Insolvency Bankruptcy Code

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Page 1 Wednesday, December 01, 2021

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© 2021 EBC Publishing Pvt.Ltd., Lucknow.
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The
Insolvency and Bankruptcy Code, 2016
(Insolvency and Bankruptcy Code, 2016)
[Act 31 of 2016 as amended up to Act 26 of 2021]1
[28th May, 2016]
CONTENTS
PART I
PRELIMINARY
1. Short title, extent and commencement
2. Application
3. Definitions
PART II
INSOLVENCY RESOLUTION AND LIQUIDATION FOR CORPORATE PERSONS
CHAPTER I
PRELIMINARY
4. Application of this Part
5. Definitions
CHAPTER II
CORPORATE INSOLVENCY RESOLUTION PROCESS
6. Persons who may initiate corporate insolvency resolution process
7. Initiation of corporate insolvency resolution process by financial creditor
8. Insolvency resolution by operational creditor
9. Application for initiation of corporate insolvency resolution process by operational

creditor
10. Initiation of corporate insolvency resolution process by corporate applicant
10-A. Suspension of initiation of corporate insolvency resolution process
11. Persons not entitled to make application
11-A. Disposal of applications under Section 54-C and under Section 7 or Section 9 or
Section 10
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12. Time-limit for completion of insolvency resolution process
12-A. Withdrawal of application admitted under Section 7, 9 or 10
13. Declaration of moratorium and public announcement
14. Moratorium
15. Public announcement of corporate insolvency resolution process
16. Appointment and tenure of interim resolution professional
17. Management of affairs of corporate debtor by interim resolution professional
18. Duties of interim resolution professional
19. Personnel to extend cooperation to interim resolution professional
20. Management of operations of corporate debtor as going concern
21. Committee of creditors
22. Appointment of resolution professional
23. Resolution professional to conduct corporate insolvency resolution process
24. Meeting of committee of creditors
25. Duties of resolution professional
25-A. Rights and duties of authorised representative of financial creditors
26. Application for avoidance of transactions not to affect proceedings
27. Replacement of resolution professional by committee of creditors
28. Approval of committee of creditors for certain actions
29. Preparation of information memorandum
30. Submission of resolution plan
31. Approval of resolution plan
32. Appeal
32-A. Liability for prior offences, etc
CHAPTER III
LIQUIDATION PROCESS
33. Initiation of liquidation
34. Appointment of liquidator and fee to be paid
35. Powers and duties of liquidator

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36. Liquidation Estate
37. Powers of liquidator to access information
38. Consolidation of claims
39. Verification of claims
40. Admission or rejection of claims
41. Determination of valuation of claims
42. Appeal against the decision of liquidator
43. Preferential transactions and relevant time
44. Orders in case of preferential transactions
45. Avoidance of undervalued transactions
46. Relevant period for avoidable transactions
47. Application by creditor in cases of undervalued transactions
48. Order in cases of undervalued transactions
49. Transactions defrauding creditors
50. Extortionate credit transactions
51. Orders of Adjudicating Authority in respect of extortionate credit transactions
52. Secured creditor in liquidation proceedings
53. Distribution of assets
54. Dissolution of corporate debtor
CHAPTER III-A
PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS
54-A. Corporate debtors eligible for pre-packaged insolvency resolution process
54-B. Duties of insolvency professional before initiation of pre-packaged insolvency

resolution process
54-C. Application to initiate pre-packaged insolvency resolution process
54-D. Time-limit for completion of pre-packaged insolvency resolution process
54-E. Declaration of moratorium and public announcement during prepackaged

insolvency resolution process
54-F. Duties and powers of resolution professional during prepackaged insolvency

resolution process
54-G. List of claims and preliminary information memorandum

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54-H. Management of affairs of corporate debtor
54-I. Committee of creditors
54-J. Vesting management of corporate debtor with resolution professional
54-K. Consideration and approval of resolution plan
54-L. Approval of resolution plan
54-M. Appeal against order under Section 54-L
54-N. Termination of pre-packaged insolvency resolution process
54-O. Initiation of corporate insolvency resolution process
54-P. Application of provisions of Chapters II, III, VI and VII to this Chapter
CHAPTER IV
FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS
55. Fast track corporation insolvency resolution process
56. Time period for completion of fast track corporate insolvency resolution process
57. Manner of initiating fast track corporate insolvency resolution process
58. Applicability of Chapter II to this Chapter
CHAPTER V
VOLUNTARY LIQUIDATION OF CORPORATE PERSONS
59. Voluntary liquidation of corporate persons
CHAPTER VI
ADJUDICATING AUTHORITY FOR CORPORATE PERSONS
60. Adjudicating Authority for corporate persons
61. Appeals and Appellate Authority
62. Appeal to Supreme Court
63. Civil court not to have jurisdiction
64. Expeditious disposal of applications
65. Fraudulent or malicious initiation of proceedings
66. Fraudulent trading or wrongful trading
67. Proceedings under Section 66
CHAPTER VII
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OFFENCES AND PENALTIES
68. Punishment for concealment of property
69. Punishment for transactions defrauding creditors
70. Punishment for misconduct in course of corporate insolvency resolution process
71. Punishment for falsification of books of corporate debtor
72. Punishment for wilful and material omissions from statements relating to affairs of
corporate debtor
73. Punishment for false representations to creditors
74. Punishment for contravention of moratorium or the resolution plan
75. Punishment for false information furnished in application
76. Punishment for non-disclosure of dispute or [payment] of debt by operational

creditor
77. Punishment for providing false information in application made by corporate debtor
77-A. Punishment for offences related to pre-packaged insolvency resolution process
PART III
INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP

FIRMS
CHAPTER I
PRELIMINARY
78. Application
79. Definitions
CHAPTER II
FRESH START PROCESS
80. Eligibility for making an application
81. Application for fresh start order
83. Examination of application by resolution professional
84. Admission or rejection of application by Adjudicating Authority
85. Effect of admission of application
86. Objections by creditor and their examination by resolution professional

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87. Application against decision of resolution professional
88. General duties of debtor
89. Replacement of resolution professional
90. Directions for compliances of restrictions, etc
91. Revocation of order admitting application
92. Discharge order
93. Standard of conduct
CHAPTER III
INSOLVENCY RESOLUTION PROCESS
94. Application by debtor to initiate insolvency resolution process
95. Application by creditor to initiate insolvency resolution process
96. Interim-moratorium
98. Replacement of resolution professional
99. Submission of report by resolution professional
100. Admission or rejection of application
101. Moratorium
102. Public notice and claims from creditors
103. Registering of claims by creditors
104. Preparation of list of creditors
105. Repayment plan
106. Report of resolution professional on repayment plan
107. Summoning of meeting of creditors
108. Conduct of meeting of creditors
109. Voting rights in meeting of creditors
110. Rights of secured creditors in relation to repayment plan
111. Approval of repayment plan by creditors
112. Report of meeting of creditors on repayment plan
113. Notice of decisions taken at meeting of creditors

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114. Order of Adjudicating Authority on repayment plan
115. Effect of order of Adjudicating Authority on repayment plan
116. Implementation and supervision of repayment plan
117. Completion of repayment plan
118. Repayment plan coming to end prematurely
119. Discharge order
CHAPTER IV
BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS
121. Application for bankruptcy
122. Application by debtor
123. Application by creditor
124. Effect of application
125. Appointment of insolvency professional as bankruptcy trustee
126. Bankruptcy order
127. Validity of bankruptcy order
128. Effect of bankruptcy order
129. Statement of financial position
130. Public notice inviting claims from creditors
131. Registration of claims
132. Preparation of list of creditors
133. Summoning of meeting of creditors
134. Conduct of meeting of creditors
135. Voting rights of creditors
136. Administration and distribution of estate of bankrupt
137. Completion of administration
138. Discharge order
139. Effect of discharge
140. Disqualification of bankrupt

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141. Restrictions on bankrupt
142. Modification or recall of bankruptcy order
144. Fees of bankruptcy trustee
145. Replacement of bankruptcy trustee
146. Resignation by bankruptcy trustee
147. Vacancy in office of bankruptcy trustee
148. Release of bankruptcy trustee
CHAPTER V
ADMINISTRATION AND DISTRIBUTION OF THE ESTATE OF THE BANKRUPT
149. Functions of bankruptcy trustee
150. Duties of bankrupt towards bankruptcy trustee
151. Rights of bankruptcy trustee
152. General powers of bankruptcy trustee
153. Approval of creditors for certain acts
154. Vesting of estate of bankrupt in bankruptcy trustee
155. Estate of bankrupt
156. Delivery of property and documents to bankruptcy trustee
157. Acquisition of control by bankruptcy trustee
158. Restrictions on disposition of property
159. After-acquired property of bankrupt
160. Onerous property of bankrupt
161. Notice to disclaim onerous property
162. Disclaimer of leaseholds
163. Challenge against disclaimed property
164. Undervalued transactions
165. Preference transactions
166. Effect of order
167. Extortionate credit transactions

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168. Obligations under contracts
169. Continuance of proceedings on death of bankrupt
170. Administration of estate of deceased bankrupt
171. Proof of debt
172. Proof of debt by secured creditors
173. Mutual credit and set-off
174. Distribution of interim dividend
175. Distribution of property
176. Final dividend
177. Claims of creditors
178. Priority of payment of debts
CHAPTER VI
ADJUDICATING AUTHORITY FOR INDIVIDUALS AND PARTNERSHIP FIRMS
179. Adjudicating Authority for individuals and partnership firms
180. Civil court not to have jurisdiction
181. Appeal to Debts Recovery Appellate Tribunal
182. Appeal to Supreme Court
183. Expeditious disposal of applications
CHAPTER VII
184. Punishment for false information, etc., by creditor in insolvency resolution

process
185. Punishment for contravention of provisions
186. Punishment for false information, concealment, etc., by bankrupt
187. Punishment for certain actions
PART IV
REGULATION OF INSOLVENCY PROFESSIONALS, AGENCIES AND INFORMATION

UTILITIES
CHAPTER I
THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

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188. Establishment and incorporation of Board
189. Constitution of Board
190. Removal of member from office
191. Powers of Chairperson
192. Meetings of Board
193. Member not to participate in meetings in certain cases
194. Vacancies, etc., not to invalidate proceedings of Board, Officers and employees of
Board
195. Power to designate financial sector regulator
CHAPTER II
POWERS AND FUNCTIONS OF THE BOARD
196. Powers and functions of Board
197. Constitution of advisory committee, executive committee or other committee
198. Condonation of delay
CHAPTER III
INSOLVENCY PROFESSIONAL AGENCIES
199. No person to function as insolvency professional agency without valid certificate

of registration
200. Principles governing registration of insolvency professional agency
201. Registration of insolvency professional agency
202. Appeal to National Company Law Appellate Tribunal
203. Governing Board of insolvency professional agency
204. Functions of insolvency professional agencies
205. Insolvency professional agencies to make bye-laws
CHAPTER IV
INSOLVENCY PROFESSIONALS
206. Enrolled and registered persons to act as insolvency professionals
207. Registration of insolvency professionals
208. Functions and obligations of insolvency professionals
CHAPTER V
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INFORMATION UTILITIES
209. No person to function as information utility without certificate of registration
210. Registration of information utility
211. Appeal to National Company Law Appellate Tribunal
212. Governing Board of information utility
213. Core services, etc., of information utilities
214. Obligations of information utility
215. Procedure for submission, etc., of financial information
216. Rights and obligations of persons submitting financial information
CHAPTER VI
INSPECTION AND INVESTIGATION
217. Complaints against insolvency professional agency or its member or information

utility
218. Investigation of insolvency professional agency or its member or information

utility
219. Show-cause notice to insolvency professional agency or its member or

information utility
220. Appointment of Disciplinary Committee
CHAPTER VII
FINANCE, ACCOUNTS AND AUDIT
221. Grants by Central Government
222. Board's Fund
223. Accounts and audit
PART V
MISCELLENEOUS
224. Insolvency and Bankruptcy Fund
225. Power of Central Government to issue directions
226. Power of Central Government to supersede Board
227. Power of Central Government to notify financial service providers, etc
228. Budget
229. Annual Report

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230. Delegation
231. Bar of jurisdiction
232. Members, officers and employees of Board to the public servants
233. Protection of action taken in good faith
234. Agreements with foreign countries
235. Letter of request to a country outside India in certain cases
235-A. Punishment where no specific penalty or punishment is provided
236. Trial of offences by Special Court
237. Appeal and revision
238. Provisions of this Code to override other laws
238-A. Limitation
239. Power to make rules
240. Power to make regulations
240-A. Application of this Code to micro, small and medium enterprises
241. Rules and regulations to be laid before Parliament
242. Power to remove difficulties
243. Repeal of certain enactments and savings
244. Transitional provisions
245. Amendments of Act 9 of 1932

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THE FIRST SCHEDULE
THE SECOND SCHEDULE
THE THIRD SCHEDULE
THE FOURTH SCHEDULE
THE FIFTH SCHEDULE
THE SIXTH SCHEDULE
THE SEVENTH SCHEDULE
THE EIGHTH SCHEDULE
THE NINTH SCHEDULE
THE TENTH SCHEDULE
THE ELEVENTH SCHEDULE
THE TWELFTH SCHEDULE
———
Insolvency and Bankruptcy Code, 2016

[Act 31 of 2016] [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—
Statement of Objects and Reasons.—There is no single law in India that deals with
insolvency and bankruptcy. Provisions relating to insolvency and bankruptcy for
companies can be found in the Sick Industrial Companies (Special Provisions) Act,
1985, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 and the Companies Act, 2013. These statutes provide for creation
of multiple fora such as Board of Industrial and Financial Reconstruction (BIFR), Debts
Recovery Tribunal (DRT) and National Company Law Tribunal (NCLT) and their
respective Appellate Tribunals. Liquidation of companies is handled by the High
Courts. Individual bankruptcy and insolvency is dealt with under the Presidency Towns
Insolvency Act, 1909, and the Provincial Insolvency Act, 1920 and is dealt with by the
Courts. The existing framework for insolvency and bankruptcy is inadequate,
ineffective and results in undue delays in resolution, therefore, the proposed
legislation.
2. The objective of the Insolvency and Bankruptcy Code, 2015 is to consolidate and
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amend the laws relating to reorganization and insolvency resolution of corporate

