sub-section (1) shall contain—
(b) the resolutions which were proposed at the meeting and the decision on such resolutions;
(c) list of the creditors who were present or represented at the meeting, and the voting records of each creditor for all meetings of the creditors; and
(d) such other information as the resolution professional thinks appropriate to make known to the Adjudicating Authority.
The resolution professional shall provide a copy of the report of the meeting of creditors prepared under section 99 to—
(b) the creditors, including those who were not present at the meeting; and
(c) the Adjudicating Authority.
(1) The Adjudicating Authority shall by an order approve or reject the repayment plan on the basis of the report of the meeting of the creditors submitted by the resolution professional under section 112:
Provided that where a meeting of creditors is not summoned, the Adjudicating Authority shall pass an order on the basis of the report prepared by the resolution professional under section 106.
(2) The order of the Adjudicating Authority approving the repayment plan may also provide for directions for implementing the repayment plan.
(3) Where the Adjudicating Authority is of the opinion that the repayment plan requires modification, it may direct the resolution professional to re-convene a meeting of the creditors for reconsidering the repayment plan.
(1) Where the Adjudicating Authority has approved the repayment plan under section 114, such repayment plan shall—
(b) be binding on creditors mentioned in the repayment plan and the debtor.
(2) Where the Adjudicating Authority rejects the repayment plan under section 114, the debtor and the creditors shall be entitled to file an application for bankruptcy under Chapter IV.
(3) A copy of the order passed by the Adjudicating Authority under sub-section (2) shall be provided to the Board, for the purpose of recording an entry in the register referred to in section 196.
(1) The resolution professional appointed under section 97 or under section 98 shall supervise the implementation of the repayment plan.
(2) The resolution professional may apply to the Adjudicating Authority for directions, if necessary, in relation to any particular matter arising under the repayment plan.
(3) The Adjudicating Authority may issue directions to the resolution professional on the basis of an application under sub-section (2).
(1) The resolution professional shall within fourteen days of the completion of the repayment plan, forward to the persons who are bound by the repayment plan under section 115 and the Adjudicating Authority, the following documents, namely:—
(b) a copy of a report by the resolution professional summarising all receipts and payments made in pursuance of the repayment plan and extent of the implementation of such plan as compared with the repayment plan approved by the meeting of the creditors.
(2) The resolution professional may apply to the Adjudicating Authority to extend the time mentioned in sub-section (1) for such further period not exceeding seven days.
(1) A repayment plan shall be deemed to have come to an end prematurely if it has not been fully implemented in respect of all persons bound by it within the period as mentioned in the repayment plan.
(2) Where a repayment plan comes to an end prematurely under this section, the resolution professional shall submit a report to the Adjudicating Authority which shall state—
(b) the reasons for premature end of the repayment plan; and
(c) the details of the creditors whose claims have not been fully satisfied.
(3) The Adjudicating Authority shall pass an order on the basis of the report submitted under sub-section (2) by the resolution professional that the repayment plan has not been completely implemented.
(4) The debtor or the creditor, whose claims under rep
(1) On the basis of the repayment plan, the resolution professional shall apply to the Adjudicating Authority for a discharge order in relation to the debts mentioned in the repayment plan and the Adjudicating Authority may pass such discharge order.
(2) The repayment plan may provide for—
(b) discharge on complete implementation of the repayment plan.
(3) The discharge order shall be forwarded to the Board, for the purpose of recording entries in the register referred to in section 196.
(4) The discharge order under sub-section (3) shall not discharge any other person from any liability in respect of his debt.
The resolution professional shall perform his functions and duties in compliance with the code of conduct provided under section 208.
(1) An application for bankruptcy of a debtor may be made, by a creditor individually or jointly with other creditors or by a debtor, to the Adjudicating Authority in the following circumstances, namely;—
(b) where an order has been passed by an Adjudicating Authority under sub-section 2 of section 115; or
(c) where an order has been passed by an Adjudicating Authority under sub-section 3 of section 118.
(2) An application for bankruptcy shall be filed within a period of three months of the date of the order passed by the Adjudicating Authority under the sections referred to in sub-section (1).
(3) Where the debtor is a firm, the application under sub-section (1) may be filed by any of its partners.
(1) The application for bankruptcy by the debtor shall be accompanied by—
(b) the statement of affairs of the debtor in such form and manner as may be prescribed, on the date of the application for bankruptcy; and
(c) a copy of the order passed by the Adjudicating Authority under Chapter III of Part III permitting the debtor to apply for bankruptcy.
(2) The debtor may propose an insolvency professional as the bankruptcy trustee in the application for bankruptcy.
(3) The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed.
(4) An application for bankruptcy by the debtor shall not be withdrawn without the leave of the Adjudicating Authority.
(1) The application for bankruptcy by the creditor shall be accompanied by—
(b) a copy of the order passed by the Adjudicating Authority under Chapter III permitting the creditor to apply for bankruptcy;
(c) details of the debts owed by the debtor to the creditor as on the date of the application for bankruptcy; and
(d) such other information as may be prescribed.
(2) An application under sub-section (1) made in respect of a debt which is secured, shall be accompanied with—
(b) a statement by the creditor stating—
(1) When an application is filed under section 122 or section 123,—
(b) during the interim-moratorium period—
(i) any pending legal action or legal proceeding against any property of the debtor in respect of any of his debts shall be deemed to have been stayed;
(ii) the creditors of the debtor shall not be entitled to initiate any legal action or legal proceedings against any property of the debtor in respect of any of his debts.
(2) Where the application has been made in relation to a firm, the interim-moratorium under sub-section (1) shall operate against all the partners of the firm as on the date of t
(1) If an insolvency professional is proposed as the bankruptcy trustee in the application for bankruptcy under section 122 or section 123, the Adjudicating Authority shall direct the Board within seven days of receiving the application for bankruptcy to confirm that there are no disciplinary proceedings pending against such professional.
(2) The Board shall within ten days of the receipt of the direction under sub-section (1) in writing either—
(b) reject the appointment of the proposed insolvency professional as the bankruptcy trustee and nominate another bankruptcy trustee for the bankruptcy process.
(3) Where a bankruptcy trustee is not proposed by the debtor or creditor under section 122 or 123, the Adjudicating Authority shall direct the Board
(1) The Adjudicating Authority shall pass a bankruptcy order within fourteen days of receiving the confirmation or nomination of the bankruptcy trustee under section 125.
(2) The Adjudicating Authority shall provide the following documents to bankrupt, creditors and the bankruptcy trustee within seven days of the passing of the bankruptcy order, namely:—
(b) a copy of the bankruptcy order.
The bankruptcy order passed by the Adjudicating Authority under section 126 shall continue to have effect till the debtor is discharged under section 138.
(1) On the passing of the bankruptcy order under section 126,—
(b) the estate of the bankrupt shall be divided among his creditors;
(c) subject to provisions of sub-section (2), a creditor of the bankrupt indebted in respect of any debt claimed as a bankruptcy debt shall not—
(i) initiate any action against the property of the bankrupt in respect of such debt; or
(ii) commence any suit or other legal proceedings except with the leave of the Adjudicating Authority and on such terms as the Adjudicating Authority may impose.
(2) Subject to the provisions of section 123, the bankruptcy order shall not affect the right of any secured creditor to realise or otherwise deal with his security interest in the same manner as he would have been e
Section 128 of the Insolvency and Bankruptcy Code, 2016 (IBC) deals with the effect of a bankruptcy order on the estate of the bankrupt individual or entity. It establishes the legal consequences following the passing of such an order, particularly concerning the vesting of assets and the rights of secured creditors.
Section 128 specifies that upon the issuance of a bankruptcy order under Section 126, the estate of the bankrupt person shall vest in the bankruptcy trustee. It also clarifies that this order does not affect the rights of secured creditors to realize or deal with their security interests in the same manner as before the order.
Section 128 does not prescribe any punishment; rather, it delineates the legal effects and procedural consequences following a bankruptcy order.
This concise commentary synthesizes the legal provisions, judicial interpretations, and practical implications of Section 128 of the Insolvency and Bankruptcy Code, 2016, emphasizing its role in safeguarding the rights of secured creditors while facilitating the insolvency process.
(1) Where a bankruptcy order is passed on the application for bankruptcy by a creditor under section 123, the bankrupt shall submit his statement of financial position to the bankruptcy trustee within seven days from the bankruptcy commencement date.
(2) The statement of financial position shall be submitted in such form and manner as may be prescribed.
(3) Where the bankrupt is a firm, its partners on the date of the order shall submit a joint statement of financial position of the firm, and each partner of the firm shall submit a statement of his financial position.
(4) The bankruptcy trustee may require the bankrupt or any other person to submit in writing further information explaining or modifying any matter contained in the statement of financial position.
(1) The Adjudicating Authority shall—
(i) the statement of affairs submitted by the bankrupt under section 129; or
(ii) the application for bankruptcy submitted by the bankrupt under section 122.
(b) issue a public notice inviting claims from creditors.
(2) The public notice under clause (b) of sub-section (1) shall include the last date up to which the claims shall be submitted and such other matters and details as may be prescribed and shall be—
(b) affixed on the premises of the Adjudicating Authority; and
(c) placed on the website of the Adjudic
(1) The creditors shall register claims with the bankruptcy trustee within seven days of the publication of the public notice, by sending details of the claims to the bankruptcy trustee in such manner as may be prescribed.
(2) The creditor, in addition to the details of his claims, shall provide such other information and in such manner as may be prescribed.
The bankruptcy trustee shall, within fourteen days from the bankruptcy commencement date, prepare a list of creditors of the bankrupt on the basis of—
(b) claims received by the bankruptcy trustee under sub-section (2) of section 130.
(1) The bankruptcy trustee shall, within twenty-one days from the bankruptcy commencement date, issue a notice for calling a meeting of the creditors, to every creditor of the bankrupt as mentioned in the list prepared under section 132.
(2) The notices issued under sub-section (1) shall—
(b) be accompanied with forms of proxy voting;
(c) specify the form and manner in which the proxy voting may take place.
(3) The proxy voting, including electronic proxy voting shall take place in such manner and form as may be specified.
(1) The bankruptcy trustee shall be the convener of the meeting of the creditors summoned under section 133.
(2) The bankruptcy trustee shall decide the quorum for the meeting of the creditors, and conduct the meeting only if the quorum is present.
(3) The following business shall be conducted in the meeting of the creditors in which regard a resolution may be passed, namely:—
(b) any other business that the bankruptcy trustee thinks fit to be transacted.
(4) The bankruptcy trustee shall cause the minutes of the meeting of the creditors to be recorded, signed and retained as a part of the records of the bankruptcy process.
(5) The bankruptcy trustee shall not adjourn the meeting of the creditors for any purpose for more than seven days at a time.
(1) Every creditor mentioned in the list under section 132 or his proxy shall be entitled to vote in respect of the resolutions in the meeting of the creditors in accordance with the voting share assigned to him.
(2) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
(3) A creditor shall not be entitled to vote in respect of a debt for an unliquidated amount.
(4) The following creditors shall not be entitled to vote under this section, namely:—
(b) creditors who are associates of the bankrupt.
The bankruptcy trustee shall conduct the administration and distribution of the estate of the bankrupt in accordance with the provisions of Chapter V.
(1) The bankruptcy trustee shall convene a meeting of the committee of creditors on completion of the administration and distribution of the estate of the bankrupt in accordance with the provisions of Chapter V.
(2) The bankruptcy trustee shall provide the committee of creditors with a report of the administration of the estate of the bankrupt in the meeting of the said committee.
(3) The committee of creditors shall approve the report submitted by the bankruptcy trustee under sub-section (2) within seven days of the receipt of the report and determine whether the bankruptcy trustee should be released under section 148.
(4) The bankruptcy trustee shall retain sufficient sums from the estate of the bankrupt to meet the expenses of convening and conducting the meeting required under this section during the administration of the estate.
(1) The bankruptcy trustee shall apply to the Adjudicating Authority for a discharge order—
(b) within seven days of the approval of the committee of creditors of the completion of administration of the estates of the bankrupt under section 137, where such approval is obtained prior to the period mentioned in clause (a).
(2) The Adjudicating Authority shall pass a discharge order on an application by the bankruptcy trustee under sub-section (1).
(3) A copy of the discharge order shall be provided to the Board for the purpose of recording an entry in the register referred to in section 196.
The discharge order under sub-section (2) of section 138 shall release the bankrupt from all the bankruptcy debt:
Provided that discharge shall not—
(b) affect the operation of the provisions of Chapters IV and V of Part III; or
(c) release the bankrupt from any debt incurred by means of fraud or breach of trust to which he was a party; or
(d) discharge the bankrupt from any excluded debt.
(1) The bankrupt shall, from the bankruptcy commencement date, be subject to the disqualifications mentioned in this section.
(2) In addition to any disqualification under any other law for the time being in force, a bankrupt shall be disqualified from—
(b) being appointed or acting as a public servant;
(c) being elected to any public office where the appointment to such office is by election; and
(d) being elected or sitting or voting as a member of any local authority.
(3) Any disqualification to which a bankrupt may be subject under this section shall cease to have effect, if—
(b) he is disc
(1) A bankrupt, from the bankruptcy commencement date, shall—
(b) without the previous sanction of the bankruptcy trustee, be prohibited from creating any charge on his estate or taking any further debt;
(c) be required to inform his business partners that he is undergoing a bankruptcy process;
(d) prior to entering into any financial or commercial transaction of such value as may be prescribed, either individually or jointly, inform all the parties involved in such transaction that he is undergoing a bankruptcy process;
(e) without the previous sanction of the Adjudicating Authority, be incompetent to maintain any legal action or proceedings in relation to the bankruptcy debts; and
(1) The Adjudicating Authority may, on an application or suo motu, modify or recall a bankruptcy order, whether or not the bankrupt is discharged, if it appears to the Adjudicating Authority that—
(b) both the bankruptcy debts and the expenses of the bankruptcy have, after the making of the bankruptcy order, either been paid for or secured to the satisfaction of the Adjudicating Authority.
(2) Where the Adjudicating Authority modifies or recalls the bankruptcy order under this section, any sale or other disposition of property, payment made or other things duly done by the bankruptcy trustee shall be valid except that the property of the bankrupt shall vest in such person as the Adjudicating Authority may appoint or, in default of any such appointment, revert to the bankrupt on such terms as the Adjudicating Authority may direct.
The bankruptcy trustee shall perform his functions and duties in compliance with the code of conduct provided under section 208.
(1) A bankruptcy trustee appointed for conducting the bankruptcy process shall charge such fees as may be specified in proportion to the value of the estate of the bankrupt.
(2) The fees for the conduct of the bankruptcy process shall be paid to the bankruptcy trustee from the distribution of the estate of the bankrupt in the manner provided in section 178.
(1) Where Committee of creditors is of the opinion that at any time during the bankruptcy process, a bankruptcy trustee appointed under section 125 is required to be replaced, it may replace him with another bankruptcy trustee in the manner provided under this section.
(2) The Committee of creditors may, at a meeting, by a vote of seventy-five per cent. of voting share, propose to replace the bankruptcy trustee appointed under section 125 with another bankruptcy trustee.
(3) The Committee of creditors may apply to the Adjudicating Authority for the replacement of the bankruptcy trustee.
(4) The Adjudicating Authority shall within seven days of the receipt of the application under sub-section (3) direct the Board to recommend for replacement of bankruptcy trustee.
(5) The Board shall, within ten days of the direction of the Adjudicating Authority under sub-section (4), recommend a
(1) A bankruptcy trustee may resign if—
(b) there is conflict of interest or change of personal circumstances which preclude the further discharge of his duties as a bankruptcy trustee.
(2) The Adjudicating Authority shall, within seven days of the acceptance of the resignation of the bankruptcy trustee, direct the Board for his replacement.
(3) The Board shall, within ten days of the direction of the Adjudicating Authority under sub-section (2) recommend another bankruptcy trustee as a replacement.
(4) The Adjudicating Authority shall appoint the bankruptcy trustee recommended by the Board under sub-section (3) within fourteen days of receiving the recommendation.
(5) The replaced bankruptcy trustee shall deliver possession of the estate of the bankrupt to the
(1) If a vacancy occurs in the office of the bankruptcy trustee for any reason other than his replacement or resignation, the vacancy shall be filled in accordance with the provisions of this section.
(2) In the event of the occurrence of vacancy referred to in sub-section (1), the Adjudicating Authority shall direct the Board for replacement of a bankruptcy trustee.
(3) The Board shall, within ten days of the direction of the Adjudicating Authority under sub-section (2), recommend a bankruptcy trustee as a replacement.
(4) The Adjudicating Authority shall appoint the bankruptcy trustee recommended by the Board under sub-section (3) within fourteen days of receiving the recommendation.
(5) The earlier bankruptcy trustee shall deliver possession of the estate of the bankrupt to the bankruptcy trustee appointed under sub-section (4), on the date of his appointment.
(1) A bankruptcy trustee shall be released from his office with effect from the date on which the Adjudicating Authority passes an order appointing a new bankruptcy trustee in the event of replacement, resignation or occurrence of vacancy under sections 145, 146 or section 147, as the case may be.
(2) Notwithstanding the release under sub-section (1), the bankruptcy trustee who has been so released, shall share all information with the new bankruptcy trustee in respect of the bankruptcy process and co-operate with the new bankruptcy trustee in such matters as may be required.
(3) A bankruptcy trustee who has completed the administration of the bankruptcy process shall be released of his duties with effect from the date on which the committee of creditors approves the report of the bankruptcy trustee under section 137.
The bankruptcy trustee shall perform the following functions in accordance with the provisions of this Chapter—
(b) realise the estate of the bankrupt; and
(c) distribute the estate of the bankrupt.