persons, partnership firms and individuals in a time bound manner for maximization 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 priority of
payment of government dues and to establish an Insolvency and Bankruptcy Fund,
and matters connected therewith or incidental thereto. An effective legal framework for
timely resolution of insolvency and bankruptcy would support development of credit
markets and encourage entrepreneurship. It would also improve Ease of Doing
Business, and facilitate more investments leading to higher economic growth and
development.
3. The Code seeks to provide for designating the NCLT and DRT as the Adjudicating
Authorities for corporate persons and firms and individuals, respectively, for resolution
of insolvency, liquidation and bankruptcy. The Code separates commercial aspects of
insolvency and bankruptcy proceedings from judicial aspects. The Code also seeks to
provide for establishment of the Insolvency and Bankruptcy Board of India (Board) for
regulation of insolvency professionals, insolvency professional agencies and
information utilities. Till the Board is established, the Central Government shall
exercise all powers of the Board or designate any financial sector regulator to exercise
the powers and functions of the Board. Insolvency professionals will assist in
completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged
in the Code. Information Utilities would collect, collate, authenticate and disseminate
financial information to facilitate such proceedings. The Code also proposes to
establish a fund to be called the Insolvency and Bankruptcy Fund of India for the
purposes specified in the Code.
4. The Code seeks to provide for amendments in the Indian Partnership Act, 1932,
the Central Excise Act, 1944, Customs Act, 1962, Income Tax Act, 1961, the Recovery
of Debts Due to Banks and Financial Institutions Act, 1993, the Finance Act, 1994, the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, the Sick Industrial Companies (Special Provisions) Repeal Act,
2003, the Payment and Settlement Systems Act, 2007, the Limited Liability
Partnership Act, 2008, and the Companies Act, 2013.
5. The Code seeks to achieve the above objectives.
Statement of Objects and Reasons of Amendment Act 8 of 2018.—The Insolvency
and Bankruptcy Code, 2016 (the Code) was enacted, inter alia, to consolidate and
amend the laws relating to reorganisation and insolvency resolution of corporate
persons, partnership firms and individuals in a time bound manner. The provisions
relating to insolvency resolution for corporate persons (Part II of the Code), regulation
of insolvency professionals, agencies, information utilities and establishment of the
Insolvency and Bankruptcy Board of India (the Board) (Part IV of the Code) and
Miscellaneous provisions (Part V of the Code) have been brought into force, in phases.
Part III of the Code, which deals with insolvency resolution and bankruptcy for
individuals and partnership firms is yet to be commenced.
2. The provisions for insolvency resolution and liquidation of a corporate person in
the Code did not restrict or bar any person from submitting a resolution plan or
participating in the acquisition process of the assets of a company at the time of
liquidation. Concerns have been raised that persons who, with their misconduct
contributed to defaults of companies or are otherwise undesirable, may misuse this
situation due to lack of prohibition or restrictions to participate in the resolution or
liquidation process, and gain or regain control of the corporate debtor. This may
undermine the processes laid down in the Code as the unscrupulous person would be
seen to be rewarded at the expense of creditors. In addition, in order to check that the
undesirable persons who may have submitted their resolution plans in the absence of
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such a provision, responsibility is also being entrusted on the committee of creditors to

give a reasonable period to repay overdue amounts and become eligible.
3. The Code prescribes for the insolvency resolution and bankruptcy for individuals
and partnership firms, which are proposed to be implemented in a phased manner on
account of the wider impact of these provisions. In the first phase, the provisions
would be extended to personal guarantors of corporate debtors to further strengthen
the corporate insolvency resolution process and a clear enabling provision for the
purpose has been provided in the Bill.
4. It was accordingly decided to make amendments to the Insolvency and
Bankruptcy Code, 2016. Since Parliament was not in session and immediate action
was required to be taken, the Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2017 was promulgated by the President on the 23rd November, 2017.
5. The Insolvency and Bankruptcy Code (Amendment) Bill, 2017 which seeks to
replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, inter
alia, provide for the followings, namely—
(a) facilitate phased implementation of the provisions of the Code to corporate
persons, individuals and partnership firms;
(b) provide clarity as to the persons who can submit a resolution plan in response
to an invitation made by the resolution professional;
(c) enable the resolution professional, with the approval of the committee of
creditors, to specify the eligibility conditions (including such conditions as may
be specified by the Board) while inviting resolution plans from prospective
resolution applicants keeping in view the scale and complexity of operations of
business of the corporate debtor to avoid frivolous applicants;
(d) provide for making certain persons ineligible for being a resolution applicant;
(e) provide that the committee of creditors shall approve the resolution plan by a
vote of not less than seventy-five per cent. of voting share of the financial
creditors after considering the feasibility and viability of the resolution plan in
addition to such requirements as may be specified by the Board, before
according its approval;
(f) disallow the sale of property to a person who is ineligible to be a resolution
applicant in case of liquidation of corporate debtor;
(g) provide punishment for contravention of the provisions where no specific
penalty or punishment is mentioned;
(h) consequential amendments conferring power upon the Board to make
regulations.
6. The Bill seeks to achieve the above objectives.
and Bankruptcy Code, 2016 (the Code) was enacted, inter alia, to consolidate and
persons, partnership firms and individuals in a time bound manner. The provisions
relating to insolvency resolution for corporate persons (Part II of the Code), regulation
of insolvency professionals, agencies, information utilities and establishment of the
Insolvency and Bankruptcy Board of India (the Board) (Part IV of the Code) and
Miscellaneous provisions (Part V of the Code) have been brought into force, in phases.
Part III of the Code, which deals with insolvency resolution and bankruptcy for
individuals and partnership firms is yet to be commenced.
2. During the consideration and passing of the Insolvency and Bankruptcy Code
(Amendment) Act, 2018 in Parliament, a consensus had emerged that further fine
tuning of the Code would be required.The Government constituted an Insolvency Law
Committee (the Committee) to review the functioning and implementation of the
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Code. The recommendations of the Committee has been examined by the Government
and it was accordingly decided to amend the Insolvency and Bankruptcy Code, 2016.
3. Since Parliament was not in session and immediate action was required to be
taken, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 was
promulgated by the President on the 6th day of June, 2018.
4. The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018 which
seeks to replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018,
inter alia, provide for the followings, namely—
(a) insertion of an explanation under clause (8) of Section 5 clarifying that any
amount raised from an allottee under a real estate project shall be deemed to be
an amount having a commercial effect of borrowing;
(b) substitution of sub-section (3) of Section 10 requiring the corporate debtor to
furnish along with application for initiation of corporate insolvency resolution
process a special resolution passed by the shareholder of the corporate debtor or
the resolution passed by at least three-fourth of the total number of partners of
the corporate debtor, as the case may be;
(c) insertion of new Section 12-A for permitting withdrawal of application admitted
for initiation of insolvency resolution process by Adjudicating Authority, on an
application made by the applicant with the approval of ninety per cent. of voting
share of committee of creditors;
(d) amendment of Section 14 to clarify that the moratorium shall not apply to a
personal guarantor or a corporate guarantor to a corporate debtor;
(e) amendment of Section 21 to provide for appointment of authorised
representative by financial creditors and to provide for rights and duties of such
authorised representative;
(f) amendment of Section 29-A, inter alia, to provide—
(i) that clause (c) relating to non-performing asset shall not apply to a financial
entity and to a resolution applicant who has acquired a distressed asset with a
non-performing asset account for a period of three years from the date of such
acquisition;
(ii) for disqualification of person convicted for any offence specified under the
Twelfth Schedule and also to provide that such disqualification shall not apply
to a person after the expiry of two years from the date of his release from the
imprisonment;
(iii) for exemption from disqualification where any preferential, undervalued,
extortionate credit or fraudulent transactions had taken place prior to the
acquisition of the corporate debtor by the resolution applicant pursuant;
(g) amendment of Section 31 to provide that the resolution applicant shall obtain
necessary approval required under any law for the time being in force within the
period specified therein;
(h) reduction of voting threshold for various decisions of the committee of creditors
to sixty-six per cent. for important decisions and fifty-one per cent. for routine
decisions;
(i) amendment of Section 196 to widen the scope of functions of the Board to
promote the development of, and regulate the working and practices of, certain
professionals under the Code;
(j) insertion of new Section 238-A to provide that the Limitation Act, 1963 shall
apply to the proceedings or appeals under the Code;
(k) insertion of a new Section 240-A by which the application of clauses (c) and (h)
of Section 29-A is exempted for the resolution applicants in respect of corporate
insolvency resolution process of micro, small and medium enterprises. It also
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confers power upon the Central Government to exempt micro, small and medium
enterprises in public interest from application of any other provisions of the
Code.
5. The notes on clauses explain in detail the various provisions of the Bill.
and Bankruptcy Code, 2016 (the Code) was enacted with a view to consolidate and
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 or priority
of payment of Government dues and to establish an Insolvency and Bankruptcy Board
of India.
2. The Preamble to the Code lays down the objects of the Code to include “the
insolvency resolution” in a time bound manner for maximisation of value of assets in
order to balance the interests of all the stakeholders. Concerns have been raised that
in some cases extensive litigation is causing undue delays, which may hamper the
value maximisation. There is a need to ensure that all creditors are treated fairly,
without unduly burdening the Adjudicating Authority whose role is to ensure that the
resolution plan complies with the provisions of the Code. Various stakeholders have
suggested that if the creditors were treated on an equal footing, when they have
different pre-insolvency entitlements, it would adversely impact the cost and
availability of credit. Further, views have also been obtained so as to bring clarity on
the voting pattern of financial creditors represented by the authorised representative.
3. In view of the aforesaid difficulties and in order to fill the critical gaps in the
corporate insolvency framework, it has become necessary to amend certain provisions
of the Insolvency and Bankruptcy Code.The Insolvency and Bankruptcy Code
(Amendment) Bill, 2019, inter alia, provides for the following, namely—
(a) to amend clause (26) of Section 5 of the Code so as to insert an Explanation in
the definition of “resolution plan” to clarify that a resolution plan proposing the
insolvency resolution of corporate debtor as a going concern may include the
provisions for corporate restructuring, including by way of merger, amalgamation
and demerger to enable the market to come up with dynamic resolution plans in
the interest of value maximisation;
(b) to amend sub-section (4) of Section 7 of the Code to provide that if an
application has not been admitted or rejected within fourteen days by the
Adjudicating Authority, it shall provide the reasons in writing for the same;
(c) to amend sub-section (3) of Section 12 of the Code to mandate that the
insolvency resolution process of a corporate debtor shall not extend beyond three
hundred and thirty days from the insolvency commencement date, which will
include the time taken in legal proceedings, in order to prevent undue delays in
the completion of the Corporate Insolvency Resolution Process. However, if the
process, including time taken in legal proceedings, is not completed within the
said period of three hundred and thirty days, an order requiring the corporate
debtor to be liquidated under clause (a) of sub-section (1) of Section 33 shall be
passed. It is clarified that the time taken for the completion of the corporate
insolvency resolution process shall include the time taken in legal proceedings;
(d) to insert sub-section (3-A) in Section 25-A of the Code to provide that an
authorised representative under sub-section (6-A) of Section 21 will cast the
vote for all financial creditors he represents in accordance with the decision taken
by a vote of more than fifty per cent of the voting share of the financial creditors
he represents, who have cast their vote, in order to facilitate decision making in
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the committee of creditors, especially when financial creditors are large and
heterogeneous group;
(e) to amend sub-section (2) of Section 30 of the Code to provide that—
(i) the operational creditors shall receive an amount that is not less than the
liquidation value of their debt or the amount that would have been received if
the amount to be distributed under the resolution plan had been distributed in
accordance with the order of priorities in Section 53 of the Code, whichever is
higher;
(ii) the financial creditors who do not vote in favour of the resolution plan shall
receive an amount that is not less than the liquidation value of their debt;
(iii) the provisions shall apply to the corporate insolvency resolution process of a
corporate debtor—
(A) where a resolution plan has not been approved or rejected by the
Adjudicating Authority; or
(B) an appeal is preferred under Section 61 or 62 or such appeal is not time
barred under any provision of law for the time being in force; or
(C) where a legal proceeding has been initiated in any court against the
decision of the Adjudicating Authority in respect of a resolution plan;
(f) to amend sub-section (1) of Section 31 of the Code to clarify that the resolution
plan approved by the Adjudicating Authority shall also be binding on the Central
Government, any State Government or any local authority to whom a debt in
respect of payment of dues arising under any law for the time being in force,
such as authorities to whom statutory dues are owed, including tax authorities;
(g) to amend sub-section (2) of Section 33 of the Code to clarify that the
committee of creditors may take the decision to liquidate the corporate debtor, in
accordance with the requirements provided in sub-section (2) of Section 33, any
time after the constitution of the committee of creditors under sub-section (1) of
Section 21 until the confirmation of the resolution plan, including at any time
before the preparation of the information memorandum.
and Bankruptcy Code, 2016, was enacted to consolidate and amend the laws relating
to reorganisation and insolvency resolution of corporate persons, partnership firms,
individuals and to achieve the desired objectives under it. The Code was amended in
the past to deal with the emerging market realities and to achieve certainty to the
various processes under the law.
2. COVID-19 pandemic has impacted businesses, financial markets and economies
all over the world, including India. The Government has been taking several measures
to mitigate the distress caused by the pandemic, inter alia, increasing the minimum
amount of default to one crore rupees for initiation of corporate insolvency resolution
process and suspension of filing of corporate insolvency resolution applications in
respect of the defaults arising during the period of one year between 25th March, 2020
and 24th March, 2021. The Micro, Small and Medium Enterprises sector is critical to
the economy considering their significant contribution to our gross domestic product
and generation of employment to a sizeable population. It has, therefore, been
considered necessary to urgently address the specific requirements of the sector by
providing an efficient and alternative framework under the Code for quicker, cost-
effective insolvency resolution process that is least disruptive to the businesses,
ensuring, among other objectives, job preservation.
3. In the aforesaid circumstances, it has become necessary to amend the Code to
provide for pre-packaged insolvency resolution process. However, as the Parliament
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was not in session and immediate action was required to be taken, the Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2021, was promulgated by the President
on the 4th day of April, 2021.
4. The Insolvency and Bankruptcy Code (Amendment) Bill, 2021, that seeks to
replace the Ordinance, inter alia, provides for—
(a) specifying a minimum threshold of not more than one crore rupees for initiating
pre-packaged insolvency resolution process;
(b) disposal of simultaneous applications for initiation of corporate insolvency
resolution process and pre-packaged insolvency resolution process, pending
against the same corporate debtor;
(c) inserting a new Chapter III-A containing Sections 54-A to 54-P to facilitate pre-
packaged insolvency resolution process for corporate persons that are Micro,
Small and Medium Enterprises;
(d) penalty for fraudulent or malicious initiation of pre-packaged insolvency
resolution process or with intent to defraud persons;
(e) penalty for fraudulent management of corporate debtor during pre-packaged
insolvency resolution process;
(f) punishment for offences related to pre-packaged insolvency resolution process;
and
(g) certain amendments to the relevant provisions, which are consequential in
nature.
CASE LAW ► Inconsistency between Central and State Acts.—The Insolvency Code is a
Parliamentary law that is an exhaustive code on the subject-matter of insolvency in relation to
corporate entities, and is made under Entry 9, List III in the Seventh Schedule. Further, earlier State
law (Maharashtra Relief Undertakings (Special Provisions) Act, 1958) is repugnant to the later
Parliamentary enactment (Insolvency Code) as under the said State law, the State Government may
take over the management of the relief undertaking, after which a temporary moratorium in much the
same manner as that contained in Sections 13 and 14 of 2016 Code takes place under Section 4 of
the Maharashtra Act, Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407.
Part I
PRELIMINARY
1. Short title, extent and commencement.—(1) This Code may be called the
Insolvency and Bankruptcy Code, 2016.
(2) It extends to the whole of India:
Provided that Part III of this Code shall not extend to the State of Jammu and
Kashmir.
(3) It shall come into force on such date 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.
STATE AMENDMENTS
Union Territory of Jammu and Kashmir.—In its application to the Union Territory of
Jammu and Kashmir, in Section 1, in sub-section (2), omit the proviso. [Vide S.O.
1123(E), dated 18-3-2020 (w.e.f. 18-3-2020)].
Union Territory of Ladakh.—In its application to the Union Territory of Ladakh, in
Section 1, in sub-section (2), omit the proviso. [Vide S.O. 3774(E), dated 23-10-
2020].
NOTIFICATIONS
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(1)
Ministry of Corporate Affairs, Noti. No. S.O. 2618(E), dated August 5, 2016, published
in the Gazette of India, Extra., Part II, Section 3(ii), dated 5th August, 2016, p. 1, No.
1949
In exercise of the powers conferred by the proviso to sub-section (3) of Section 1 of
the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government
hereby appoints the 5th of August, 2016 as the date on which the provisions of
Sections 188 to 194 (both inclusive) of the said Code shall come into force.
(2)
Ministry of Corporate Affairs, Noti. No. S.O. 2746(E), dated August 19, 2016,
published in the Gazette of India, Extra., Part II, Section 3(ii), dated 19th August,
2016, p. 2, No. 2064
In exercise of the powers conferred by sub-section (3) of Section 1 of the
Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby
appoints the 19th August, 2016 as the date on which the provisions of following
sections of the said Code shall come into force—
(1) Section 3—
(i) clause (1);
(ii) clause (5);
(iii) clause (22);
(iv) clause (26);
(v) clause (28);
(vi) clause (37);
(2) Section 221;
(3) Section 222;
(4) Section 225;
(5) Section 226;
(6) Section 230;
(7) Section 232;
(8) Section 233;
(9) sub-section (1) and clause (zd) of sub-section (2) of Section 239;
(10) sub-section (1) and clause (zt) of sub-section (2) of Section 240;
(11) Section 241; and
(12) Section 242.
(3)
Ministry of Corporate Affairs, Noti. No. S.O. 2618(E), dated August 5, 2016, published
in the Gazette of India, Extra., Part II, Section 3(ii), dated 5th August, 2016, p. 1, No.
1949
In exercise of the powers conferred by the proviso to sub-section (3) of Section 1 of
the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (2016-CCL-II-215), the
Central Government hereby appoints the 5th of August, 2016 as the date on which the
provisions of Sections 188 to 194 (both inclusive) of the said Code shall come into
force.
(4)
Ministry of Corporate Affairs, Noti. No. S.O. 2746(E), dated August 19, 2016,
published in the Gazette of India, Extra., Part II, Section 3(ii), dated 19th August,
2016, p. 2, No. 2064
In exercise of the powers conferred by sub-section (3) of Section 1 of the Insolvency
and Bankruptcy Code, 2016 (31 of 2016) (2016-CCL-II-215), the Central Government
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hereby appoints the 19th August, 2016 as the date on which the provisions of
following sections of the said Code shall come into force—
(1) Section 3—
(i) clause (1);
(ii) clause (5);
(iii) clause (22);
(iv) clause (26);
(v) clause (28);
(vi) clause (37);
(2) Section 221;
(3) Section 222;
(4) Section 225;
(5) Section 226;
(6) Section 230;
(7) Section 232;
(8) Section 233;
(9) sub-section (1) and clause (zd) of sub-section (2) of Section 239;
(10) sub-section (1) and clause (zt) of sub-section (2) of Section 240;
(12) Section 242.
(5)
Ministry of Corporate Affairs, Noti. No. S.O. 3110(E), dated October 1, 2016, published
in the Gazette of India, Extra., Part II, Section 3(ii), dated 1st October, 2016, p. 1, No.
2387
In exercise of the powers conferred by sub-sections (1) and (3) of Section 188 of
the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government
hereby appoints 1st October, 2016 as the date of establishment of Insolvency and
Bankruptcy Board of India. The Head Office of the Insolvency and Bankruptcy Board of
India shall be at New Delhi.
(6)
Ministry of Corporate Affairs, Noti. No. S.O. 3355(E), dated November 1, 2016,
published in the Gazette of India, Extra., Part II, Section 3(ii), dated 2nd November,
2016, p. 2, No. 2603
appoints the 1st November, 2016 as the date on which the provisions of the following
(1) Section 3—
(i) clause (2) to clause (4);
(ii) clause (6) to clause (21);
(iii) clause (23) to clause (25);
(iv) clause (27);
(v) clause (29) to clause (36);
(2) Section 196;
(3) Section 197;
(4) Section 223;
(5) Sub-section (2) of Section 239—
(i) clause (ze) to (zh);
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(ii) clause (zl) to (zm);

(6) Sub-section (2) of Section 240—
(i) clause (a) to (zm);
(ii) clause (zu) to (zzzc);
(7) Section 244;
(8) Section 246 to Section 248 [both inclusive];
(10) Section 252.
(7)
published in the Gazette of India, Extra., Part II, Section 3(ii), dated 15th November,
2016, p. 2, No. 2690
appoints the 15th November, 2016 as the date on which the provisions of the
following sections of the said Code shall come into force—
(2) sub-section (1) of Section 208—
(i) clause (c);
(ii) clause (e);
(3) sub-section (2) of Section 208;
(5) Section 251;
(6) Section 253;
(8) Section 255.
(8)
2016, p. 2, No. 2815
appoints the 1st December, 2016 as the date on which the provisions of the following
(1) clause (a) to clause (d) of Section 2 (except with regard to voluntary liquidation
or Bankruptcy);
(2) Sections 4 to Section 32 [both inclusive];
(3) Sections 60 to Section 77 [both inclusive];
(4) Section 198;
(5) Section 231;
(6) Sections 236 to Section 238 [both inclusive]; and
(7) clause (a) to clause (f) of sub-section (2) of Section 239.
(9)
Ministry of Corporate Affairs, Noti. No. S.O. 3687(E), dated December 9, 2016,
published in the Gazette of India, Extra., Part II, Section 3(ii), dated 9th December,
2016, p. 1, No. 2899
appoints the 15th day of December, 2016 as the date on which the provisions of
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Section 33 to Section 54 (both inclusive) of the said Code shall come into force.
(10)
Ministry of Corporate Affairs, Noti. No. S.O. 1005(E), dated March 30, 2017, published
in the Gazette of India, Extra., Part II, Section 3(ii), dated 30th March, 2017, p. 1, No.
896
appoints the 1st April, 2017 as the date on which the provisions of the following
(1) Section 59;
(2) Section 209 to Section 215 (both inclusive);
(3) Sub-section (1) of Section 216; and
(4) Section 234 and Section 235.
(11)
Ministry of Corporate Affairs, Noti. No. S.O. 1570(E), dated May 15, 2017, published in
the Gazette of India, Extra., Part II, Section 3(ii), dated 16th May, 2017, p. 1, No.
1387
Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the
‘Code’), the Central Government hereby appoints the 1st April, 2017, as the date on
which the provisions of clause (a) to clause (d) of Section 2 of the Code relating to
voluntary liquidation or bankruptcy shall come into force.
Explanatory Memorandum.—By giving retrospective effect to this notification, it is
certified that no one is being adversely affected and giving retrospective effect to this
notification is purely procedural in nature.
(12)
Ministry of Corporate Affairs, Noti. No. S.O. 1817(E), dated May 1, 2018, published in
the Gazette of India, Extra., Part II, Section 3(ii), dated 3rd May, 2018, p. 1, No. 1631.
appoints the 1st day of May, 2018 as the date on which the provisions of Section 227
to Section 229 (both inclusive) of the said Code shall come into force.
(13)
Ministry of Corporate Affairs, Noti. No. S.O. 1910(E), dated June 14, 2017 published in
the Gazette of India, Extra., Part II, Section 3(ii), dated 14th June, 2017, p. 2, No.
1697
appoints the 14th day of June, 2017, as the date on which the provisions of Sections
55 to Section 58 (both inclusive) of the said Code shall come into force.
(14)
Ministry of Corporate Affairs, Noti. No. S.O. 4126(E), dated November 15, 2019 and
2019, p. 2, No. 3704
appoints the 1st day of December, 2019 as the date on which the following provisions
of the said Code only insofar as they relate to personal guarantors to corporate
debtors, shall come into force—
(1) clause (e) of Section 2;
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(2) Section 78 (except with regard to fresh start process) and Section 79;
(3) Sections 94 to 187 [both inclusive];
(4) clause (g) to clause (i) of sub-section (2) of Section 239;
(5) clause (m) to clause (zc) of sub-section (2) of Section 239;
(6) clause (zn) to clause (zs) of sub-section (2) of Section 240; and
(7) Section 249.
(15)
2019, p. 2, No. 3716
In exercise of the powers conferred by Section 227 of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016), the Central Government in consultation with the
Reserve Bank of India hereby notifies as under:
The insolvency resolution and liquidation proceedings of the following categories of
financial service providers shall be undertaken in accordance with the provisions of the
Insolvency and Bankruptcy Code, 2016 read with the Insolvency and Bankruptcy
(Insolvency and Liquidation Proceedings of Financial Service Providers and Application
to Adjudicating Authority) Rules, 2019 (in this notification referred to as the ‘Rules’)
and the applicable Regulations:
Sl. Category of Financial Service Appropriate Regulator Dealing with third-
No. Provider (Rule 2 of the Rules) [clause (a) of sub-rule party assets (Rule
(1) of Rule 3 of the 10 of the Rules)
Rules]
(1) (2) (3) (5)
1 Non-banking finance Reserve Bank of India. To be notified
companies (which include separately.
housing finance companies)
with asset size of Rs 500 crore
or more, as per last audited
balance sheet.
2. Application.—The provisions of this Code shall apply to—
(a) any company incorporated under the Companies Act, 2013 (18 of 2013) or
under any previous company law;
(b) any other company governed by any special Act for the time being in force,
except insofar 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; 2 [* * *]
3 [(e) personal guarantors to corporate debtors;]
4 [(f) partnership firms and proprietorship firms; and
(g) individuals, other than persons referred to in clause (e),]

in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the
case may be.
► Effect of Section 2(e) [as amended in 2018].—Amended clause providing that 2016 Code
shall apply to “personal guarantors to corporate debtors”. The effect thereof is only for purposes of
Sections 60(2) and (3) and does not mean that whole 2016 Code applies to such persons. This only
means that “bankruptcy” proceedings against such persons shall be initiated/continued only before
jurisdicational NCLT, which shall proceed against such persons in accordance with Presidency
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Towns Insolvency Act, 1909/Provincial Insolvency Act, 1920, and not 2016 Code, SBI v. V.
Ramakrishnan, (2018) 17 SCC 394.
3. Definitions.—In this Code, unless the context otherwise requires,—
(1) “Board” means the Insolvency and Bankruptcy Board of India established
under sub-section (1) of Section 188;
(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, if such breach gives rise to a right to payment, whether or not such
right is reduced to judgment, fixed, matured, unmatured, disputed,
undisputed, secured or unsecured;
(7) “corporate person” means a company as defined in clause (20) of Section 2
of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as
defined in clause (n) of sub-section (1) of Section 2 of the Limited Liability
Partnership Act, 2008 (6 of 2009), or any other person incorporated with
limited liability under any law for the time being in force but shall not include
any financial service provider;
(8) “corporate debtor” means a corporate person who owes a debt to any person;
(9) “core services” means services rendered by an information utility for—
(a) accepting electronic submission of financial information in such form and
manner as may be specified;
(b) safe and accurate recording of financial information;
(c) authenticating and verifying the financial information submitted by a
person; and
(d) providing access to information stored with the information utility to
persons as may be specified;
(10) “creditor” means any person to whom a debt is owed and includes a
financial creditor, an operational creditor, a secured creditor, an unsecured
creditor and a decree-holder;
(11) “debt” means a liability or obligation in respect of a claim which is due from
any person and includes a financial debt and operational debt;
(12) “default” means non-payment of debt when whole or any part or instalment
of the amount of debt has become due and payable and is not 5 [paid] by the
debtor or the corporate debtor, as the case may be;
(13) “financial information”, in relation to a person, means one or more of the
following categories of information, namely:—
(a) records of the debt of the person;
(b) records of liabilities when the person is solvent;
(c) records of assets of person over which security interest has been created;
(d) records, if any, of instances of default by the person against any debt;
(e) records of the balance sheet and cash-flow statements of the person; and
(f) such other information as may be specified.
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(14) “financial institution” means—

(a) a scheduled bank;
(b) financial institution as defined in Section 45-I of the Reserve Bank of India
Act, 1934 (2 of 1934);
(c) public financial institution as defined in clause (72) of Section 2 of the
Companies Act, 2013 (18 of 2013); and
(d) such other institution as the Central Government may by notification
specify as a financial institution;
(15) “financial product” means securities, contracts of insurance, deposits, credit
arrangements including loans and advances by banks and financial
institutions, retirement benefit plans, small savings instruments, foreign
currency contracts other than contracts to exchange one currency (whether
Indian or not) for another which are to be settled immediately, or any other
instrument as may be prescribed;
(16) “financial service” includes any of the following services, namely—
(a) accepting of deposits;
(b) safeguarding and administering assets consisting of financial products,
belonging to another person, or agreeing to do so;
(c) effecting contracts of insurance;
(d) offering, managing or agreeing to manage assets consisting of financial
products belonging to another person;
(e) rendering or agreeing, for consideration, to render advice on or soliciting
for the purposes of—
(i) buying, selling, or subscribing to, a financial product;
(ii) availing a financial service; or
(iii) exercising any right associated with a financial product or financial
service;
(f) establishing or operating an investment scheme;
(g) maintaining or transferring records of ownership of a financial product;
(h) underwriting the issuance or subscription of a financial product; or
(i) selling, providing, or issuing stored value or payment instruments or
providing payment services;
(17) “financial service provider” means a person engaged in the business of
providing financial services in terms of authorisation issued or registration
granted by a financial sector regulator;
(18) “financial sector regulator” means an authority or body constituted under
any law for the time being in force to regulate services or transactions of
financial sector and includes the Reserve Bank of India, the Securities and
Exchange Board of India, the Insurance Regulatory and Development
Authority of India, the Pension Fund Regulatory Authority and such other
regulatory authorities as may be notified by the Central Government;
(19) “insolvency professional” means a person enrolled under Section 206 with
an insolvency professional agency as its member and registered with the
Board as an insolvency professional under Section 207;
(20) “insolvency professional agency” means any person registered with the
Board under Section 201 as an insolvency professional agency;
(21) “information utility” means a person who is registered with the Board as an
information utility under Section 210;
(22) “notification” means a notification published in the Official Gazette, and the
terms “notified” and “notify” shall be construed accordingly;
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(23) “person” includes—

(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a trust;
(e) a partnership;
(f) a limited liability partnership; and
(g) any other entity established under a statute,
and includes a person resident outside India;
(24) “person resident in India” shall have the meaning as assigned to such term
in clause (v) of Section 2 of the Foreign Exchange Management Act, 1999 (42
of 1999);
(25) “person resident outside India” means a person other than a person
resident in India;
(26) “prescribed” means prescribed by rules made by the Central Government;
(27) “property” includes money, goods, actionable claims, land and every
description of property situated in India or outside India and every description
of interest including present or future or vested or contingent interest arising
out of, or incidental to, property;
(28) “regulations” means the regulations made by the Board under this Code;
(29) “Schedule” means the Schedule annexed to this Code;
(30) “secured creditor” means a creditor in favour of whom security interest is
created;
(31) “security interest” means right, title or interest or a claim to property,
created in favour of, or provided for a secured creditor by a transaction which
secures payment or performance of an obligation and includes mortgage,
charge, hypothecation, assignment and encumbrance or any other agreement
or arrangement securing payment or performance of any obligation of any
person:
Provided that security interest shall not include a performance guarantee;
(32) “specified” means specified by regulations made by the Board under this
Code and the term “specify” shall be construed accordingly;
(33) “transaction” includes a agreement or arrangement in writing for the
transfer of assets, or funds, goods or services, from or to the corporate debtor;
(34) “transfer” includes sale, purchase, exchange, mortgage, pledge, gift, loan or
any other form of transfer of right, title, possession or lien;
(35) “transfer of property” means transfer of any property and includes a transfer
of any interest in the property and creation of any charge upon such property;
(36) “workman” shall have the same meaning as assigned to it in clause (s) of
Section 2 of the Industrial Disputes Act, 1947 (14 of 1947);
(37) words and expressions used but not defined in this Code but defined in the
Indian Contract Act, 1872 (9 of 1872), the Indian Partnership Act, 1932 (9 of
1932), the Securities Contact (Regulation) Act, 1956 (42 of 1956), the
Securities Exchange Board of India Act, 1992 (15 of 1992), the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), the
Limited Liability Partnership Act, 2008 (6 of 2009) and the Companies Act,
2013 (18 of 2013), shall have the meanings respectively assigned to them in
those Acts.
► Definition of “transaction” — Nature and scope.—Said definition, held, is an inclusive one
which is extremely wide in nature, and includes a transaction evidencing a debt or liability, P.
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Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258.