(1) The bankrupt shall assist the bankruptcy trustee in carrying out his functions under this Chapter by—
(b) attending on the bankruptcy trustee at such times as may be required;
(c) giving notice to the bankruptcy trustee of any of the following events which have occurred after the bankruptcy commencement date,—
(i) acquisition of any property by the bankrupt;
(ii) devolution of any property upon the bankrupt;
(iii) increase in the income of the bankrupt;
(d) doing all other things as may be prescribed.
(2) The bankrupt shall give notice of the increase in income or acquisition or devolution of property under clause (c) of sub-section (1) within seven days of such increase, acquisition or devolution.
For the purpose of performing his functions under this Chapter, the bankruptcy trustee may, by his official name—
(b) make contracts;
(c) sue and be sued;
(d) enter into engagements in respect of the estate of the bankrupt;
(e) employ persons to assist him;
(f) execute any power of attorney, deed or other instrument; and
(g) do any other act which is necessary or expedient for the purposes of or in connection with the exercise of his rights.
The bankruptcy trustee may while discharging his functions under this Chapter,—
(b) give receipts for any money received by him;
(c) prove, rank, claim and draw a dividend in respect of such debts due to the bankrupt as are comprised in his estate;
(d) where any property comprised in the estate of the bankrupt is held by any person by way of pledge or hypothecation, exercise the right of redemption in respect of any such property subject to the relevant contract by giving notice to the said person;
(e) where any part of the estate of the bankrupt consists of securities in a company or any other property which is transferable in the books of a person, exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt; and
The bankruptcy trustee for the purposes of this Chapter may after procuring the approval of the committee of creditors,—
(b) bring, institute or defend any legal action or proceedings relating to the property comprised in the estate of the bankrupt;
(c) accept as consideration for the sale of any property a sum of money due at a future time subject to certain stipulations such as security;
(d) mortgage or pledge any property for the purpose of raising money for the payment of the debts of the bankrupt;
(e) where any right, option or other power forms part of the estate of the bankrupt, make payments or incur liabilities with a view to obtaining, for the benefit of the creditors, any property which is the subject of such right, option or power;
(1) The estate of the bankrupt shall vest in the bankruptcy trustee immediately from the date of his appointment.
(2) The vesting under sub-section (1) shall take effect without any conveyance, assignment or transfer.
(1) The estate of the bankrupt shall include,—
(b) the capacity to exercise and to initiate proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the bankruptcy commencement date or before the date of the discharge order passed under section 138; and
(c) all property which by virtue of any of the provisions of this Chapter is comprised in the estate.
(2) The estate of the bankrupt shall not include—
(b) property held by the bankrupt on trust for any other person;
(c) all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund; and
(d)
The bankrupt, his banker or agent or any other person having possession of any property, books, papers or other records which bankruptcy trustee is required to take possession for the purposes of the bankruptcy process shall deliver the said property and documents to the bankruptcy trustee.
(1) The bankruptcy trustee shall take possession and control of all property, books, papers and other records relating to the estate of the bankrupt or affairs of the bankrupt which belong to him or are in his possession or under his control.
(2) Where any part of the estate of the bankrupt consists of things in actionable claims, they shall be deemed to have been assigned to the bankruptcy trustee without any notice of the assignment.
(1) Any disposition of property made by the debtor, during the period between the date of filing of the application for bankruptcy and the bankruptcy commencement date shall be void.
(2) Any disposition of property made under sub-section (1) shall not give rise to any right against any person, in respect of such property, even if he has received such property before the bankruptcy commencement date in—
(b) for value; and
(c) without notice of the filing of the application for bankruptcy.
(3) For the purposes of this section, the term “property” means all the property of the debtor, whether or not it is comprised in the estate of the bankrupt, but shall not include property held by the debtor in trust for any other person.
(1) The bankruptcy trustee shall be entitled to claim for the estate of the bankrupt, any after-acquired property by giving a notice to the bankrupt.
(2) A notice under sub-section (1) shall not be served in respect of—
(b) any property which is acquired by or devolves upon the bankrupt after a discharge order is passed under section 138.
(3) The notice under sub-section (2) shall be given within fifteen days from the day on which the acquisition or devolution of the after-acquired property comes to the knowledge of the bankruptcy trustee.
(4) For the purposes of sub-section (3)—
(b) anything which comes
(1) The bankruptcy trustee may, by giving notice to the bankrupt or any person interested in the onerous property, disclaim any onerous property which forms a part of the estate of the bankrupt.
(2) The bankruptcy trustee may give the notice under sub-section (1) notwithstanding that he has taken possession of the onerous property, endeavoured to sell it or has exercised rights of ownership in relation to it.
(3) A notice of disclaimer under sub-section (1) shall—
(b) discharge the bankruptcy trustee from all personal liability in respect of the onerous property as from the date of appointment of the bankruptcy trustee.
(4) A notice of disclaimer under sub-section (1) shall not be given in respect of the
(1) No notice of disclaimer under section 160 shall be necessary if—
(b) a decision under clause (a) has not been taken by the bankruptcy trustee within seven days of receipt of the notice.
(2) Any onerous property which cannot be disclaimed under sub-section (1) shall be deemed to be part of the estate of the bankrupt.
Explanation.—For the purposes of this section, an onerous property is said to be disclaimed where notice in relation to that property has been given by the bankruptcy trustee under section 160.
(1) The bankruptcy trustee shall not be entitled to disclaim any leasehold interest, unless a notice of disclaimer has been served on every interested person and—
(b) where the application objecting to the disclaimer has been filed by the interested person, the Adjudicating Authority has directed under section 163 that the disclaimer shall take effect.
(2) Where the Adjudicating Authority gives a direction under clause (b) of sub-section (1), it may also make order with respect to fixtures, improvements by tenant and other matters arising out of the lease as it may think fit.
(1) An application challenging the disclaimer may be made by the following persons under this section to the Adjudicating Authority—
(b) any person who is under any liability in respect of the disclaimed property; or
(c) where the disclaimed property is a dwelling house, any person who on the date of application for bankruptcy was in occupation of or entitled to occupy that dwelling house.
(2) The Adjudicating Authority may on an application under sub-section (1) make an order for the vesting of the disclaimed property in, or for its delivery to any of the persons mentioned in sub-section (1).
(3) The Adjudicating Authority shall not make an order in favour of a person who has made an application under clause (b) of sub-section (1) except where it appears to the Adjudicating Authori
(1) The bankruptcy trustee may apply to the Adjudicating Authority for an order under this section in respect of an undervalued transaction between a bankrupt and any person.
(2) The undervalued transaction referred to in sub-section (1) should have—
(b) caused bankruptcy process to be triggered.
(3) A transaction between a bankrupt and his associate entered into during the period of two years preceding the date of making of the application for bankruptcy shall be deemed to be an undervalued transaction under this section.
(4) On the application of the bankruptcy trustee under sub-section (1), the Adjudicating Authority may—
(b) pas
(1) The bankruptcy trustee may apply to the Adjudicating Authority for an order under this section if a bankrupt has given a preference to any person.
(2) The transaction giving preference to an associate of the bankrupt under sub-section (1) should have been entered into by the bankrupt with the associate during the period of two years ending on the date of the application for bankruptcy.
(3) Any transaction giving preference not covered under sub-section (2) should have been entered into by the bankrupt during the period of six months ending on the date of the application for bankruptcy.
(4) The transaction giving preference under sub-section (2) or under sub-section (3) should have caused the bankruptcy process to be triggered.
(5) On the application of the bankruptcy trustee under sub-section (1), the Adjudicating Authority may—
(1) Subject to the provision of sub-section (2), an order passed by the Adjudicating Authority under section 164 or section 165 shall not,—
(b) require any person to pay a sum to the bankruptcy trustee in respect of the benefit received from the undervalued transaction or a transaction giving preference, whether or not he is the person with whom the bankrupt entered into such transaction.
(2) The provision of sub-section (1) shall apply only if the interest was acquired or the benefit was received—
(b) for value;
(c) without notice that the bankrupt entered into the
(1) Subject to sub-section (6), on an application by the bankruptcy trustee, the Adjudicating Authority may make an order under this section in respect of extortionate credit transactions to which the bankrupt is or has been a party.
(2) The transactions under sub-section (1) should have been entered into by the bankrupt during the period of two years ending on the bankruptcy commencement date.
(3) An order of the Adjudicating Authority may—
(b) vary the terms of the transaction or vary the terms on which any security for the purposes of the transaction is held;
(c) require any person who has been paid by the bankrupt under any transaction, to pay a sum to the bankruptcy trustee;
(d) require any person to surrender to the bankruptcy trustee any property of the ba
(1) This section shall apply where a contract has been entered into by the bankrupt with a person before the bankruptcy commencement date.
(2) Any party to a contract, other than the bankrupt under sub-section (1), may apply to the Adjudicating Authority for—
(b) payment of damages by the party or the bankrupt, for non-performance of the contract or otherwise.
(3) Any damages payable by the bankrupt by virtue of an order under clause (b) of sub-section (2) shall be provable as bankruptcy debt.
(4) When a bankrupt is a party to the contract under this section jointly with another person, that person may sue or be sued in respect of the contract without joinder of the bankrupt.