Part II
INSOLVENCY RESOLUTION AND LIQUIDATION FOR CORPORATE PERSONS
Chapter I
PRELIMINARY
4. Application of this Part.—(1) This Part shall apply to matters relating to the
insolvency and liquidation of corporate debtors where the minimum amount of the
default is one lakh 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:
6
[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.]
5. Definitions.—In this Part, unless the context otherwise requires,—
(1) “Adjudicating Authority”, for the purposes of this Part, means National
Company Law Tribunal constituted under Section 408 of the Companies Act,
2013 (18 of 2013);
(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 (XXXVIII of 1949);
7 [(2-A) “base resolution plan” means a resolution plan provided by the corporate
debtor under clause (c) of sub-section (4) of Section 54-A;]

(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” means—
(a) corporate debtor; or
(b) a member or partner of the corporate debtor who is authorised to make an
application for the corporate insolvency resolution process 8 [or the pre-
packaged insolvency resolution process, as the case may be,] under the
constitutional document of the corporate debtor; or
(c) an individual who is in charge of managing the operations and resources of
the corporate debtor; or
(d) a person who has the control and supervision over the financial affairs of
the corporate debtor;
9
[(5-A) “corporate guarantor” means a corporate person who is the surety in a
contract of guarantee to a corporate debtor;]
(6) “dispute” includes a suit or arbitration proceedings relating to—
(a) the existence of the amount of debt;
(b) the quality of goods or service; or
(c) the breach of a representation or warranty;
(7) “financial creditor” means any person to whom a financial debt is owed and
includes a person to whom such debt has been legally assigned or transferred
to;
(8) “financial debt” means a debt along with interest, if any, which is disbursed
against the consideration for the time value of money and includes—
(a) money borrowed against the payment of interest;
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(b) any amount raised by acceptance under any acceptance credit facility or
its de-materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the issue of
bonds, notes, debentures, loan stock or any similar instrument;
(d) the amount of any liability in respect of any lease or hire purchase contract
which is deemed as a finance or capital lease under the Indian Accounting
Standards or such other accounting standards as may be prescribed;
(e) receivables sold or discounted other than any receivables sold on non-
recourse basis;
(f) any amount raised under any other transaction, including any forward sale
or purchase agreement, having the commercial effect of a borrowing;
10 [Explanation.—For the purposes of this sub-clause,—
(i) any amount raised from an allottee under a real estate project shall be
deemed to be an amount having the commercial effect of a borrowing;
and
(ii) the expressions, “allottee” and “real estate project” shall have the
meanings respectively assigned to them in clauses (d) and (zn) of
Section 2 of the Real Estate (Regulation and Development) Act, 2016
(16 of 2016);]
(g) any derivative transaction entered into in connection with protection
against or benefit from fluctuation in any rate or price and for calculating
the value of any derivative transaction, only the market value of such
transaction shall be taken into account;
(h) any counter-indemnity obligation in respect of a guarantee, indemnity,
bond, documentary letter of credit or any other instrument issued by a
bank or financial institution;
(i) the amount of any liability in respect of any of the guarantee or indemnity
for any of the items referred to in sub-clauses (a) to (h) of this clause;
(9) “financial position”, in relation to any person, means the financial information
of a person as on a certain date;
(10) “information memorandum” means a memorandum prepared by resolution
professional under sub-section (1) of Section 29;
(11) “initiation date” means the date on which a financial creditor, corporate
applicant or operational creditor, as the case may be, makes an application to
the Adjudicating Authority for initiating corporate insolvency resolution
process 11 [or pre-packaged insolvency resolution process, as the case may
be];
(12) “insolvency commencement date” means the date of admission of an
application for initiating corporate insolvency resolution process by the
Adjudicating Authority under Sections 7, 9 or Section 10, as the case may be:
12
[* * *]
(13) “insolvency resolution process costs” means—
(a) the amount of any interim finance and the costs incurred in raising such
finance;
(b) the fees payable to any person acting as a resolution professional;
(c) any costs incurred by the resolution professional in running the business of
the corporate debtor as a going concern;
(d) any costs incurred at the expense of the Government to facilitate the
insolvency resolution process; and
(e) any other costs as may be specified by the Board;
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(14) “insolvency resolution process period” means the period of one hundred and
eighty days beginning from the insolvency commencement date and ending
on one hundred and eightieth day;
(15) “interim finance” means any financial debt raised by the resolution
professional during the insolvency resolution process period 13 [or by the
corporate debtor during the pre-packaged insolvency resolution process
period, as the case may be] 14 [and such other debt as may be notified];
(16) “liquidation cost” means any cost incurred by the liquidator during the
period of liquidation subject to such regulations, as may be specified by the
Board;
(17) “liquidation commencement date” means the date on which proceedings for
liquidation commence in accordance with Section 33 or Section 59, as the
case may be;
(18) “liquidator” means an insolvency professional appointed as a liquidator in
accordance with the provisions of Chapter III or Chapter V of this Part, as the
case may be;
(19) “officer” for the purposes of 15 [Chapter VI and] Chapter VII of this Part,
means an officer who is in default, as defined in clause (60) of Section 2 of
the Companies Act, 2013 (18 of 2013) or a designated partner as defined in
clause (j) of Section 2 of the Limited Liability Partnership Act, 2008 (6 of
2009), as the case may be;
(20) “operational creditor” means a person to whom an operational debt is owed
and includes any person to whom such debt has been legally assigned or
transferred;
(21) “operational debt” means a claim in respect of the provision of goods or
services including employment or a debt in respect of the 16 [payment] of dues
arising under any law for the time being in force and payable to the Central
Government, any State Government or any local authority;
(22) “personal guarantor” means an individual who is the surety in a contract of
guarantee to a corporate debtor;
(23) “personnel” includes the directors, managers, key managerial personnel,
designated partners and employees, if any, of the corporate debtor;
17
[(23-A) “preliminary information memorandum” means a memorandum
submitted by the corporate debtor under clause (b) of sub-section (1) of
Section 54-G;
(23-B) “pre-packaged insolvency commencement date” means the date of
admission of an application for initiating the pre-packaged insolvency
resolution process by the Adjudicating Authority under clause (a) of sub-
section (4) of Section 54-C;
(23-C) “pre-packaged insolvency resolution process costs” means—
(a) the amount of any interim finance and the costs incurred in raising such
finance;
(b) the fees payable to any person acting as a resolution professional and any
expenses incurred by him for conducting the pre-packaged insolvency
resolution process during the pre-packaged insolvency resolution process
period, subject to sub-section (6) of Section 54-F;
(c) any costs incurred by the resolution professional in running the business of
the corporate debtor as a going concern pursuant to an order under sub-
section (2) of Section 54-J;
(d) any costs incurred at the expense of the Government to facilitate the pre-
packaged insolvency resolution process; and
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(e) any other costs as may be specified;

(23-D) “pre-packaged insolvency resolution process period” means the period
beginning from the pre-packaged insolvency commencement date and ending
on the date on which an order under sub-section (1) of Section 54-L, or sub-
section (1) of Section 54-N, or sub-section (2) of Section 54-O, as the case
may be, is passed by the Adjudicating Authority;]
(24) “related party”, in relation to a corporate debtor, means—
(a) a director or partner of the corporate debtor or a relative of a director or
partner of the corporate debtor;
(b) a key managerial personnel of the corporate debtor or a relative of a key
managerial personnel of the corporate debtor;
(c) a limited liability partnership or a partnership firm in which a director,
partner, or manager of the corporate debtor or his relative is a partner;
(d) a private company in which a director, partner or manager of the corporate
debtor is a director and holds along with his relatives, more than two per
cent of its share capital;
(e) a public company in which a director, partner or manager of the corporate
debtor is a director and holds along with relatives, more than two per cent
of its paid-up share capital;
(f) anybody corporate whose board of directors, managing director or
manager, in the ordinary course of business, acts on the advice, directions
or instructions of a director, partner or manager of the corporate debtor;
(g) any limited liability partnership or a partnership firm whose partners or
employees in the ordinary course of business, acts on the advice, directions
or instructions of a director, partner or manager of the corporate debtor;
(h) any person on whose advice, directions or instructions, a director, partner
or manager of the corporate debtor is accustomed to act;
(i) a body corporate which is a holding, subsidiary or an associate company of
the corporate debtor, or a subsidiary of a holding company to which the
corporate debtor is a subsidiary;
(j) any person who controls more than twenty per cent of voting rights in the
corporate debtor on account of ownership or a voting agreement;
(k) any person in whom the corporate debtor controls more than twenty per
cent of voting rights on account of ownership or a voting agreement;
(l) any person who can control the composition of the board of directors or
corresponding governing body of the corporate debtor;
(m) any person who is associated with the corporate debtor on account of—
(i) participation in policy-making processes of the corporate debtor; or
(ii) having more than two directors in common between the corporate
debtor and such person; or
(iii) interchange of managerial personnel between the corporate debtor and
such person; or
(iv) provision of essential technical information to, or from, the corporate
debtor;
18 [(24-A) “related party”, in relation to an individual, means—
(a) a person who is a relative of the individual or a relative of the spouse of

the individual;
(b) a partner of a limited liability partnership, or a limited liability partnership
or a partnership firm, in which the individual is a partner;
(c) a person who is a trustee of a trust in which the beneficiary of the trust
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includes the individual, or the terms of the trust confers a power on the
trustee which may be exercised for the benefit of the individual;
(d) a private company in which the individual is a director and holds along
with his relatives, more than two per cent. of its share capital;
(e) a public company in which the individual is a director and holds along with
relatives, more than two per cent. of its paid-up share capital;
(f) a body corporate whose board of directors, managing director or manager,
in the ordinary course of business, acts on the advice, directions or
instructions of the individual;
(g) a limited liability partnership or a partnership firm whose partners or
employees in the ordinary course of business, act on the advice, directions
or instructions of the individual;
(h) a person on whose advice, directions or instructions, the individual is
accustomed to act;
(i) a company, where the individual or the individual along with its related
party, own more than fifty per cent. of the share capital of the company or
controls the appointment of the board of directors of the company.
Explanation.—For the purposes of this clause,—
(a) “relative”, with reference to any person, means anyone who is related to
another, in the following manner, namely—
(i) members of a Hindu Undivided Family,
(ii) husband,
(iii) wife,
(iv) father,
(v) mother,
(vi) son,
(vii) daughter,
(viii) son's daughter and son,
(ix) daughter's daughter and son,
(x) grandson's daughter and son,
(xi) granddaughter's daughter and son,
(xii) brother,
(xiii) sister,
(xiv) brother's son and daughter,
(xv) sister's son and daughter,
(xvi) father's father and mother,
(xvii) mother's father and mother,
(xviii) father's brother and sister,
(xix) mother's brother and sister, and
(b) wherever the relation is that of a son, daughter, sister or brother, their
spouses shall also be included;]
19 [(25) “resolution applicant” means a person, who individually or jointly with
any other person, submits a resolution plan to the resolution professional

pursuant to the invitation made under clause (h) of sub-section (2) of Section
25 20 [or pursuant to Section 54-K, as the case may be];]
(26) “resolution plan” means a plan proposed by 21 [resolution applicant] for
insolvency resolution of the corporate debtor as a going concern in accordance
with Part II;
22 [Explanation.—For the removal of doubts, it is hereby clarified that a
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resolution plan may include provisions for the restructuring of the corporate
debtor, including by way of merger, amalgamation and demerger;]
(27) “resolution professional”, for the purposes of this Part, means an insolvency
professional appointed to conduct the corporate insolvency resolution process
23 [or the pre-packaged insolvency resolution process, as the case may be,]
and includes an interim resolution professional; and

(28) “voting share” means the share of the voting rights of a single financial
creditor in the committee of creditors which is based on the proportion of the
financial debt owed to such financial creditor in relation to the financial debt
owed by the corporate debtor.
► —Financial creditors”.—The Insolvency and Bankruptcy Code, as it was originally enacted,
did not contain an adequate recognition of the interests of home buyers in real estate projects.
Home buyers are vital stake holders. The process of corporate insolvency resolution directly impacts
upon their rights and interests. Yet the IBC, as initially crafted, did not protect them. The concerns
of the home buyers have been sought to be assuaged by the Insolvency and Bankruptcy
(Amendment) Ordinance, 2018 which came into force on 6-6-2018. As a result of the Ordinance,
home buyers are brought within the purview of financial creditors under the IBC, Chitra Sharma v.
Union of India, 2018 SCC OnLine SC 874.
In Chitra Sharma v. Union of India, 2018 SCC OnLine SC 874, for protecting the interests of
home buyers in projects floated by Jaypee Infratech Ltd. the Supreme Court remanded the matter
back to the National Company Law Tribunal (NCLT) while directing that homebuyers be included in
the Committee of Creditors (CoC) to be constituted afresh in accordance with the provisions of the
Insolvency and Bankruptcy (Amendment) Ordinance, 2018, more particularly the amended
definition of the expression —financial creditors”.
► “Financial debt” under — Scope of.—Pledge agreement between lender and corporate
debtor is limited to pledge of shares by corporate debtor as security towards borrower's (parent
company of corporate debtor) dues, but if there is no promise to discharge the liability of the
borrower by the pledgor corporate debtor, the same did not amount to a financial debt so as to treat
the lender as financial creditor of the corporate debtor. “Pledge agreement” by itself does not
amount to a “Contract of guarantee”. A person having only security interest over the assets of
corporate debtor, even if falling within the description of “secured creditor” by virtue of collateral
security extended by the corporate debtor (to secure the debts of another), would not be covered by
the term “financial creditors” as per definitions contained in clauses (7) and (8) of Section 5,
Phoenix ARC (P) Ltd. v. Ketulbhai Ramubhai Patel, (2021) 2 SCC 799.
Who is Collusive/Sham transactions cannot amount to “financial debts” under IBC. Under
Section 5(7) a person can be categorised as a financial creditor if a financial debt is owed to it.
Section 5(8) stipulates that the essential ingredient of a financial debt is disbursal against
consideration for the time value of money. A transaction which is sham or collusive would only
create an illusion that money has been disbursed to a borrower with the object of receiving
consideration in the form of time value of money, when in fact the parties have entered into the
transaction with a different or an ulterior motive i.e. the real agreement between the parties is
something other than advancing a financial debt. Further, IBC recognises that for the success of an
insolvency regime, the real nature of the transactions has to be unearthed in order to prevent any
person from taking undue benefit of its provisions to the detriment of the rights of legitimate
creditors, Phoenix ARC (P) Ltd. v. Spade Financial Services Ltd., (2021) 3 SCC 475.
► Validity of Section 5(8)(f) Expln. [as inserted by Insolvency and Bankruptcy Code
(Second Amendment) Act, 2018].—Allottees of real estate projects/homebuyers can be
considered, as “financial creditors” and are entitled to be represented in the Committee of Creditors.
Section 5(8)(f) Expln. qua such allottees being financial creditors is clarificatory in nature. Money
advanced by allottees to real estate developers can also be considered as “financial debt”, as
defined under Section 5(8). The validity of Section 5(8)(f) Expln., affirmed, Pioneer Urban Land
And Infrastructure Ltd. v. Union Of India, (2019) 8 SCC 416.
► Maintainability of petition.—Petition by a registered trade union as an “operational creditor”
is maintainable, Mazdoor Morcha v. Juggilal Kamlapat Jute Mills Co. Ltd., (2019) 11 SCC 332.
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► Differentiation of “real estate developers” from other entities.—Real estate developers

are, in substance, persons who avail finance from allottees who then fund the real estate
development project. Further, the object of dividing debts into two categories under the Code,
namely, financial and operational debts, is broadly to sub-divide debts into those in which money is
lent and those where debts are incurred on account of goods being sold or services being rendered.
Thus, real estate developers fall squarely within the object of the Code as originally enacted insofar
as they are financial debtors and not operational debtors. Also, homebuyers/allottees can be
assimilated with other individual financial creditors like debenture holders and fixed deposit holders,
who have advanced certain amounts to the corporate debtor, Pioneer Urban Land and
Infrastructure Ltd. v. Union Of India, (2019) 8 SCC 416.
► Noscitur a sociis.—Noscitur a sociis being a mere rule of construction cannot be applied as
wider words had been deliberately used in the residuary provision, to make the scope of the
definition of “financial debt” subsume matters not found in other sub-clauses of Section 5(8),
Pioneer Urban Land and Infrastructure Ltd. v. Union Of India, (2019) 8 SCC 416.
► Right to have access to resolution plan.—Though the erstwhile Board of Directors are not
members of the Committee of Creditors, yet, they have a right to participate in each and every
meeting held by the Committee of Creditors, and also have a right to discuss along with members of
the Committee of Creditors all resolution plans that are presented at such meetings under Section 25
(2)(i) IBC. Further, every participant is entitled to a notice of every meeting of the Committee of
Creditors and such notice of meeting must contain an agenda of the meeting, together with the
copies of all documents relevant for matters to be discussed and the issues to be voted upon at the
meeting vide Regn. 21(3)(iii) of the Corporate Persons Regulations, 2016 and resolution plans are
“matters to be discussed” at such meetings, and the erstwhile Board of Directors are “participants”
who will discuss these issues. Also, held, the expression “documents” is a wide expression which
would include resolution plans. A combined reading of the Code as well as the Regulations leads to
the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution
plans that may be discussed at meetings of the Committee of Creditors, must be given a copy of
such plans as part of “documents” that have to be furnished along with the notice of such meetings.
So far as confidential information is concerned, it is clear that the resolution professional can take
an undertaking from members of the erstwhile Board of Directors to maintain confidentiality. The
source of this power is Regn. 7(2)(h) of the Professionals Regulations, 2016, read with Para 21 of
Schedule 1 thereto. This can be in the form of a non-disclosure agreement in which the resolution
professional can be indemnified in case information is not kept strictly confidential, Vijay Kumar
Jain v. Standard Chartered Bank, (2019) 20 SCC 455.
Chapter II
CORPORATE INSOLVENCY RESOLUTION PROCESS
6. Persons who may initiate corporate insolvency resolution process.—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.
7. Initiation of corporate insolvency resolution process by financial creditor.—(1) A
financial creditor either by itself or jointly with 24 [other financial creditors, or any other
person on behalf of the financial creditor, as may be notified25 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:
26 [Provided that for the financial creditors, referred to in clauses (a) and (b) of sub-
section (6-A) 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 resolution process against the
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corporate debtor shall be filed jointly by not less than one hundred of such allottees
under the same real estate project or not less than ten per cent. of the total number of
such allottees under the same real estate project, whichever is less:
Provided also that where an application for initiating the corporate insolvency
resolution process against a corporate debtor has been filed by a financial creditor
referred to in the first and second provisos and has not been admitted by the
Adjudicating Authority before the commencement of the Insolvency and Bankruptcy
Code (Amendment) Act, 2020, such application shall be modified to comply with the
requirements of the first or second proviso within thirty days of the commencement of
the said Act, failing which the application shall be deemed to be withdrawn before its
admission.]
Explanation.—For the purposes of this sub-section, a default includes a default in
respect of a financial debt owed not only to the applicant financial creditor but to any
other financial creditor of the corporate debtor.
(2) The financial creditor shall make an application under sub-section (1) in such
form and manner and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish—
(a) record of the default recorded with the information utility or such other record
or evidence of default as may be specified;
(b) the name of the resolution professional proposed to act as an interim
resolution professional; and
(c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the
application under sub-section (2), ascertain the existence of a default from the records
of an information utility or on the basis of other evidence furnished by the financial
creditor under sub-section (3):
27 [Provided that if the Adjudicating Authority has not ascertained the existence of
default and passed an order under sub-section (5) within such time, it shall record its
reasons in writing for the same.]
(5) Where the Adjudicating Authority is satisfied that—
(a) a default has occurred and the application under sub-section (2) is complete,
and there is no disciplinary proceedings pending against the proposed
resolution professional, it may, by order, admit such application; or
(b) default has not occurred or the application under sub-section (2) is
incomplete or any disciplinary proceeding is pending against the proposed
resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application
under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect
in his application within seven days of receipt of such notice from the Adjudicating
Authority.
(6) The corporate insolvency resolution process shall commence from the date of
admission of the application under sub-section (5).
(7) The Adjudicating Authority shall communicate—
(a) the order under clause (a) of sub-section (5) to the financial creditor and the
corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor, within
seven days of admission or rejection of such application, as the case may be.
► Constitutional validity.—Vires of Section 7(1) second proviso imposing conditions on
allottees of same real estate project for filing of insolvency applications, namely, that: (i) application
for initiating corporate insolvency resolution process must be filed jointly; (ii) by not less than 100,
or, not less than 10% of the total number of allottees under the same real estate project, whichever is
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less, upheld, Manish Kumar v. Union of India, (2021) 5 SCC 1.