If a bankrupt dies, the bankruptcy proceedings shall, continue as if he were alive.
(1) All the provisions of Chapter V relating to the administration and distribution of the estate of the bankrupt shall, so far as the same are applicable, apply to the administration of the estate of a deceased bankrupt.
(2) While administering the estate of a deceased bankrupt, the bankruptcy trustee shall have regard to the claims by the legal representatives of the deceased bankrupt to payment of the proper funeral and testamentary expenses incurred by them.
(3) The claims under sub-section (2) shall rank equally to the secured creditors in the priority provided under section 178.
(4) If, on the administration of the estate of a deceased bankrupt, any surplus remains in the hands of the bankruptcy trustee after payment in full of all the debts due from the deceased bankrupt, together with the costs of the administration and interest as provided under section 178, such surplus shall be paid to the l
(1) The bankruptcy trustee shall give notice to each of the creditors to submit proof of debt within fourteen days of preparing the list of creditors under section 132.
(2) The proof of debt shall—
(b) require the creditor to give full particulars of the security, including the date on which the security was given and the value at which that person assesses it;
(c) be in such form and manner as may be prescribed.
(3) In case the creditor is a decree holder against the bankrupt, a copy of the decree shall be a valid proof of debt.
(4) Where a debt bears interest, that interest shall be provable as part of the debt except in so far as it is owed in respect of any period afte
(1) Where a secured creditor realises his security, he may produce proof of the balance due to him.
(2) Where a secured creditor surrenders his security to the bankruptcy trustee for the general benefit of the creditors, he may produce proof of his whole claim.
(1) Where before the bankruptcy commencement date, there have been mutual dealings between the bankrupt and any creditor, the bankruptcy trustee shall—
(b) only the balance shall be provable as a bankruptcy debt or as the amount payable to the bankruptcy trustee as part of the estate of the bankrupt.
(2) Sums due from the bankrupt to another party shall not be included in the account taken by the bankruptcy trustee under sub-section (1), if that other party had notice at the time they became due that an application for bankruptcy relating to the bankrupt was pending.
(1) Whenever the bankruptcy trustee has sufficient funds in his hand, he may declare and distribute interim dividend among the creditors in respect of the bankruptcy debts which they have respectively proved.
(2) Where the bankruptcy trustee has declared any interim dividend, he shall give notice of such dividend and the manner in which it is proposed to be distributed.
(3) In the calculation and distribution of the interim dividend, the bankruptcy trustee shall make provision for—
(b) any bankruptcy debts which are subject of claims which have not yet been determined;
(c) disputed proofs and claims; and
(d) expenses necessary for the ad
Section 174 of the Insolvency and Bankruptcy Code, 2016 (IBC) pertains to the distribution of interim dividends by the bankruptcy trustee during insolvency proceedings. It establishes the procedural framework for the declaration and distribution of funds when the insolvent estate has sufficient resources, ensuring equitable treatment of creditors.
Section 174(1) states that when the bankruptcy trustee has adequate funds in hand, they may declare and distribute an interim dividend among creditors. The section emphasizes the timing and conditions under which such dividends can be declared, primarily focusing on the availability of sufficient funds and the procedural steps for distribution.
Section 174 applies to:- Corporate insolvency resolution processes.- Liquidation proceedings where the estate has realized assets.- Situations where the trustee determines that funds are available for distribution.It aims to facilitate timely and equitable distribution of funds, preventing undue delay in creditor payments.
While Section 174 itself does not specify punishments, related provisions under the IBC address misconduct, false disclosures, or improper distribution. For example:- Section 70 and 71 prescribe penalties for misconduct or falsification of books during insolvency proceedings.- Sections 74 and 177 specify penalties for contravention of moratorium or non-disclosure of facts.Violations related to improper distribution or misappropriation can attract penalties under these provisions.
Note: The references are based on the available sources and the text of the IBC. This commentary synthesizes legal principles and judicial interpretations related to Section 174, emphasizing its procedural and protective functions within insolvency proceedings.
(1) The bankruptcy trustee may, with the approval of the committee of creditors, divide in its existing form amongst the creditors, according to its estimated value, any property in its existing form which from its peculiar nature or other special circumstances cannot be readily or advantageously sold.
(2) An approval under sub-section (1) shall be sought by the bankruptcy trustee for each transaction, and a person dealing with the bankruptcy trustee in good faith and for value shall not be required to enquire whether any approval required under sub-section (1) has been given.
(3) Where the bankruptcy trustee has done anything without the approval of the committee of creditors, the committee may, for the purpose of enabling him to meet his expenses out of the estate of the bankrupt, ratify the act of the bankruptcy trustee.
(4) The committee of the creditors shall not ratify the act of the bankruptcy t
(1) Where the bankruptcy trustee has realised the entire estate of the bankrupt or so much of it as could be realised in the opinion of the bankruptcy trustee, he shall give notice—
(b) that no dividend or further dividend shall be declared.
(2) The notice under sub-section (1) shall contain such particulars as may be prescribed and shall require all claims against the estate of the bankrupt to be established by a final date specified in the notice.
(3) The Adjudicating Authority may, on the application of any person interested in the administration of the estate of the bankrupt, postpone the final date referred to in sub-section (2).
(4) After the final date referred to in sub-section (2), the bankruptcy trustee shall—
(1) A creditor who has not proved his debt before the declaration of any dividend is not entitled to disturb, by reason that he has not participated in it, the distribution of that dividend or any other dividend declared before his debt was proved, but—
(b) any dividend or dividends payable to him shall be paid before that money is applied to the payment of any such further dividend.
(2) No action shall lie against the bankruptcy trustee for a dividend, but if the bankruptcy trustee refuses to pay a dividend payable under sub-section (1), the Adjudicating Authority may order him to—
(b) pay, out
(1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or the State Legislature for the time being in force, in the distribution of the final dividend, the following debts shall be paid in priority to all other debts—
(b) secondly,—
(i) the workmen’s dues for the period of twenty-four months preceding the bankruptcy commencement date; and
(ii) debts owed to secured creditors;
(c) thirdly, wages and any unpaid dues owed to employees, other than workmen, of the bankrupt for the period of twelve months preceding the bankruptcy commencement date;
(d) fourthly, any amount due to the Central Government and the State Government including the amount to be received on account of Consolidated Fund of I
(1) Subject to the provisions of section 60, the Adjudicating Authority, in relation to insolvency matters of individuals and firms shall be the Debt Recovery Tribunal having territorial jurisdiction over the place where the individual debtor actually and voluntarily resides or carries on business or personally works for gain and can entertain an application under this Code regarding such person.
(2) The Debt Recovery Tribunal shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain or dispose of—
(b) any claim made by or against the individual debtor;
(c) any question of priorities or any other question whether of law or facts, arising out of or in relation to insolvency and bankruptcy of the individual debtor or firm under this Code.
(1) No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal has jurisdiction under this Code.
(2) No injunction shall be granted by any court, tribunal or authority in respect of any action taken, or to be taken, in pursuance of any power conferred on the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal by or under this Code.
(1) An appeal from an order of the Debt Recovery Tribunal under this Code shall be filed within thirty days before the Debt Recovery Appellate Tribunal.
(2) The Debt Recovery Appellate Tribunal may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within thirty days, allow the appeal to be filed within a further period not exceeding fifteen days.
(1) An appeal from an order of the Debt Recovery Appellate Tribunal on a question of law under this Code shall be filed within forty-five days before the Supreme Court.
(2) The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within forty-five days, allow the appeal to be filed within a further period not exceeding fifteen days.
Where an application is not disposed of or order is not passed within the period specified in this Code, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be, shall record the reasons for not doing so within the period so specified; and the Chairperson of the Debt Recovery Appellate Tribunal, after taking into account the reasons so recorded, extend the period specified in this Code, but not exceeding ten days.
(1) If a debtor or creditor provides information which is false in any material particulars to the resolution professional, he shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to five lakh rupees, or with both.
(2) If a creditor promises to vote in favour of the repayment plan dishonestly by accepting any money, property or security from the debtor, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to three times the amount or its equivalent of such money, property or security accepted by such creditor, as the case may be, or with both:
Provided that where such amount is not quantifiable, the total amount of fine shall not exceed five lakh rupees.
If an insolvency professional deliberately contravenes the provisions of this Part, he shall be punishable with imprisonment for a term which may extend to six months, or with fine, which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both.
If the bankrupt—
Explanation.—For the purposes of clause (a), a false representation or omission includes nondisclosure of the details of disposal of any property, which but for the disposal, would be comprised in the estate of the bankrupt, other than dispositions made in the ordinary course of business carried on by the bankrupt;
(b) fraudulently has failed to provide or deliberately withheld the production of, destroyed, falsified or altered, his books of account, financial information and other records under his custody or control, he sha
If a bankruptcy trustee,—
(b) has wilfully acted in a manner that the estate of the bankrupt has suffered any loss in consequence of breach of any duty of the bankruptcy trustee in carrying out his functions under section 149,
he shall be punishable with imprisonment for a term which may extend to three years, or with fine, which shall not be less than three times the amount of the loss caused, or likely to have been caused, to persons concerned on account of such contravention, or with both:
Provided that where such loss or unlawful gain is not quantifiable, the total amount of fine imposed shall not exceed five lakh rupees:
Provided further that the bankruptcy trustee shall not be liable under this section if he seizes or dis
(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Code, a Board by the name of the Insolvency and Bankruptcy Board of India.