► The nature of Section 7(1) third proviso (as inserted by Act 1 of 2020), is retrospective. There
is temporal operation of the three provisos thereto inserted vide Act 1 of 2020. First and second
provisos to Section 7(1), held, have only prospective operation. Third proviso is retrospective.
Validity of all three provisos upheld, Manish Kumar v. Union of India, (2021) 5 SCC 1.
► Classification of creditors.—Classification of creditors i.e. as financial and operational
creditors, held, valid. Operational creditors are not discriminated against and Article 14 of the
Constitution has not been infracted either on the ground of equals being treated unequally or on the
ground of manifest arbitrariness. Since equality is only among equals, no discrimination results if
the Court can be shown that there is an intelligible differentia which separates two kinds of creditors
so long as there is some rational relation between the creditors so differentiated, with the object
sought to be achieved by the legislation. Swiss Ribbons Private Ltd. v. Union of India, (2019) 4
SCC 17.
► Insolvency resolution procedure.—Validity of different insolvency resolution procedure vis-
à-vis operational and financial creditors, upheld. Swiss Ribbons Private Ltd. v. Union of India,
(2019) 4 SCC 17.
► Overriding effect of 2016 Code.—Winding up proceedings under SICA will continue in High
Court and not NCLT, until an application for transfer is filed by a party under Section 434(1)(c),
Companies Act 2013. Employees Organization v. Jaipur Metals & Electricals Ltd., (2019) 4 SCC
227
► Reading down a statute/provision.—When a provision is cast in definite and unambiguous
language, it is not permissible either to mend or bend it, even if such recasting is in accord with
good reason and conscience, Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019)
8 SCC 416.
► Acknowledgement of debt by corporate debtor in earlier insolvency proceedings.—
Counter-affidavit of corporate debtor in earlier petition, held, was not a pleading of the insolvency
applicant in the earlier insolvency proceedings. Rather, it was an admission of the outstanding debt
by the corporate debtor and was admissible qua debt acknowledgement in later insolvency
proceedings, Rizwan Khan v. State of Chhattisgarh, (2020) 9 SCC 627.
► Maintainability of Petition under Section 7 or Section 9, even when there is an admitted
winding-up petition.— IBC has overriding effect over winding-up provisions of the Companies Act,
including Section 446 of the Companies Act, 1956/S. 279&Section 434(1)(c) of the Companies Act,
2013. (1) Pendency of admitted winding-up proceedings, thus held, not a bar to Section 7 or
Section 9 IBC petitions, as the latter are independent and overriding proceedings. (2) Transfer of
such pending admitted winding-up petition to NCLT for adjudication under IBC, further held, is not
the only route to IBC in such case, as Section 7 or Section 9 IBC petition are independent
proceedings and IBC has overriding effect over winding-up provisions of the Companies Act. (3)
Fresh petition under Section 7 or Section 9 IBC, or, transfer of pending admitted winding-up petition
to NCLT under IBC, are subject only to: (i) test of irreversible/irretrievable act(s)/stage having been
done or reached in the winding-up proceedings as laid down in Action Ispat, (2021) 2 SCC 641., or,
(ii) where a company in winding up is near corporate death. These have to be determined in the
facts and circumstances of each case, and an irresistible conclusion reached in this regard. (4)
Irreversible/irretrievable act(s)/stage in the winding-up proceedings, clarified, must be act(s) or
stage in or of the winding-up proceedings themselves. Sale of property of corporate
creditor/company which is under winding-up proceedings by secured creditor who stood outside the
winding-up proceedings, held, is not irreversible/irretrievable act/stage in the winding-up
proceedings themselves, hence, not a bar to fresh petition under Section 7 or Section 9 IBC. (5)
Fresh Section 7 or Section 9 IBC petition being an independent proceeding having overriding effect
over winding-up provisions of the Companies Act, and which has to be determined on its own
merits, held, it is irrelevant that pendency of winding-up proceedings was suppressed in Section 7
or Section 9 IBC application, nor would such act be a subterfuge, A. Navinchandra Steels (P) Ltd.
v. Srei Equipment Finance Ltd., (2021) 4 SCC 435.
► Determination of threshold figure of 100 allottees.—“Allottees” under same “real estate
project” for the purposes of the Code are to be determined as per respective definitions thereof in
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Sections 2(d) and 2(zn) of the RERA, since Section 5(8)(f) Expln. (ii) of the Code so provides. Who
are “allottees” under same “real estate project”, and categories of persons included thereunder as
per the definitions in RERA, explained in detail, Manish Kumar v. Union of India, (2021) 5 SCC 1.
► In rem status.—Proceedings under Section 7 may attain in rem status only when
adjudicating authority, having applied its mind in accordance with law, has recorded a finding of
default and admitted petition under Section 7. It is only upon admission of the petition that third-party
rights are created in all creditors of the corporate debtor in question, and which will have erga
omnes effect. Mere filing of petition and its pendency before admission, held, cannot be construed
as triggering of a proceeding in rem. Trigger point for determining in rem status of the proceedings
is not filing of application under Section 7 but admission of the same on determination of default,
Indus Biotech (P) Ltd. v. Kotak India Venture (Offshore) Fund, (2021) 6 SCC 436.
► Application for reference to arbitration.—Course to be adopted by adjudicating authority
under IBC for filing of application for reference to arbitration/appointment of arbitrator under A&C
Act, 1996 by alleged corporate debtor in pending Section 7 IBC petition, explained in detail, Indus
Biotech (P) Ltd. v. Kotak India Venture (Offshore) Fund, (2021) 6 SCC 436.
► Default whether has been committed by alleged corporate debtor.—There is necessity
of proper application of mind and due adjudication and consideration of contentions raised by the
parties and materials adduced by them. Mere existence of debt is not enough, Indus Biotech (P)
Ltd. v. Kotak India Venture (Offshore) Fund, (2021) 6 SCC 436.
8. Insolvency resolution by operational creditor.—(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—
(a) existence of a dispute, 28 [if any, or] record of the pendency of the suit or
arbitration proceedings filed before the receipt of such notice or invoice in
relation to such dispute;
(b) the 29 [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 sending an attested copy of record that the operational creditor has
encashed a cheque issued by the corporate debtor.
Explanation.—For the purposes of this section, a “demand notice” means a notice
served by an operational creditor to the corporate debtor demanding 30 [payment] of
the operational debt in respect of which the default has occurred.
► Corporate insolvency resolution.—All that the adjudicating authority is to see at the stage
of admitting/rejecting the application, is whether there is a plausible contention which requires
further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of
fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a
spurious defence which is mere bluster. However, in doing so, the authority does not need to be
satisfied that the defence is likely to succeed. So long as a dispute truly exists in fact and is not
spurious, hypothetical or illusory, the adjudicating authority has to reject the application. Moreover,
the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must
exist before the receipt of the demand notice or invoice, Mobilox Innovations (P) Ltd. v. Kirusa
Software (P) Ltd., (2018) 1 SCC 353.
9. Application for initiation of corporate insolvency resolution process by operational
creditor.—(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
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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—
(a) a copy of the invoice demanding payment or demand notice delivered by the
operational creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate debtor
relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts
of the operational creditor confirming that there is no payment of an unpaid
operational debt 31 [by the corporate debtor, if available;]
32
[(d) a copy of any record with information utility confirming that there is no
payment of an unpaid operational debt by the corporate debtor, if available;
and]
33 [(e)
any other proof confirming that there is no payment of an unpaid
operational debt by the corporate debtor or such other information, as may be
prescribed.]
(4) An operational creditor initiating a corporate insolvency resolution process under
this section, may propose a resolution professional to act as an interim resolution
professional.
application under sub-section (2), by an order—
(i) admit the application and communicate such decision to the operational
creditor and the corporate debtor if,—
(a) the application made under sub-section (2) is complete;
(b) there is no 34 [payment] of the unpaid operational debt;
(c) the invoice or notice for payment to the corporate debtor has been
delivered by the operational creditor;
(d) no notice of dispute has been received by the operational creditor or there
is no record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution
professional proposed under sub-section (4), if any.
(ii) reject the application and communicate such decision to the operational
creditor and the corporate debtor, if—
(a) the application made under sub-section (2) is incomplete;
(b) there has been 35 [payment] of the unpaid operational debt;
(c) the creditor has not delivered the invoice or notice for payment to the
corporate debtor;
(d) notice of dispute has been received by the operational creditor or there is
a record of dispute in the information utility; or
(e) any disciplinary proceeding is pending against any proposed resolution
professional:
Provided that Adjudicating Authority, shall before rejecting an application under sub
-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his
application within seven days of the date of receipt of such notice from the
Adjudicating Authority.
admission of the application under sub-section (5) of this section.
► Invocation of Insolvency Code.—Arbitration award qua which a challenge under Section 34
-----------------------------------------------------------------------------------------------------------------------------------------------------------
of the 1996 Act is pending cannot be considered as an undisputed operational debt for the purpose
of invocation of Insolvency Code: Operational creditors cannot use the Insolvency Code either
prematurely or for extraneous considerations or as a substitute for debt enforcement procedures.
Further, the object of the Code, insofar as operational creditors are concerned, is to put the
insolvency process against a corporate debtor only in clear cases where a real dispute between the
parties as to the debt owed does not exist. Further, the filing of a Section 34 A&C Act petition
against an arbitral award shows that a pre-existing dispute which culminates at the first stage of the
proceedings in an award, continues even after the award, at least till the final adjudicatory process
under Sections 34 and 37 of the A&C Act has taken place. Further held, it is only in clear cases,
such as where a Section 34-A&C Act petition is barred by limitation that the insolvency process may
be put into operation. However, even in cases where a Section 34 A&C Act petition may have been
instituted in the wrong court, the insolvency process cannot be put into operation without an
adjudication on the applicability of Section 14 of the Limitation Act, K. Kishan v. Vijay Nirman Co.
(P) Ltd., (2018) 17 SCC 662.
► Corporate insolvency resolution process (CIRP).—Petition for initiating corporate
insolvency resolution process is not maintainable when the dues claimed are non-tenable/disputed.
The existence of an undisputed debt is a sine qua non of initiating CIRP, Transmission Corpn. of
A.P. Ltd. v. Equipment Conductors & Cables Ltd., (2019) 12 SCC 697.
10. Initiation of corporate insolvency resolution process by corporate applicant.—(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
(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.
36 [(3) The corporate applicant shall, along with the application, furnish—
(a) the information relating to its books of account and such other documents for
such period as may be specified;
(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 debtor, as the case may be, approving filing of the application.]
(4) The Adjudicating Authority shall, within a period of fourteen days of the receipt
of the application, by an order—
(a) admit the application, if it is complete 37 [and no disciplinary proceeding is
pending against the proposed resolution professional]; or
(b) reject the application, if it is incomplete 38 [or any disciplinary proceeding is
pending against the proposed resolution professional]:
Provided that Adjudicating Authority shall, before rejecting an application, give a
notice to the applicant to rectify the defects in his application within seven days from
the date of receipt of such notice from the Adjudicating Authority.
admission of the application under sub-section (4) of this section.
39 [10-A. Suspension of initiation of corporate insolvency resolution process.—
Notwithstanding 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
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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.]
NOTIFICATIONS
Ministry of Corporate Affairs, Noti. No. S.O. 3265(E), dated September 24, 2020,
published in the Gazette of India, Extra., Part II, Section 3(ii), dated 24th September,
2020, p. 1, No. 2917
In exercise of the powers conferred by Section 10-A of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) [as inserted by Section 2 of the Insolvency and
Bankruptcy Code (Second Amendment) Act, 2020 (17 of 2020)], the Central
Government hereby notified further period of three months from the 25th September,
2020 for the purpose of the said section.
► Nature of bar against filing of applications for initiation of CIRP.— Said bar is
retrospective in nature, and is thus applicable to applications filed prior to insertion of Section 10-A
i.e. prior to 5-6-2020. Use of the expressions “shall be filed” and “no application shall ever be filed”,
do not affect the retrospective applicability of such bar. The language of the provision is not always
decisive to arrive at a determination whether the provision is applicable prospectively or
retrospectively. The substantive part of Section 10-A is to be construed harmoniously with the first
proviso and the Explanation. Reading the provisions together, it is evident that Parliament intended to
impose a bar on filing of applications for commencement of CIRP in respect of a corporate debtor
for a default occurring on or after 25-3-2020, the embargo remaining in force for a period of six
months, extendable to one year. Thus, the embargo contained in Section 10-A must receive a
purposive construction which will advance the object which was sought to be achieved by enacting
the provision. Further held, the (retrospective) bar on the filing of applications for the
commencement of CIRP during the stipulated period does not extinguish the debt owed by the
corporate debtor or the right of creditors to recover it, Ramesh Kymal v. Siemens Gamesa
Renewable Power (P) Ltd., (2021) 3 SCC 224.
► Nature of bar against filing of applications for initiation of CIRP.—Said bar is
retrospective in nature, and is thus applicable to applications filed prior to insertion of Section 10-A
i.e. prior to 5-6-2020. Use of the expressions “shall be filed” and “no application shall ever be filed”,
do not affect the retrospective applicability of such bar. The language of the provision is not always
decisive to arrive at a determination whether the provision is applicable prospectively or
retrospectively. The substantive part of Section 10-A is to be construed harmoniously with the first
proviso and the Explanation. Reading the provisions together, it is evident that Parliament intended to
impose a bar on filing of applications for commencement of CIRP in respect of a corporate debtor
for a default occurring on or after 25-3-2020, the embargo remaining in force for a period of six
months, extendable to one year. Thus, the embargo contained in Section 10-A must receive a
purposive construction which will advance the object which was sought to be achieved by enacting
the provision. Further held, the (retrospective) bar on the filing of applications for the
commencement of CIRP during the stipulated period does not extinguish the debt owed by the
corporate debtor or the right of creditors to recover it, Ramesh Kymal v. Siemens Gamesa
Renewable Power (P) Ltd., (2021) 3 SCC 224.
11. Persons not entitled to make application.—The following persons shall not be
entitled to make an application to initiate corporate insolvency resolution process
under this Chapter, namely—
(a) a corporate debtor undergoing a corporate insolvency resolution process 40 [or
a pre-packaged insolvency resolution process]; or
41
[(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
42 [(ba) a corporate debtor in respect of whom a resolution plan has been
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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 which was approved twelve months before the date of making
of an application under this Chapter; or
(d) a corporate debtor in respect of whom a liquidation order has been made.
Explanation43 [I].—For the purposes of this section, a corporate debtor includes a
corporate applicant in respect of such corporate debtor.
44
[Explanation II.—For the purposes of this section, it is hereby clarified that
nothing in this section shall prevent a corporate debtor referred to in clauses (a) to (d)
from initiating corporate insolvency resolution process against another corporate
debtor.]
► Constitutional validity.—Validity of Section 11 Expln. II [as inserted vide Act 1 of 2020]
providing the clarification that the corporate debtor even though falling within the ambit of clauses (a)
to (d) of Section 11, is not precluded from initiating corporate insolvency resolution process against
another corporate debtor, upheld. Expln. II to Section 11 is clarificatory in nature and hence, shall
apply to all pending applications, Manish Kumar v. Union of India, (2021) 5 SCC 1.
45 [11-A. Disposal of applications under Section 54-C and under Section 7 or Section
9 or Section 10.—(1) Where an application filed under Section 54-C 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 54-C, in respect of the same corporate
debtor.
(2) Where an application under Section 54-C 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 54-C.
(3) Where an application under Section 54-C 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 the application under
Section 7 or Section 9 or Section 10.
(4) The provisions of this section shall not apply where an application under Section
7 or Section 9 or Section 10 is filed and pending as on the date of the commencement
of the Insolvency and Bankruptcy Code (Amendment) Act, 2021.]
12. Time-limit for completion of insolvency resolution process.—(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 46 [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, but not exceeding ninety days:
Provided that any extension of the period of corporate insolvency resolution process
under this section shall not be granted more than once:
47 [Provided further that the corporate insolvency resolution process shall
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mandatorily be completed within a period of three hundred and thirty days from the
insolvency commencement date, including any extension of the period of corporate
insolvency resolution process granted under this section and the time taken in legal
proceedings in relation to such resolution process of the corporate debtor:
Provided also that where the insolvency resolution process of a corporate debtor is
pending and has not been completed within the period referred to in the second
proviso, such resolution process shall be completed within a period of ninety days from
the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act,
2019.]
► Constitutional validity.— Section 12(3) [as amended by Section 4 of the Insolvency and
Bankruptcy Code (Amendment) Act, 2019], provides for mandatory completion of corporate
insolvency resolution process (CIRP) within a period of 330 days. The general rule is that of an
outer limit of 330 days. However, held, extension of time can be granted in exceptional cases.
Exceptional cases would be cases where only a short period is left for completion of the insolvency
resolution process beyond 330 days, and it would be in the interest of all stakeholders that the
corporate debtor be put back on its feet and where the delay or a large part thereof is attributable to
the tardy process of the Adjudicating Authority/Appellate Tribunal itself. Further, where the grace
period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there
again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to
further extend time. The validity of amended Section 12(3), affirmed in its entirety except that the
word “mandatorily” struck down, as being an excessive, arbitrary and unreasonable restriction being
violative of Articles 14 and 19(1)(g) of the Constitution. Essar Steel (India) Ltd. v. Satish Kumar
Gupta, (2020) 8 SCC 531.
► Nature and scope.—Section 12(1) envisages that the corporate of insolvency resolution
process has to be completed within a period of 180 days from the date of admission of the
application. However, a window is provided to the resolution professional to seek an extension of a
further period of 90 days upon a resolution from the Committee of Creditors (CoC). The extension
can be provided only once, Chitra Sharma v. Union of India, 2018 SCC OnLine SC 874.
► Time-limit for completion of insolvency resolution process.— If there is a resolution
applicant who can continue to run the corporate debtor as a going concern, every effort must be
made to try and see that this is made possible and a reasonable and balanced construction of this
statute would lead to the result that, where a resolution plan is upheld by the appellate authority,
either by way of allowing or dismissing an appeal before it, the period of time taken in litigation
ought to be excluded. Arcelormittal India Private Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1.
48
[12-A. Withdrawal of application admitted under Section 7, 9 or 10.—The
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.]
► Withdrawal of application.—Withdrawal of admitted application with requirement of approval
of at least ninety per cent of voting share of Committee of Creditors, not discriminatory/arbitrary,
Swiss Ribbons Private Ltd. v. Union of India, (2019) 4 SCC 17.
13. Declaration of moratorium and public announcement.—(1) The Adjudicating
Authority, after admission of the application under Section 7 or Section 9 or Section
10, shall, by an order—
(a) declare a moratorium for the purposes referred to in Section 14;
(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.
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► Resolution profession.— Role of resolution profession in the revival of the corporate debtor,
summarized. Essar Steel (India) Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531.
► Recovery of dues of workmen.— Continuation of writ proceedings relating to auction of
corporate debtorapos;s assets for recovery of dues of workmen not permissible, when insolvency
proceedings against the company are admitted and moratorium declared, Hirakud Industrial Works
Ltd. v. Varsha Fabrics (P) Ltd., (2020) 14 SCC 198.
14. Moratorium.—(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—
(a) the institution of suits or continuation of pending suits or proceedings against
the corporate debtor including execution of any judgment, decree or order in
any court of law, tribunal, arbitration panel or other authority;
(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 an owner or lessor where such property is
occupied by or in the possession of the corporate debtor.
49
[Explanation.—For the purposes of this sub-section, it is hereby clarified that
notwithstanding anything contained in any other law for the time being in force, a
license, permit, registration, quota, concession, clearances or a similar grant or right
given by the Central Government, State Government, local authority, sectoral
regulator or any other authority constituted under any other law for the time being in
force, shall not be suspended or terminated on the grounds of insolvency, subject to
the condition that there is no default in payment of current dues arising for the use or
continuation of the license, permit, registration, quota, concession, clearances or a
similar grant or right during the moratorium period.]
(2) The supply of essential goods or services to the corporate debtor as may be
specified shall not be terminated or suspended or interrupted during moratorium
period.
50 [(2-A) Where the interim resolution professional or resolution professional, as the
case may be, considers the supply of goods or services critical to protect and preserve
the value of the corporate debtor and manage the operations of such corporate debtor
as a going concern, then the supply of such goods or services shall not be terminated,
suspended or interrupted during the period of moratorium, except where such
corporate debtor has not paid dues arising from such supply during the moratorium
period or in such circumstances as may be specified.]
51
[(3) The provisions of sub-section (1) shall not apply to—
52 [(a) such transactions, agreements or other arrangements as may be notified
by the Central Government in consultation with any financial sector regulator

or any other authority;]
(b) a surety in a contract of guarantee to a corporate debtor.]
(4) The order of moratorium shall have effect from the date of such order till the
completion of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process
period, if the Adjudicating Authority approves the resolution plan under sub-section
(1) of Section 31 or passes an order for liquidation of corporate debtor under Section
33, the moratorium shall cease to have effect from the date of such approval or
liquidation order, as the case may be.
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► Applicability.—Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for
a moratorium for the limited period mentioned in the Code, on admission of an insolvency petition,
would not apply to a personal guarantor of a corporate debtor, State Bank of India v.
Ramakrishnan, 2018 SCC OnLine SC 963.
The moratorium under the Insolvency and Bankruptcy Code will apply to the order of Income Tax
Appellate Tribunal. The Code will override anything inconsistent contained in any other enactment,
including the Income Tax Act, CIT v. Monnet Ispat & Energy Ltd., 2018 SCC OnLine SC 984.
Moratorium under Section 14 inapplicable to a personal guarantor of a corporate debtor before
and after amendment of Section 14 in 2018 — Not only was Section 14 inapplicable to personal
guarantor of corporate debtor prior to its amendment in 2018 on its own terms, this position of law is
confirmed by the clarificatory amendment made in 2018, vide insertion of Section 3(b), which
makes it clear that moratorium under Section 14 shall not apply to a surety in a contract of
guarantee for corporate debtor. Said amendment being clarificatory in nature is retrospective, which
means that this was always the law. Hence held, SARFAESI proceedings against personal guarantor
of corporate debtor, held, can continue under the SARFAESI Act, even though a moratorium may
be in force against corporate debtor under Section 14 of 2016 Code, SBI v. V. Ramakrishnan,
(2018) 17 SCC 394.
Proceedings under Sections 138/141 NI Act against corporate debtor itself, held, fall within the
ambit of the expression “proceedings” in Section 14 IBC. Hence, moratorium under Section 14
would not apply in respect of Sections 138/141 NI Act proceedings against persons in charge of
and responsible for the conduct of the business of the corporate debtor, even though moratorium
under Section 14 applies to Sections 138/141 NI Act proceedings against corporate debtor itself.
Rules of construction noscitur a sociis and ejusdem generis are not applicable to curtail the meaning
of the expression “proceedings” in Section 14 IBC, P. Mohanraj v. Shah Bros. Ispat (P) Ltd.,
(2021) 6 SCC 258.
► Retrospective effect of Section 14(3).—Section 14(3) of the Code (introduced vide the
Insolvency and Bankruptcy Code (Amendment) Act, 2018) which states that provisions of sub-
section (1) of Section 14 shall not apply to a surety in a contract of guarantee for corporate debtor,
is retrospective in nature, State Bank of India v. Ramakrishnan, 2018 SCC OnLine SC 963.
► Commencement of moratorium.—Once moratorium comes into effect, Section 14(1)(a)
expressly stops institution or continuation of pending proceedings against corporate debtors,
Alchemist Asset Reconstruction Co. Ltd. v. Hotel Gaudavan (P) Ltd., (2018) 16 SCC 94.
► Recovery of property by owner/lessor.—Recovery of property by owner/lessor where
such property is “occupied by” corporate debtor is not permissible when a moratorium under IBC is
declared. Section 14(1)(d) does not deal with any of the assets or legal right or beneficial interest in
such assets of the corporate debtor but what is referred to therein is the “recovery of any property”.
Further, the expression “occupied by” would mean or be synonymous with being in actual physical
possession of or being actually used by, in contradistinction to the expression “possession”. This is
because the expression “possession” would connote possession being either constructive or actual
and which, in turn, would include legally being in possession, though factually not being in physical
possession, Rajendra K. Bhutta v. MHADA, (2020) 13 SCC 208.
► Meaning and scope of the expression “proceedings” in Section 14.—Section 14(1)(a)
does not indicate as to what the proceedings contained therein apply to, however Section 14(3)(a)
provides the answer: that such “proceedings” relate to “transactions” entered into by the corporate
debtor pre-imposition of the moratorium. Further, the definition of “transaction” in Section 3(33)
being an inclusive one is extremely wide in nature and would include a transaction evidencing a debt
or liability. Further, what throws light on the width of the expression “proceedings” is the expression
“any judgment, decree or order” and “any court of law, tribunal, arbitration panel or other authority”.
Since criminal proceedings under the Code of Criminal Procedure, 1973 (CrPC) are conducted
before the courts mentioned in Section 6 CrPC, it is clear that a Section 138 NI Act proceeding
being conducted before a Magistrate would certainly be a proceeding in a court of law in respect of
a transaction which relates to a debt owed by the corporate debtor, P. Mohanraj v. Shah Bros. Ispat
(P) Ltd., (2021) 6 SCC 258.
15. Public announcement of corporate insolvency resolution process.—(1) The public
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announcement of the corporate insolvency resolution process under the order referred
to in Section 13 shall contain the following information, namely:—
(a) name and address of the corporate debtor under the corporate insolvency
resolution process;
(b) name of the authority with which the corporate debtor is incorporated or
registered;
(c) the last date for submission of 53 [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 10, as the case
may be.
(2) The public announcement under this section shall be made in such manner as
may be specified.
16. Appointment and tenure of interim resolution professional.—(1) The
Adjudicating Authority shall appoint an interim resolution professional 54 [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—
(a) no proposal for an interim resolution professional is made, the Adjudicating
Authority shall make a reference to the Board for the recommendation of an
insolvency professional who may act as an interim resolution professional;
(b) a proposal for an interim resolution professional is made under sub-section
(4) of Section 9, the resolution professional as proposed, shall be appointed as
the interim resolution professional, if no disciplinary proceedings are pending
against him.
(4) The Board shall, within ten days of the receipt of a reference from the
Adjudicating Authority under sub-section (3), recommend the name of an insolvency
professional to the Adjudicating Authority against whom no disciplinary proceedings
are pending.
(5) The term of the interim resolution professional 55 [shall continue till the date of
appointment of the resolution professional under Section 22].
► Resolution professional (RP).—Based merely upon the fact that the person who remained
in service of one of the financial creditors and is getting pension, a person cannot be disentitled
from being appointed as RP, SBI v. Metenere Ltd., (2021) 1 SCC 191.
17. Management of affairs of corporate debtor by interim resolution professional.—
(1) From the date of appointment of the interim resolution professional,—
(a) the management of the affairs of the corporate debtor shall vest in 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
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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 professional.
(2) The interim resolution professional vested with the management of the
corporate debtor shall—
(a) act and execute in the name and on behalf of the corporate debtor all deeds,
receipts, and other documents, if any;
(b) take such actions, in the manner and subject to such restrictions, as may be
specified by the Board;
(c) have the authority to access the electronic records of corporate debtor from
information utility having financial information of the corporate debtor;
(d) have the authority to access the books of account, records and other relevant
documents of corporate debtor available with government authorities,
statutory auditors, accountants and such other persons as 56 [may be
specified; and]
57 [(e) be responsible for complying with the requirements under any law for the
time being in force on behalf of the corporate debtor.]

18. Duties of interim resolution professional.—(1) The interim resolution
professional shall perform the following duties, namely—
(a) collect all information relating to the assets, finances and operations of the
corporate debtor for determining the financial position of the corporate debtor,
including information relating to—
(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 appointed by the committee of creditors;
(e) file information collected with the information utility, if necessary; and
(f) take control and custody of any asset over which the corporate debtor has
ownership rights as recorded in the balance sheet of the corporate debtor, or
with information utility or the depository of securities or any other registry
that records the ownership of assets including—
(i) assets over which the corporate debtor has ownership rights which may be
located in a foreign country;
(ii) assets that may or may not be in possession of the corporate debtor;
(iii) tangible assets, whether movable or immovable;
(iv) intangible assets including intellectual property;
(v) securities including shares held in any subsidiary of the corporate debtor,
financial instruments, insurance policies;
(vi) assets subject to the determination of ownership by a court or authority;
(g) to perform such other duties as may be specified by the Board.
Explanation.—For the purposes of this 58 [section], the term “assets” shall not
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include the following, namely—

(a) assets owned by a third party in possession of the corporate debtor held
under trust or under contractual arrangements including bailment;
(b) assets of any Indian or foreign subsidiary of the corporate debtor; and
(c) such other assets as may be notified by the Central Government in
consultation with any financial sector regulator.
19. Personnel to extend cooperation to interim resolution professional.—(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.
20. Management of operations of corporate debtor as going concern.—(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—
(a) to appoint accountants, legal or other professionals as may be necessary;
(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 creditor shall be required where the
value of such property is not less than the amount equivalent to twice the
amount of the debt.
(d) to issue instructions to personnel of the corporate debtor as may be
necessary for keeping the corporate debtor as a going concern; and
(e) to take all such actions as are necessary to keep the corporate debtor as a
going concern.
21. Committee of creditors.—(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 59 [financial creditor or the authorised representative of the financial
creditor referred to in sub-section (6) or sub-section (6-A) 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:
60 [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

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solely on account of conversion or substitution of debt into equity shares or

instruments convertible into equity shares 61 [or completion of such transactions as
may be prescribed,] prior to the insolvency commencement date.]
(3) 62 [Subject to sub-sections (6) and (6-A), where] the corporate debtor owes
financial debts to two or more financial creditors as part of a consortium or agreement,
each such financial creditor shall be part of the committee of creditors and their voting
share shall be determined on the basis of the financial debts owed to them.
(4) Where any person is a financial creditor as well as an operational creditor,—
(a) such person shall be a financial creditor to the extent of the financial debt
owed by the corporate debtor, and shall be included in the committee of
creditors, with voting share proportionate to the extent of financial debts owed
to such creditor;
(b) such person shall be considered to be an operational creditor to the extent of
the operational debt owed by the corporate debtor to such creditor.
(5) Where an operational creditor has assigned or legally transferred any
operational debt to a financial creditor, the assignee or transferee shall be considered
as an operational creditor to the extent of such assignment or legal transfer.
(6) Where the terms of the financial debt extended as part of a consortium
arrangement or syndicated facility 63 [* * *] provide for a single trustee or agent to act
for all financial creditors, each financial creditor may—
(a) authorise the trustee or agent to act on his behalf in the committee of
creditors to the extent of his voting share;
(b) represent himself in the committee of creditors to the extent of his voting
share;
(c) appoint an insolvency professional (other than the resolution professional) at
his own cost to represent himself in the committee of creditors to the extent
of his voting share; or
(d) exercise his right to vote to the extent of his voting share with one or more
financial creditors jointly or severally.
64 [(6-A) Where a financial debt—
(a) is in the form of securities or deposits and the terms of the financial debt
provide for appointment of a trustee or agent to act as authorised
representative for all the financial creditors, such trustee or agent shall act on
behalf of such financial creditors;
(b) is owed to a class of creditors exceeding the number as may be specified,
other than the creditors covered under clause (a) or sub-section (6), the
interim resolution professional shall make an application to the Adjudicating
Authority along with the list of all financial creditors, containing the name of
an insolvency professional, other than the interim resolution professional, to
act as their authorised representative who shall be appointed by the
Adjudicating Authority prior to the first meeting of the committee of creditors;
(c) is represented by a guardian, executor or administrator, such person shall act
as authorised representative on behalf of such financial creditors,
and such authorised representative under clause (a) or clause (b) or clause (c) shall
attend the meetings of the committee of creditors, and vote on behalf of each financial
creditor to the extent of his voting share.
(6-B) The remuneration payable to the authorised representative—
(i) under clauses (a) and (c) of sub-section (6-A), if any, shall be as per the
terms of the financial debt or the relevant documentation; and
(ii) under clause (b) of sub-section (6-A) shall be as specified which shall form
part of the insolvency resolution process costs.]
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65
[(7) The Board may specify the manner of voting and the determining of the
voting share in respect of financial debts covered under sub-sections (6) and (6-A).
(8) Save as otherwise provided in this Code, all decisions of the committee of
creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of
the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the
committee of creditors shall be constituted and shall comprise of such persons to
exercise such functions in such manner as may be specified.]
(9) The committee of creditors shall have the right to require the resolution
professional to furnish any financial information in relation to the corporate debtor at
any time during the corporate insolvency resolution process.
(10) The resolution professional shall make available any financial information so
required by the committee of creditors under sub-section (9) within a period of seven
days of such requisition.
► Right to vote.—Denial of right to vote in Committee of Creditors (CoC) to operational
creditors, not discriminatory, considering its objective/purpose. Moreover, the interests of
operational creditors are otherwise protected, so as to ensure that they are given roughly the same
treatment as financial creditors, Swiss Ribbons Private Ltd. v. Union of India, (2019) 4 SCC 17.
► Eligibility of resolution applicant.—Validity of Eligibility restrictions on who can be
resolution applicant i.e. on promoter to be considered as such in resolution process, reaffirmed,
Swiss Ribbons Private Ltd. v. Union of India, (2019) 4 SCC 17.
► Allottees of real estate projects.—Allottees of real estate projects are equally entitled to be
represented in the Committee of Creditors. Like other financial creditors, be they banks and
financial institutions, or other individuals, all persons who have advanced monies to the corporate
debtor should have the right to be on the Committee of Creditors. Further, though allottees are
unsecured creditors, they have a vital interest in amounts that are advanced for completion of the
project and it would be manifestly arbitrary to omit allottees from the Committee of Creditors,
Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416.
► Restriction on participation.—The proviso to Section 21(2) clarifies that a Director who is
also a financial creditor who 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. Further, Directors
simpliciter, are not the subject-matter of the proviso to Section 21(2), but only Directors who are
related parties of the corporate debtor and it is only such persons who do not have any right of
representation, participation, or voting in a meeting of the Committee of Creditors, Vijay Kumar Jain
v. Standard Chartered Bank, (2019) 20 SCC 455.
22. Appointment of resolution professional.—(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 66 [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)—
(a) to continue the interim resolution professional as resolution professional 67
[subject to a written consent from the interim resolution professional in the
specified form], it shall communicate its decision to the interim resolution
professional, the corporate debtor and the Adjudicating Authority; or
(b) to replace the interim resolution professional, it shall file an application
before the Adjudicating Authority for the appointment of the proposed
resolution professional 68 [along with a written consent from the proposed
resolution professional in the specified form].
(4) The Adjudicating Authority shall forward the name of the resolution professional
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proposed under clause (b) of sub-section (3) to the Board for its confirmation and
shall make such appointment after confirmation by the Board.
(5) Where the Board does not confirm the name of the proposed resolution
professional within ten days of the receipt of the name of the proposed resolution
professional, the Adjudicating Authority shall, by order, direct the interim resolution
professional to continue to function as the resolution professional until such time as
the Board confirms the appointment of the proposed resolution professional.
23. Resolution professional to conduct corporate insolvency resolution process.—(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:
69
[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-sections (4)
of Section 22, the interim resolution professional shall provide all the information,
documents and records pertaining to the corporate debtor in his possession and
knowledge to the resolution professional.
24. Meeting of committee of creditors.—(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—
(a) members of 70 [committee of creditors, including the authorised
representatives referred to in sub-sections (6) and (6-A) of Section 21 and
sub-section (5)];
(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 attend the meetings of committee of creditors, but
shall not have any right to vote in such meetings:
Provided that the absence of any such director, partner or representative of
operational creditors, as the case may be, shall not invalidate proceedings of such
meeting.
(5) 71 [Subject to sub-sections (6), (6-A) and (6-B) of Section 21, any creditor] who
is a member of the committee of creditors may appoint an insolvency professional
other than the resolution professional to represent such creditor in a meeting of the
committee of creditors:
Provided that the fees payable to such insolvency professional representing any
individual creditor will be borne by such creditor.
(6) Each creditor shall vote in accordance with the voting share assigned to him
based on the financial debts owed to such creditor.
(7) The resolution professional shall determine the voting share to be assigned to
each creditor in the manner specified by the Board.
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(8) The meetings of the committee of creditors shall be conducted in such manner
as may be specified.
25. Duties of resolution professional.—(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—
(a) take immediate custody and control of all the assets of the corporate debtor,
including the business records of the corporate debtor;
(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 list of claims;
(f) convene and attend all meetings of the committee of creditors;
(g) prepare the information memorandum in accordance with Section 29;
72 [(h) invite prospective resolution applicants, who fulfil such criteria as may be
laid down by him with the approval of committee of creditors, having regard
to the complexity and scale of operations of the business of the corporate
debtor and such other conditions as may be specified by the Board, to submit
a resolution plan or plans;]
(i) present all resolution plans at the meetings of the committee of creditors;
(j) file application for avoidance of transactions in accordance with Chapter III, if
any; and
(k) such other actions as may be specified by the Board.
► Criminal proceedings.—Duties of a resolution professional who takes over management of
corporate debtor during CIRP, to represent and act on behalf of corporate debtor in all “judicial,
quasi-judicial, or arbitration proceedings”, held, includes criminal proceedings. Word “judicial”
cannot be construed noscitur a sociis so as to cut down its plain meaning, as otherwise, quasi-
judicial or arbitration proceedings, not being criminal proceedings, the word “judicial” would then
take colour from them. This would stultify the object sought to be achieved by Section 25 and result
in an absurdity, namely, that during this interregnum, nobody can represent or act on behalf of the
corporate debtor in criminal proceedings, P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC
258.
73
[25-A. Rights and duties of authorised representative of financial creditors.—(1)
The authorised representative under sub-section (6) or sub-section (6-A) 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
instructions received from each financial creditor, to the extent of his voting share:
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Provided further that if any financial creditor does not give prior instructions
through physical or electronic means, the authorised representative shall abstain from
voting on behalf of such creditor.
74
[(3-A) Notwithstanding anything to the contrary contained in sub-section (3), the
authorised representative under sub-section (6-A) of Section 21 shall cast his vote on
behalf of all the financial creditors he represents in accordance with the decision taken
by a vote of more than fifty per cent. of the voting share of the financial creditors he
represents, who have cast their vote:
Provided that for a vote to be cast in respect of an application under Section 12-A,
the authorised representative shall cast his vote in accordance with the provisions of
sub-section (3).]
(4) The authorised representative shall file with the committee of creditors any
instructions received by way of physical or electronic means, from the financial creditor
he represents, for voting in accordance therewith, to ensure that the appropriate
voting instructions of the financial creditor he represents is correctly recorded by the
interim resolution professional or resolution professional, as the case may be.
Explanation.—For the purposes of this section, the “electronic means” shall be such
as may be specified.]
26. Application for avoidance of transactions not to affect proceedings.—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.
27. Replacement of resolution professional by committee of creditors.—(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.
75
[(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 professional shall be
appointed in the same manner as laid down in Section 16.
(5) Where any disciplinary proceedings are pending against the proposed resolution
professional under sub-section (3), the resolution professional appointed under
Section 22 shall continue till the appointment of another resolution professional under
this section.
28. Approval of committee of creditors for certain actions.—(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—
(a) raise any interim finance in excess of the amount as may be decided by the
committee of creditors in their meeting;
(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;
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(d) record any change in the ownership interest of the corporate debtor;
(e) give instructions to financial institutions maintaining accounts of the
corporate debtor for a debit transaction from any such accounts in excess of
the amount as may be decided by the committee of creditors in their meeting;
(f) undertake any related party transaction;
(g) amend any constitutional documents of the corporate debtor;
(h) delegate its authority to any other person;
(i) dispose of or permit the disposal of shares of any shareholder of the corporate
debtor or their nominees to third parties;
(j) make any change in the management of the corporate debtor or its
subsidiary;
(k) transfer rights or financial debts or operational debts under material contracts
otherwise than in the ordinary course of business;
(l) make changes in the appointment or terms of contract of such personnel as
specified by the committee of creditors; or
(m) make changes in the appointment or terms of contract of statutory auditors
or internal auditors of the corporate debtor.
(2) The resolution professional shall convene a meeting of the committee of
creditors and seek the vote of the creditors prior to taking any of the actions under sub
-section (1).
(3) No action under sub-section (1) shall be approved by the committee of creditors
unless approved by a vote of 76 [sixty-six] per cent of the voting shares.
(4) Where any action under sub-section (1) is taken by the resolution professional
without seeking the approval of the committee of creditors in the manner as required
in this section, such action shall be void.
(5) The committee of creditors may report the actions of the resolution professional
under sub-section (4) to the Board for taking necessary actions against him under this
Code. Approval of committee of creditors for certain actions.
29. Preparation of information memorandum.—(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—
(a) to comply with provisions of law for the time being in force relating to
confidentiality and insider trading;
(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 resolution plan for the
corporate debtor, which shall include the financial position of the corporate debtor, all
information related to disputes by or against the corporate debtor and any other
matter pertaining to the corporate debtor as may be specified.
77 [29-A. Persons not eligible to be resolution applicant.—A 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—
(a) is an undischarged insolvent;
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(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of
India issued under the Banking Regulation Act, 1949 (10 of 1949);
(c) 78 [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 of 1949) 79 [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 commencement of the corporate insolvency
resolution process of the corporate debtor:
Provided that the person shall be eligible to submit a resolution plan if such
person makes payment of all overdue amounts with interest thereon and
charges relating to non-performing asset accounts before submission of
resolution plan:
80 [Provided further that nothing in this clause shall apply to a resolution
applicant where such applicant is a financial entity and is not a related party
to the corporate debtor.
Explanation I.—For the purposes of this proviso, the expression “related party”
shall not include a financial entity, regulated by a financial sector regulator, if
it is a financial creditor of the corporate debtor and is a related party of the
corporate debtor solely on account of conversion or substitution of debt into
equity shares or instruments convertible into equity shares 81 [or completion of
such transactions as may be prescribed,] prior to the insolvency
commencement date.
Explanation II.—For the purposes of this clause, where a resolution applicant
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 and such account was acquired pursuant to a prior
resolution plan approved under this Code, then, the provisions of this clause
shall not apply to such resolution applicant for a period of three years from the
date of approval of such resolution plan by the Adjudicating Authority under
this Code;]
82 [(d) has been convicted for any offence punishable with imprisonment—
(i) for two years or more under any Act specified under the Twelfth Schedule;
or
(ii) for seven years or more under any other law for the time being in force:
Provided that this clause shall not apply to a person after the expiry of a
period of two years from the date of his release from imprisonment:
Provided further that this clause shall not apply in relation to a connected
person referred to in clause (iii) of Explanation I;]
(e) is disqualified to act as a director under the Companies Act, 2013 (18 of
2013):
83
[Provided that this clause shall not apply in relation to a connected person
referred to in clause (iii) of Explanation I;]
(f) is prohibited by the Securities and Exchange Board of India from trading in
securities or accessing the securities markets;
(g) has been a promoter or in the management or control of a corporate debtor
in which a preferential transaction, undervalued transaction, extortionate
credit transaction or fraudulent transaction has taken place and in respect of
which an order has been made by the Adjudicating Authority under this Code:
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84
[Provided that this clause shall not apply if a preferential transaction,
undervalued transaction, extortionate credit transaction or fraudulent
transaction has taken place prior to the acquisition of the corporate debtor by
the resolution applicant pursuant to a resolution plan approved under this
Code or pursuant to a scheme or plan approved by a financial sector regulator
or a court, and such resolution applicant has not otherwise contributed to the
preferential transaction, undervalued transaction, extortionate credit
transaction or fraudulent transaction;]
(h) has executed 85 [a guarantee] in favour of a creditor in respect of a corporate
debtor against which an application for insolvency resolution made by such
creditor has been admitted under this Code 86 [and such guarantee has been
invoked by the creditor and remains unpaid in full or part];
(i) 87 [is] subject to any disability, corresponding to clauses (a) to (h), under any
law in a jurisdiction outside India; or
(j) has a connected person not eligible under clauses (a) to (i).
Explanation88 [I].—For the purposes of this clause, the expression “connected
person” means—
(i) any person who is the promoter or in the management or control of the
resolution applicant; or
(ii) any person who shall be the promoter or in management or control of the
business of the corporate debtor during the implementation of the resolution
plan; or
(iii) the holding company, subsidiary company, associate company or related
party of a person referred to in clauses (i) and (ii):
89
[Provided that nothing in clause (iii) of Explanation I shall apply to a resolution
applicant where such applicant is a financial entity and is not a related party of the
corporate debtor:
Provided further that the expression “related party” shall not include a financial
entity, regulated by a financial sector regulator, if it is a financial creditor of the
corporate debtor and is a related party of the corporate debtor solely on account of
conversion or substitution of debt into equity shares or instruments convertible into
equity shares 90 [or completion of such transactions as may be prescribed,] prior to the
insolvency commencement date;]
91 [Explanation II.—For the purposes of this section, “financial entity” shall mean the
following entities which meet such criteria or conditions as the Central Government
may, in consultation with the financial sector regulator, notify in this behalf, namely—
(a) a scheduled bank;
(b) any entity regulated by a foreign central bank or a securities market
regulator or other financial sector regulator of a jurisdiction outside India
which jurisdiction is compliant with the Financial Action Task Force Standards
and is a signatory to the International Organisation of Securities Commissions
Multilateral Memorandum of Understanding;
(c) any investment vehicle, registered foreign institutional investor, registered
foreign portfolio investor or a foreign venture capital investor, where the terms
shall have the meaning assigned to them in Regulation 2 of the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident
Outside India) Regulations, 2017 made under the Foreign Exchange
Management Act, 1999 (42 of 1999);
(d) an asset reconstruction company registered with the Reserve Bank of India
under Section 3 of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (54 of 2002);
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(e) an Alternate Investment Fund registered with the Securities and Exchange
Board of India;
(f) such categories of persons as may be notified by the Central Government.]
► Bar under the section.—Section 29-A has been introduced into the Code with a specific
purpose. The provisions of Section 29-A are intended to ensure that among others, persons
responsible for insolvency of the corporate debtor do not participate in the resolution process. If
such persons are allowed to participate in the resolution process, it would undermine the salutary
object and purpose of the Code, Chitra Sharma v. Union of India, 2018 SCC OnLine SC 874.
► Ineligibility to be Resolution applicant.—For the purpose of applying sub-section (c) of
Section 29-A, thecorporate debtor may be under the management of the person referred to
inSection 29-A, the corporate debtor may be a person under the control of such person, or the
corporate debtor may be a person of whom such person is a promoter. Further, the expression
“management” would refer to the de jure management of a corporate debtor and the expression
“control”, denotes only positive control, which means that the mere power to block special
resolutions of a company cannot amount to control and “control”, as contrasted with “management”,
means de facto control of actual management or policy decisions that can be or are in fact taken.
Further, in the expression “management or control”, the two words take colour from each other, and
thus viewed, what is referred to in clauses (c) and (g) is de jure or de facto proactive or positive
control, and not mere negative control. The provision ensures that if a person wishes to submit a
resolution plan, and if such person or any person acting jointly or any person in concert with such
person, happens to either manage, control, or be promoter of a corporate debtor declared as a
nonperforming asset one year before the corporate insolvency resolution process begins, is
ineligible to submit a resolution plan. Further, despite the fact that the relevant time for the ineligibility
under clause (c) to attach is the time of submission of the resolution plan, antecedent facts
reasonably proximate to this point of time can always be seen, to determine whether the persons
referred to in Section 29-A are, in substance, seeking to avoid the consequences of the proviso to
clause (c) before submitting a resolution plan, Arcelormittal India Private Ltd. v. Satish Kumar
Gupta, (2019) 2 SCC 1.
► Grace period.—The legislative policy, that a person who is unable to service its own debt
beyond the grace period (i.e. period of one year post declaration of NPA) is unfit to be eligible to
become a resolution applicant cannot be found fault with and neither can the period of one year be
found fault with, as this is a policy matter decided by RBI. Further, the ineligibility attaches only after
this one year period is over as the NPA then gets classified as a doubtful asset, Swiss Ribbons
Private Ltd. v. Union of India, (2019) 4 SCC 17.
► Related or connected party/person.—The expression “related party”, and “relative”
contained in the definition sections must be read noscitur a sociis with the categories of persons
mentioned in Expln. I, clause (ii) to Section 29-A(j), and so read, would include only persons who
are connected with business activity of resolution applicant. Further, the expression “connected
person” in Expln. I is a person who is in the saddle of the business of corporate debtor either at an
anterior point of time or even during implementation of the resolution plan, Swiss Ribbons Private
Ltd. v. Union of India, (2019) 4 SCC 17.
► Resolution plan.—Acceptance of resolution plans of erstwhile management, not permissible,
Chitra Sharma v. Union of India, (2018) 18 SCC 575.
30. Submission of resolution plan.—(1) A resolution applicant may submit a
resolution plan 92 [along with an affidavit stating that he is eligible under Section 29-A]
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—
(a) provides for the payment of insolvency resolution process costs in a manner
specified by the Board in priority to the 93 [payment] of other debts of the
corporate debtor;
94 [(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—