(2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power, subject to the provisions of this Code, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued.
(3) The head office of the Board shall be at such place in the National Capital Region, as the Central Government may, by notification, specify.
Explanation.—For the purposes of this section, the expression “National Capital Region” shall have the same meaning as assigned to it in clause (f) of section 2 of the National Capital Region Planning Board Act, 1985 (2 of 1985).
(4) The
(1) The Board shall consist of the following members who shall be appointed by the Central Government, namely:—
(b) three members from amongst the officers of the Central Government not below the rank of Joint Secretary or equivalent, one each to represent the Ministry of Finance, the Ministry of Corporate Affairs and Ministry of Law, ex officio;
(c) one member to be nominated by the Reserve Bank of India, ex officio;
(d) five other members to be nominated by the Central Government, of whom at least three shall be the whole-time members.
(2) The Chairperson and the other members shall be persons of ability, integrity and standing, who have shown capacity in dealing with problems relating to insolvency or bankruptcy and have special knowledge and experience in the field of law, finance, economics, accountancy or administration.
<The Central Government may remove a member from office if he—
(b) has become physically or mentally incapable of acting as a member;
(c) has been convicted of an offence, which in the opinion of the Central Government involves moral turpitude;
(d) has, so abused his position as to render his continuation in office detrimental to the public interest:
Provided that no member shall be removed under clause (d) unless he has been given a reasonable opportunity of being heard in the matter.
Save as otherwise determined by regulations, the Chairperson shall have powers of general superintendence and direction of the affairs of the Board and may also exercise such other powers as may be delegated to him by the Board.
(1) The Board shall meet at such times and places, and observe such rules of procedure in regard to the transaction of business at its meetings (including quorum at such meetings) as may be determined by regulations.
(2) The Chairperson, or if, for any reason, the Chairperson is unable to attend any meeting of the Board, any other member chosen by the members present at the meeting shall preside at the meeting.
(3) All questions which come up before any meeting of the Board shall be decided by a majority votes of the members present and voting, and, in the event of an equality of votes, the Chairperson, or in his absence, the person presiding, shall have a second or casting vote.
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.
(1) No act or proceeding of the Board shall be invalid merely by reason of—
(b) any defect in the appointment of a person acting as a member of the Board; or
(c) any irregularity in the procedure of the Board not affecting the merits of the case.
(2) The Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its functions in such manner as may be specified.
(3) The salaries and allowances payable to, and other terms and conditions of service of, officers and employees of the Board appointed under sub-section (2) shall be such as may be specified by regulations.
Until the Board is established, the Central Government may by notification, designate any financial sector regulator to exercise the powers and functions of the Board under this Code.
(1) The Board shall, subject to the general direction of the Central Government, perform all or any of the following functions namely:—
1[(aa) promote the development of, and regulate, the working and practices of, insolvency professionals, insolvency professional agencies and information utilities and other institutions, in furtherance of the purposes of this Code;]
(b) specify the minimum eligibility requirements for registration of insolvency professional agencies, insolvency professionals and information utilities;
(c) levy fee or other charges 2[for carrying out the purposes of this Code, including fee for registration and renewal] of insolvency professional agencies, insolvency professionals and
The Board may, for the efficient discharge of its functions, may constitute advisory and executive committees or such other committees, as it may deem fit, consisting of a Chairperson and such other members as may be specified by regulations.
Notwithstanding anything contained in this Code, where the Board does not perform any act within the period specified under this Code, the relevant Adjudicating Authority may, for reasons to be recorded in writing, condone the delay.
Save as otherwise provided in this Code, no person shall carry on its business as insolvency professional agencies under this Code and enrol insolvency professionals as its members except under and in accordance with a certificate of registration issued in this behalf by the Board.
The Board shall have regard to the following principles while registering the insolvency professional agencies under this Code, namely:—
(b) to promote the services of competent insolvency professionals to cater to the needs of debtors, creditors and such other persons as may be specified;
(c) to promote good professional and ethical conduct amongst insolvency professionals;
(d) to protect the interests of debtors, creditors and such other persons as may be specified;
(e) to promote the growth of insolvency professional agencies for the effective resolution of insolvency and bankruptcy processes under this Code.
(1) Every application for registration shall be made to the Board in such form and manner, containing such particulars, and accompanied by such fee, as may be specified by regulations:
Provided that every application received by the Board shall be acknowledged within seven days of its receipt.
(2) On receipt of the application under sub-section (1), the Board may, on being satisfied that the application conforms with all requirements specified under sub-section (1), grant a certificate of registration to the applicant or else, reject, by order, such application:
Provided that no order rejecting the application shall be made without giving an opportunity of being heard to the applicant:
Provided further that every order so made shall be communicated to the applicant within a period of fifteen days.
(3) The Board may issue a certificate of registration to the a
Any insolvency professional agency which is aggrieved by the order of the Board made under section 201 may prefer an appeal to the National Company Law Appellate Tribunal in such form, within such period, and in such manner, as may be specified by regulations.
The Board may, for the purposes of ensuring that every insolvency professional agency takes into account the objectives sought to be achieved under this Code, make regulations to specify—
(b) the minimum number of independent members to be on the governing board of the insolvency professional agency; and
(c) the number of the insolvency professionals being its members who shall be on the governing board of the insolvency professional agency.
Section 203 of the Insolvency and Bankruptcy Code, 2016 (IBC) primarily deals with the governance and regulatory framework of insolvency professional agencies (IPAs). It establishes the powers and responsibilities of the governing board of such agencies to ensure effective oversight and adherence to the objectives of the Code.
Section 203 authorizes the Board to create rules and regulations governing the functioning of insolvency professional agencies, including the composition of their governing boards, appointment of members, and ensuring compliance with the objectives of the IBC. It also emphasizes the role of the Board in regulating the standards and practices of IPAs.
Note: This commentary synthesizes the available sources to provide a comprehensive legal overview of Section 203, emphasizing its regulatory and governance framework within the insolvency ecosystem of India.
An insolvency professional agency shall perform the following functions, namely:—
(b) lay down standards of professional conduct for its members;
(c) monitor the performance of its members;
(d) safeguard the rights, privileges and interests of insolvency professionals who are its members;
(e) suspend or cancel the membership of insolvency professionals who are its members on the grounds set out in its bye-laws;
(f) redress the grievances of consumers against insolvency professionals who are its members; and
(g) publish information about its functions, list of its members, performance of its members and such other information as may be specified by regulations.
Subject to the provisions of this Code and any rules or regulations made thereunder and after obtaining the approval of the Board, every insolvency professional agency shall make bye-laws consistent with the model bye-laws specified by the Board under sub-section (2) of section 196.
No person shall render his services as insolvency professional under this Code without being enrolled as a member of an insolvency professional agency and registered with the Board.
(1) Every insolvency professional shall, after obtaining the membership of any insolvency professional agency, register himself with the Board within such time, in such manner and on payment of such fee, as may be specified by regulations.
(2) The Board may specify the categories of professionals or persons possessing such qualifications and experience in the field of finance, law, management, insolvency or such other field, as it deems fit.
(1) Where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated, it shall be the function of an insolvency professional to take such actions as may be necessary, in the following matters, namely:—
(b) individual insolvency resolution process under Chapter III of Part III;
(c) corporate insolvency resolution process under Chapter II of Part II;
1[(ca) pre-packaged insolvency resolution process under Chapter III-A of Part II;]
(d) individual bankruptcy process under Chapter IV of Part III; and
(e) liquidation of a corporate debtor firm under Chapter III of Part II.
1[(1A) Where the name of the insolvency professional proposed to be appointed as a resolution professional, is approved under
Save as otherwise provided in this Code, no person shall carry on its business as information utility under this Code without a certificate of registration issued in that behalf by the Board.
(1) Every application for registration shall be made to the Board in such form and manner, containing such particulars, and accompanied by such fee, as may be specified by regulations:
Provided that every application received by the Board shall be acknowledged within seven days of its receipt.
(2) On receipt of the application under sub-section (1), the Board may, on being satisfied that the application conforms to all requirements specified under sub-section (1), grant a certificate of registration to the applicant or else, reject, by order, such application.
(3) The Board may issue a certificate of registration to the applicant in such form and manner and subject to such terms and conditions as may be specified.
(4) The Board may renew the certificate of registration from time to time in such manner and on payment of such fee as may be specified by regulations.
Any information utility which is aggrieved by the order of the Board made under section 210 may prefer an appeal to the National Company Law Appellate Tribunal in such form, within such period, and in such manner, as may be specified by regulations.
The Board may, for ensuring that an information utility takes into account the objectives sought to be achieved under this Code, require every information utility to set up a governing board, with such number of independent members, as may be specified by regulations.
An information utility shall provide such services as may be specified including core services to any person if such person complies with the terms and conditions as may be specified by regulations.
For the purposes of providing core services to any person, every information utility shall—
(b) accept electronic submissions of financial information from persons who are under obligations to submit financial information under sub-section (1) of section 215, in such form and manner as may be specified by regulations;
(c) accept, in specified form and manner, electronic submissions of financial information from persons who intend to submit such information;
(d) meet such minimum service quality standards as may be specified by regulations;
(e) get the information received from various persons authenticated by all concerned parties before storing such information;
(f) provide access to the financial information stored by it to any person who intends to acce
(1) Any person who intends to submit financial information to the information utility or access the information from the information utility shall pay such fee and submit information in such form and manner as may be specified by regulations.
(2) A financial creditor shall submit financial information and information relating to assets in relation to which any security interest has been created, in such form and manner as may be specified by regulations.
(3) An operational creditor may submit financial information to the information utility in such form and manner as may be specified.
(1) A person who intends to update or modify or rectify errors in the financial information submitted under section 215, he may make an application to the information utility for such purpose stating reasons therefor, in such manner and within such time, as may be specified.
(2) A person who submits financial information to an information utility shall not provide such information to any other person, except to such extent, under such circumstances, and in such manner, as may be specified.
Any person aggrieved by the functioning of an insolvency professional agency or insolvency professional or an information utility may file a complaint to the Board in such form, within such time and in such manner as may be specified.
(1) Where the Board, on receipt of a complaint under section 217 or has reasonable grounds to believe that any insolvency professional agency or insolvency professional or an information utility has contravened any of the provisions of the Code or the rules or regulations made or directions issued by the Board thereunder, it may, at any time by an order in writing, direct any person or persons to act as an investigating authority to conduct an inspection or investigation of the insolvency professional agency or insolvency professional or an information utility.
(2) The inspection or investigation carried out under sub-section (1) of this section shall be conducted within such time and in such manner as may be specified by regulations.
(3) The Investigating Authority may, in the course of such inspection or investigation, require any other person who is likely to have any relevant document, record or information to furnish t
The Board may, upon completion of an inspection or investigation under section 218, issue a show cause notice to such insolvency professional agency or insolvency professional or information utility, and carry out inspection of such insolvency professional agency or insolvency professional or information utility in such manner, giving such time for giving reply, as may be specified by regulations.
(1) The Board shall constitute a disciplinary committee to consider the reports of the investigating Authority submitted under sub-section (6) of section 218:
Provided that the members of the disciplinary committee shall consist of whole-time members of the Board only.
(2) On the examination of the report of the Investigating Authority, if the disciplinary committee is satisfied that sufficient cause exists, it may impose penalty as specified in sub-section (3) or suspend or cancel the registration of the insolvency professional or, suspend or cancel the registration of insolvency professional agency or information utility as the case may be.
(3) Where any insolvency professional agency or insolvency professional or an information utility has contravened any provision of this Code or rules or regulations made thereunder, the disciplinary committee may impose penalty which shall be—
The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the Board grants of such sums of money as that Government may think fit for being utilised for the purposes of this Code.
(1) There shall be constituted a Fund to be called the Fund of the Insolvency and Bankruptcy Board and there shall be credited thereto—
(b) all sums received by the Board from such other sources as may be decided upon by the Central Government;
(c) such other funds as may be specified by the Board or prescribed by the Central Government.
(2) The Fund shall be applied for meeting—
(b) the expenses of the Board in the discharge of its functions under section 196;
(c) the expenses on objects and for purposes authorised by this Code;
(d) such other purposes as may be prescribed.
(1) The Board shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India.
(2) The accounts of the Board shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Board to the Comptroller and Auditor-General of India.
(3) The Comptroller and Auditor-General of India and any other person appointed by him in connection with the audit of the accounts of the Board shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor-General generally has in connection with the audit of the Government accounts and, in particular, shall have the right to demand the production of books,
(1) There shall be formed a Fund to be called the Insolvency and Bankruptcy Fund (hereafter in this section referred to as the “Fund”) for the purposes of insolvency resolution, liquidation and bankruptcy of persons under the Code.
(2) There shall be credited to the Fund the following amounts, namely—
(b) the amount deposited by persons as contribution to the Fund;
(c) the amount received in the Fund from any other source; and
(d) the interest or other income received out of the investment made from the Fund.
(3) A person who has contributed any amount to the Fund may, in the event of proceedings initiated in respect of such person under this Code before an Adjudicating Authority, make an application to such Adjudicating Authority for withdrawal of funds
The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to consolidate and amend the laws relating to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals. Section 224 specifically addresses the establishment of the Insolvency and Bankruptcy Fund, which plays a crucial role in the financial management of insolvency proceedings.
Section 224 mandates the formation of a fund known as the "Insolvency and Bankruptcy Fund" to facilitate the objectives of the IBC. The fund is intended to support various activities related to insolvency and bankruptcy processes.
The scope of Section 224 encompasses the creation and management of the fund, which is essential for ensuring that the insolvency resolution process is adequately financed. It aims to provide a safety net for stakeholders involved in insolvency proceedings.
While Section 224 itself does not specify punishments, it is part of a broader legislative framework that includes penalties for misconduct in insolvency processes as outlined in other sections of the IBC.
(1) Without prejudice to the foregoing provisions of this Code, the Board shall, in exercise of its powers or the performance of its functions under this Code, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time:
Provided that the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.
(2) The decision of the Central Government as to whether a question is one of policy or not shall be final.
(1) If at any time the Central Government is of opinion—
(b) that the Board has persistently not complied with any direction issued by the Central Government under this Code or in the discharge of the functions and duties imposed on it by or under the provisions of this Code and as a result of such non-compliance the financial position of the Board or the administration of the Board has deteriorated; or
(c) that circumstances exist which render it necessary in the public interest so to do,
the Central Government may, by notification, supersede the Board for such period, not exceeding six months, as may be specified in the notification.
(2) Upon the publication of a notification under sub-section (
Notwithstanding anything to the contrary 1[contained in this Code] or any other law for the time being in force, the Central Government may, if it considers necessary, in consultation with the appropriate financial sector regulators, notify financial service providers or categories of financial service providers for the purpose of their insolvency and liquidation proceedings, which may be conducted under this Code, in such manner as may be prescribed.
2[Explanation.—For the removal of doubts, it is hereby clarified that the insolvency and liquidation proceedings for financial service providers or categories of financial service providers may be conducted with such modifications and in such manner as may be prescribed.]
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1. Subs. by Act 1 of 2020, s. 11, for “examined in this Code” (w.e.f. 28-12-2019).
The Board shall prepare, in such form and at such time in each financial year as may be prescribed, its budget for the next financial year, showing the estimated receipts and expenditure of the Board and forward the same to the Central Government.
(1) The Board shall prepare, in such form and at such time in each financial year as may be prescribed, its annual report, giving a full account of its activities during the previous financial year, and submit a copy thereof to the Central Government.
(2) A copy of the report received under sub-section (1) shall be laid, as soon as may be after it is received, before each House of Parliament.
The Board may, by general or special order in writing delegate to any member or officer of the Board subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Code (except the powers under section 240, as it may deem necessary.
No civil court shall have jurisdiction in respect of any matter in which the 1[Adjudicating Authority or Board] is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such 2[Adjudicating Authority or Board] under this Code.
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1. Subs. by Act 26 of 2018, s. 33, for “Adjudicating Authority” (w.e.f. 6-6-2018).
2. Ins. by Act 8 of 2018, s. 8 (w.e.f. 23-11-2017).
The Chairperson, Members, officers and other employees of the Board shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Code, to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).
No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government, or the Chairperson, Member, officer or other employee of the Board or an insolvency professional or liquidator for anything which is in done or intended to be done in good faith under this Code or the rules or regulations made thereunder.
(1) The Central Government may enter into an agreement with the Government of any country outside India for enforcing the provisions of this Code.
(2) The Central Government may, by notification in the Official Gazette, direct that the application of provisions of this Code in relation to assets or property of corporate debtor or debtor, including a personal guarantor of a corporate debtor, as the case may be, situated at any place in a country outside India with which reciprocal arrangements have been made, shall be subject to such conditions as may be specified.
(1) Notwithstanding anything contained in this Code or any law for the time being in force if, in the course of insolvency resolution process, or liquidation or bankruptcy proceedings, as the case may be, under this Code, the resolution professional, liquidator or bankruptcy trustee, as the case may be, is of the opinion that assets of the corporate debtor or debtor, including a personal guarantor of a corporate debtor, are situated in a country outside India with which reciprocal arrangements have been made under section 234, he may make an application to the Adjudicating Authority that evidence or action relating to such assets is required in connection with such process or proceeding.
(2) The Adjudicating Authority on receipt of an application under sub-section (1) and, on being satisfied that evidence or action relating to assets under sub-section (1) is required in connection with insolvency resolution process or liquidation or bankruptcy p
(1) Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974), offences under this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 (18 of 2013).
(2) No Court shall take cognizance of any offence punishable under this Act, save on a complaint made by the Board or the Central Government or any person authorised by the Central Government in this behalf.
(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in case of a complaint under sub-section (2), the presence of the person au
The High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 (2 of 1974) on a High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of Session trying cases within the local limits of the jurisdiction of the High Court.
The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
(1) The Central Government may, by notification, make rules for carrying out the provisions of this Code.
(2) Without prejudice to the generality of the provisions of sub-section (1), the Central Government may make rules for any of the following matters, namely:—
(b) other accounting standards which shall be a financial debt under clause (d) of sub-section (8) of section 5;
(c) the form, the manner and the fee for making application before the Adjudicating Authority for initiating corporate insolvency resolution process by financial creditor under sub-section (2) of section 7;
(d) the form and manner in which demand notice may be made and the manner of delivery thereof to the corporate debtor under sub-section (1) of section 8;
(e) the form,
(1) The Board may, by notification, make regulations consistent with this Code and the rules made thereunder, to carry out the provisions of this Code.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:—
(b) the persons to whom access to information stored with the information utility may be provided under sub-clause (d) of clause (9) of section 3;
(c) the other information under sub-clause (f) of clause (13) of section 3;
(d) the other costs under clause (e) of sub-section (13) of section 5;
(e) the cost incurred by the liquidator during the period of liquidation which shall be liquidation
Every rule and every regulation made under this Code shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.
(1) If any difficulty arises in giving effect to the provisions of this Code, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Code as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of five years from the commencement of this Code.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
(1) The Presidency Towns Insolvency Act, 1909 (3 of 1909) and the Provincial Insolvency Act, 1920 (5 of 1920) are hereby repealed.
(2) Notwithstanding the repeal under sub-sections (1),—
(ii) any order, rule, notification, regulation, appointment, conveyance, mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done under or in pursuance of any repealed enactment shall, if in force at the commencement of this Code, continu
(1) Until the Board is constituted or a financial sector regulator is designated under section 195, as the case may be, the powers and functions of the Board or such designated financial sector regulator, including its power to make regulations, shall be exercised by the Central Government.
(2) Without prejudice to the generality of the power under sub-section (1), the Central Government may by regulations provide for the following matters:—
(b) recognition of persons with technological, statistical, and data protection capability as it deems necessary, as information utilities under this Code; and
(c) conduct o
The Indian Partnership Act, 1932 shall be amended in the manner specified in the First Schedule.
The Central Excise Act, 1944 shall be amended in the manner specified in the Second Schedule.
The Income-tax Act, 1961 shall be amended in the manner specified in the Third Schedule.
The Customs Act, 1962 shall be amended in the manner specified in the Fourth Schedule.
The Recovery of Debts due to Banks and Financial Institutions Act, 1993 shall be amended in the manner specified in the Fifth Schedule.
The Finance Act, 1994 shall be amended in the manner specified in the Sixth Schedule.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 shall be amended in the manner specified in the Seventh Schedule.
The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 shall be amended in the manner specified in the Eighth Schedule.
The Payment and Settlement Systems Act, 2007 shall be amended in the manner specified in the Ninth Schedule.
The Limited Liability Partnership Act, 2008 shall be amended in the manner specified in the Tenth Schedule.
The Companies Act, 2013 shall be amended in the manner specified in the Eleventh Schedule.
AMENDMENT TO THE INDIAN PARTNERSHIP ACT, 1932
(9 OF 1932)
1. In section 41, clause (a) shall be omitted
AMENDMENT TO THE CENTRAL EXCISE ACT, 1944
(1 OF 1944)
1. In section 11E, for the words, figures and brackets “and the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002) “, the words, figures and brackets “the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002) and the Insolvency and Bankruptcy Code, 2016” shall be substituted.
AMENDMENT TO THE INCOME-TAX ACT, 1961
(43 OF 1961)
In sub-section (6) of section 178, after the words “for the time being in force”, the words and figures “except the provisions of the Insolvency and Bankruptcy Code, 2016” shall be inserted.
AMENDMENT TO THE CUSTOMS ACT, 1962
(52 OF 1962)
In section 142A, for the words, figures and brackets “and the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002)”, the words, and figures and brackets “ the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016” shall be substituted.
AMENDMENTS TO THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993
(51 OF 1993)
1. In the long title, after the words “financial institutions”, the words “, insolvency resolution and bankruptcy of individuals and partnership firms” shall be inserted, namely:—.
2. In section 1,—
(b) in sub-section (4), for the words “The provision of this Code”, the words “Save as otherwise provided, the provisions of this Code”, shall be substituted.
3. In section 3, after sub-section (1), the following sub-section shall be inserted, namely:—
AMENDMENT TO THE FINANCE ACT, 1994
(32 OF 1994)
In section 88, for the words, figures and brackets “and the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002)”, the words and figures “the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016” shall be substituted.
AMENDMENT TO THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002
(54 OF 2002)
In section 13, in sub-section (9), for the words “In the case of”, the words and figures “Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of” shall be substituted.
AMENDMENT TO THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) REPEAL ACT, 2003
(1 OF 2004)
In section 4, for sub-clause (b), the following sub-clause shall be substituted, namely—
Provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 within one hundred and eighty days from the commencement of the Insolvency and Bankruptcy Code, 2016 in accordanc
AMENDMENTS TO THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007
(51 OF 2007)
1. In section 23, in sub-sections (4), (5) and (6), after the words, figures and brackets “the Banking Regulation Act, 1949 (10 of 1949)” “the Companies Act, 2013 (18 of 2013)”, the words and figures “or the Insolvency and Bankruptcy Code, 2016” shall be inserted.
2. In section 23A, in sub-section (3), after the words, figures and brackets “the Companies Act, 2013”, the words and figures “or the Insolvency and Bankruptcy Code, 2016” shall be inserted.
AMENDMENT TO THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
(6 OF 2009)
In section 64, clause (c) shall be omitted.
AMENDMENTS TO THE COMPANIES ACT, 2013
(18 OF 2013)
1. In section 2,—
“(23) “Company Liquidator” means a person appointed by the Tribunal as the Company Liquidator in accordance with the provisions of section 275 for the winding up of a company under this Act;”;
(b) after clause (94), the following clause shall be inserted, namely:—
“(94A) “winding up” means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable.”.
2. In section 8, in sub-section (9), for the words and figures “the Rehabilitation and Insolvency Fund formed under section 269”, the words and figures “Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016” shall be substituted.
(1) Where a corporate debtor meets the requirements of section 54A, a corporate applicant thereof may file an application with the Adjudicating Authority for initiating pre-packaged insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form, containing such particulars, in such manner and accompanied with such fee as may be prescribed.
(3) The corporate applicant shall, along with the application, furnish—
(b) the name and written consent, in such form as may be specified, of the insolvency professional proposed to be appointed as resolution professional, as approved under clause (e) of sub-section (2) of section 54A, and his report as refer
(1) The pre-packaged insolvency resolution process shall be completed within a period of one hundred and twenty days from the pre-packaged insolvency commencement date.
(2) Without prejudice to sub-section (1), the resolution professional shall submit the resolution plan, as approved by the committee of creditors, to the Adjudicating Authority under sub-section (4) or sub-section (12), as the case may be, of section 54K, within a period of ninety days from the pre-packaged insolvency commencement date.
(3) Where no resolution plan is approved by the committee of creditors within the time period referred to in sub-section (2), the resolution professional shall, on the day after the expiry of such time period, file an application with the Adjudicating Authority for termination of the pre-packaged insolvency resolution process in such form and manner as may be specified.
(1) The Adjudicating Authority shall, on the pre-packaged insolvency commencement date, along with the order of admission under section 54C—
(b) appoint a resolution professional—
(i) as named in the application, if no disciplinary proceeding is pending against him; or
(ii) based on the recommendation made by the Board, if any disciplinary proceeding is pending against the insolvency professional named in the application;
(c) cause a public announcement of the initiation of the pre-packaged insolvency resolution process to be made by the resolution professional, in such form and manner as may be specified, immediately after his appointment.
(
(1) The resolution professional shall conduct the pre-packaged insolvency resolution process of a corporate debtor during the pre-packaged insolvency resolution process period.
(2) The resolution professional shall perform the following duties, namely:—
(b) inform creditors regarding their claims as confirmed under clause (a), in such manner as may be specified;
(c) maintain an updated list of claims, in such manner as may be specified;
(d) monitor management of the affairs of the corporate debtor;
(e) inform the committee of creditors in the event of breach of any of the obligations of the Board of Directors or partners, as the case may be, of the corporate debtor, under the provisions of this Chapter and the rules
(1) The corporate debtor shall, within two days of the pre-packaged insolvency commencement date, submit to the resolution professional the following information, updated as on that date, in such form and manner as may be specified, namely:—
(b) a preliminary information memorandum containing information relevant for formulating a resolution plan.
(2) Where any person has sustained any loss or damage as a consequence of the omission of any material information or inclusion of any misleading information in the list of claims or the preliminary information memorandum submitted by the corporate debtor, every person who—
During the pre-packaged insolvency resolution process period,—
(b) the Board of Directors or the partners, as the case may be, of the corporate debtor, shall make every endeavour to protect and preserve the value of the property of the corporate debtor, and manage its operations as a going concern; and
(c) the promoters, members, personnel and partners, as the case may be, of the corporate debtor, shall exercise and discharge their contractual or statutory rights and obligations in relation to the corporate debtor, subject to the provisions of this Chapter and such other conditions and restrictions as may be prescribed.
(1) The resolution professional shall, within seven days of the pre-packaged insolvency commencement date, constitute a committee of creditors, based on the list of claims confirmed under clause (a) of sub-section (2) of section 54F:
Provided that the composition of the committee of creditors shall be altered on the basis of the updated list of claims, in such manner as may be specified, and any such alteration shall not affect the validity of any past decision of the committee of creditors.
(2) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors.
(3) The provisions of section 21, except sub-section (1) thereof, shall, mutatis mutandis apply, in relation to the committee of creditors under this Chapter:
Provided that for the purposes of this sub-section, references to “resolution professional” under sub-
(1) Where the committee of creditors, at any time during the pre-packaged insolvency resolution process period, by a vote of not less than sixty-six per cent. of the voting shares, resolves to vest the management of the corporate debtor with the resolution professional, the resolution professional shall make an application for this purpose to the Adjudicating Authority, in such form and manner as may be specified.
(2) On an application made under sub-section (1), if the Adjudicating Authority is of the opinion that during the pre-packaged insolvency resolution process—
(b) there has been gross mismanagement of the affairs of the corporate debtor,
it shall pass an order vesting the management of the corporate debtor with the resolution professional.
(3) Notwithstand
(1) The corporate debtor shall submit the base resolution plan, referred to in clause (c) of sub-section (4) of section 54A, to the resolution professional within two days of the pre-packaged insolvency commencement date, and the resolution professional shall present it to the committee of creditors.
(2) The committee of creditors may provide the corporate debtor an opportunity to revise the base resolution plan prior to its approval under sub-section (4) or invitation of prospective resolution applicants under sub-section (5), as the case may be.
(3) The resolution plans and the base resolution plan, submitted under this section shall conform to the requirements referred to in sub-sections (1) and (2) of section 30, and the provisions of sub-sections (1), (2) and (5) of section 30 shall, mutatis mutandis apply, to the proceedings under this Chapter.
(4) The committee of creditors may approve the base
(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be of section 54K, subject to the conditions provided therein, meets the requirements as referred to in sub-section (2) of section 30, it shall, within thirty days of the receipt of such resolution plan, by order, approve the resolution plan:
Provided that the Adjudicating Authority shall, before passing an order for approval of a resolution plan under this sub-section, satisfy itself that the resolution plan has provisions for its effective implementation.
(2) The order of approval under sub-section (1) shall have such effect as provided under sub-sections (1), (3) and (4) of section 31, which shall, mutatis mutandis apply, to the proceedings under this Chapter.
(3) Where the Adjudicating Authority is satisfied that the resolution
Any appeal against an order approving the resolution plan under sub-section (1) of section 54L, shall be on the grounds laid down in sub-section (3) of section 61.
(1) Where the resolution professional files an application with the Adjudicating Authority,—
(b) under sub-section (3) of section 54D,
the Adjudicating Authority shall, within thirty days of the date of such application, by an order,—
(ii) provide for the manner of continuation of proceedings initiated for avoidance of transactions under Chapter III or proceedings initiated under section 66 and section 67A, if any.
(2) Where the resolution professional, at any time after the pre-packaged insolvency commencement date, but before the approval of resolution plan under sub-section (4) or sub-section (12), as the case may be of section 54K, intimates the Adjudicating Authority of the decision of the
(1) The committee of creditors, at any time after the pre-packaged insolvency commencement date but before the approval of resolution plan under sub-section (4) or sub-section (12), as the case may be of section 54K, by a vote of not less than sixty-six per cent. of the voting shares, may resolve to initiate a corporate insolvency resolution process in respect of the corporate debtor, if such corporate debtor is eligible for corporate insolvency resolution process under Chapter II.
(2) Notwithstanding anything to the contrary contained in Chapter II, where the resolution professional intimates the Adjudicating Authority of the decision of the committee of creditors under sub-section (1), the Adjudicating Authority shall, within thirty days of the date of such intimation, pass an order to—
(1) Save as provided under this Chapter, the provisions of sections 24, 25A, 26, 27, 28, 29A, 32A, 43 to 51, and the provisions of Chapters VI and VII of this Part shall, mutatis mutandis apply, to the pre-packaged insolvency resolution process, subject to the following, namely:—
(b) reference to “clause (j) of sub-section (2) of section 25” under section 26 shall be construed as reference to “clause (h) of sub-section (2) of section 54F”;
(c) reference to “section 16” under section 27 shall be construed as reference to “section 54E”;
(d) reference to “resolution professional” in sub-
1On and after the pre-packaged insolvency commencement date, where an officer of the corporate debtor manages its affairs with the intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may, on an application by the resolution professional, pass an order imposing upon any such officer, a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.]
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1. Ins. by Act 26 of 2021, s. 11 (w.e.f. 4-4-2021).
1(1) Where—
(b) a corporate debtor provides any information in the list of claims or the preliminary information memorandum submitted under sub-section (1) of section 54G which is false in material particulars, knowing it to be false or omits any material fact, knowing it to be material; or
(c) any person who knowingly and wilfully authorised or permitted the furnishing of such information under sub-clauses (a) and (b),
such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but w
1If any person contravenes any of the provisions of this Code or the rules or regulations made thereunder for which no penalty or punishment is provided in this Code, such person shall be punishable with fine which shall not be less than one lakh rupees but which may extend to two crore rupees.]
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1. Ins. by Act 8 of 2018, s. 8 (w.e.f. 23-11-2017).
1The provisions of the Limitation Act, 1963 shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be.]
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1. Ins. by Act 26 of 2018, s. 34 (w.e.f. 6-6-2018).
1(1) Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of section 29A shall not apply to the resolution applicant in respect of corporate insolvency resolution process 2[or pre-packaged insolvency resolution process] of any micro, small and medium enterprises.
(2) Subject to sub-section (1), the Central Government may, in the public interest, by notification, direct that any of the provisions of this Code shall—
(b) apply to micro, small and medium enterprises, with such modifications as may be specified in the notification.
(3) A draft of every notification proposed to be issued under sub-section (2), shall be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session
ACTS FOR THE PURPOSES OF CLAUSE (d) OF SECTION 29A
(1) The Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
(2) The Reserve Bank of India Act, 1934 (2 of 1934);
(3) The Central Excise Act, 1944 (1 of 1944);
(4) The Prevention of Food Adulteration Act, 1954 (37 of 1954);
(5) The Essential Commodities Act, 1955 (10 of 1955);
(6) The Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(7) The Income-tax Act, 1961 (43 of 1961);
(8) The Customs Act, 1962 (52 of 1962);
(9) The Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974);
(10) The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974);
(11) The Air (Prevention and Control of Pollution) Act, 1981 (14 of
[28th May, 2016.]
An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Sixty-seventh Year of the Republic of India as follows:—
1Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf:
Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.
Explanation.—For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.]
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1. Ins. by Act 17 of 2020, s. 2 (w.e.f. 5-6-2020).
1(1) Where an application filed under section 54C is pending, the Adjudicating Authority shall pass an order to admit or reject such application, before considering any application filed under section 7 or section 9 or section 10 during the pendency of such application under section 54C, in respect of the same corporate debtor.
(2) Where an application under section 54C is filed within fourteen days of filing of any application under section 7 or section 9 or section 10, which is pending, in respect of the same corporate debtor, then, notwithstanding anything contained in sections 7, 9 and 10, the Adjudicating Authority shall first dispose of the application under section 54C.
(3) Where an application under section 54C is filed after fourteen days of the filing of any application under section 7 or section 9 or section 10, in respect of the same corporate debtor, the Adjudicating Authority shall first dispose of
1The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be specified.].
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1. Ins. by Act 26 of 2018, s. 9 (w.e.f. 6-6-2018).
1(1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means.
(2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents.
(3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions:
Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with in
1A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person—
(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949;
(c) 2[at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 1949) 3[or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencem
1(1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not—
(b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint t
(1) An application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor classified as a micro, small or medium enterprise under sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).
(2) Without prejudice to sub-section (1), an application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor, who commits a default referred to in section 4, subject to the following conditions, that—
(b) it is not undergoing a corporate insolvency resolution process;
(c) no order requiring it to be liquidated is passed under section 33;
(1) The insolvency professional, proposed to be appointed as the resolution professional, shall have the following duties commencing from the date of the approval under clause (e) of sub-section (2) of section 54A, namely:—
(b) file such reports and other documents, with the Board, as may be specified; and
(c) perform such other duties as may be specified.
(2) The duties of the insolvency professional under sub-section (1) shall cease, if,—
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