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(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 the amount to
be distributed under the resolution plan had been distributed in accordance
with the order of priority in sub-section (1) of Section 53,
whichever is higher, and provides for the payment of debts of financial
creditors, who do not vote in favour of the resolution plan, in such manner as
may be specified by the Board, which shall not be less than the amount to be
paid to such creditors in accordance with sub-section (1) of Section 53 in the
event of a liquidation of the corporate debtor.
Explanation 1.—For the removal of doubts, it is hereby clarified that a
distribution in accordance with the provisions of this clause shall be fair and
equitable to such creditors.
Explanation 2.—For the purposes of this clause, it is hereby declared that on
and from the date of commencement of the Insolvency and Bankruptcy Code
(Amendment) Act, 2019, the provisions of this clause shall also apply to the
corporate insolvency resolution process of a corporate debtor—
(i) where a resolution plan has not been approved or rejected by the
Adjudicating Authority;
(ii) where an appeal has been preferred under Section 61 or Section 62 or
such an appeal is not time barred under any provision of law for the time
being in force; or
(iii) where a legal proceeding has been initiated in any court against the
decision of the Adjudicating Authority in respect of a resolution plan;]
(c) provides for the management of the affairs of the corporate debtor after
approval of the resolution plan;
(d) the implementation and supervision of the resolution plan;
(e) does not contravene any of the provisions of the law for the time being in
force;
(f) conforms to such other requirements as may be specified by the Board.
95
[Explanation.—For the purposes of clause (e), if any approval of shareholders is
required under the Companies Act, 2013 (18 of 2013) or any other law for the time
being in force for the implementation of actions under the resolution plan, such
approval shall be deemed to have been given and it shall not be a contravention of
that Act or law.]
(3) The resolution professional shall present to the committee of creditors for its
approval such resolution plans which confirm the conditions referred to in sub-section
(2).
96 [(4) The committee of creditors may approve a resolution plan by a vote of not
less than 97 [sixty-six] per cent of voting share of the financial creditors, after
considering its feasibility and viability 98 [the manner of distribution proposed, which
may take into account the order of priority amongst creditors as laid down in sub-
section (1) of Section 53,including the priority and value of the security interest of a
secured creditor], and such other requirements as may be specified by the Board:
Provided that the committee of creditors shall not approve a resolution plan,
submitted before the commencement of the Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2017, where the resolution applicant is ineligible under
Section 29-A and may require the resolution professional to invite a fresh resolution
plan where no other resolution plan is available with it:
Provided further that where the resolution applicant referred to in the first proviso is
ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by
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the committee of creditors such period, not exceeding thirty days, to make payment of
overdue amounts in accordance with the proviso to clause (c) of Section 29-A:
Provided also that nothing in the second proviso shall be construed as extension of
period for the purposes of the proviso to sub-section (3) of Section 12, and the
corporate insolvency resolution process shall be completed within the period specified
in that sub-section.]
99 [Provided also that the eligibility criteria in Section 29-A as amended by the
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall
apply to the resolution applicant who has not submitted resolution plan as on the date
of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance,
2018.]
(5) The resolution applicant may attend the meeting of the committee of creditors
in which the resolution plan of the applicant is considered:
Provided that the resolution applicant shall not have a right to vote at the meeting
of the committee of creditors unless such resolution applicant is also a financial
creditor.
(6) The resolution professional shall submit the resolution plan as approved by the
committee of creditors to the Adjudicating Authority.
► Constitutional validity.— Constitutional validity of amended Section 30 [as amended by
Section 6 of the Insolvency and Bankruptcy Code (Amendment) Act, 2019], affirmed in its entirety.
Essar Steel (India) Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531.
► Nature of Section 30(4) [as amended w.e.f. 6-6-2018 vide Insolvency and Bankruptcy
Code (Second Amendment) Act, 2018 (8 of 2018)].—Amendment to Section 30(4) i.e.
substitution of the threshold requirement of 75% to 66% is prospective, K. Sashidhar v. Indian
Overseas Bank, (2019) 12 SCC 150.
► Resolution plan.— Resolution plan need not itself provide for distribution inter se between
secured financial creditors. It is enough that under the Code and the Regulations, the resolution plan
provides for distribution of amounts payable towards debts based upon a classification of various
types of creditors. Essar Steel (India) Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531.
► Approval of resolution plan by Committee of Creditors.— Committee of Creditors, held,
does not act in fiduciary capacity to any group of creditors. In approval of resolution plan
Committee of Creditors is to take a business decision based on ground realities, by a majority,
which then binds all stakeholders, including dissentient creditors. Essar Steel (India) Ltd. v. Satish
Kumar Gupta, (2020) 8 SCC 531.
► Approval of the resolution plan.—The requirement of approval of the resolution plan by not
less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial
creditors is mandatory, K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150.
► Commercial wisdom of financial creditors.—The commercial wisdom of Committee of
Creditors (CoC) has been given paramount status without any judicial intervention, for ensuring
completion of the stated processes within the timelines prescribed by the I&B Code — Further,
neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed
with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors, K.
Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150.
► Committee of Creditors.— Principles summarised regarding scope of judicial review of
decisions of Committee of Creditors. Directions/ruling of Adjudicating Authority/Appellate Tribunal
providing for equal treatment amongst different classes of creditors i.e. financial and operational
creditors & secured and unsecured creditors is not valid, when the same is against the decision of
CoC (Committee of Creditors). while the Adjudicating Authority cannot interfere on merits with the
commercial decision taken by the Committee of Creditors, the limited judicial review available is to
see that the Committee of Creditors has taken into account the fact that the corporate debtor needs
to keep going as a going concern during the insolvency resolution process; that it needs to
maximise the value of its assets; and that the interests of all stakeholders including operational
creditors has been taken care of. Also, a harmonious reading of Section 31(1) and Section 60(5)
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would lead to the result that the residual jurisdiction of NCLT under Section 60(5)(c) cannot, in any
manner, whittle down Section 31(1), by the investment of some discretionary or equity jurisdiction in
the Adjudicating Authority outside Section 30(2) of the Code, when it comes to a resolution plan
being adjudicated upon by the Adjudicating Authority. Essar Steel (India) Ltd. v. Satish Kumar
Gupta, (2020) 8 SCC 531.
► “Feasibility and viability”.— “Feasibility and viability” of resolution plan to be considered by
Committee of Creditors, includes distribution of the amount of debt under the said plan. Essar Steel
(India) Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531.
► Constitution of a sub-committee by the Committee of Creditors.— The power to approve
a resolution plan under Section 30(4), cannot be delegated to any other body as it is the Committee
of Creditors alone that has been vested with this important business decision which it must take by
itself. However, sub-committees can be appointed for the purpose of negotiating with resolution
applicants, or for the purpose of performing other ministerial or administrative acts, provided such
acts are in the ultimate analysis approved and ratified by the Committee of Creditors. Essar Steel
(India) Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531.
31. Approval of resolution plan.—(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, 100 [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:
101
[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 satisfied that the resolution plan does not
confirm to the requirements referred to in sub-section (1), it may, by an order, reject
the resolution plan.
(3) After the order of approval under sub-section (1),—
(a) the moratorium order passed by the Adjudicating Authority under Section 14
shall cease to have effect; and
(b) the resolution professional shall forward all records relating to the conduct of
the corporate insolvency resolution process and the resolution plan to the
Board to be recorded on its database.
102 [(4) The resolution applicant shall, pursuant to the resolution plan approved
under sub-section (1), obtain the necessary approval required under any law for the
time being in force within a period of one year from the date of approval of the
resolution plan by the Adjudicating Authority under sub-section (1) or within such
period as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for combination, as
referred to in Section 5 of the Competition Act, 2002 (12 of 2003), the resolution
applicant shall obtain the approval of the Competition Commission of India under that
Act prior to the approval of such resolution plan by the committee of creditors.]
► Guarantor/Surety.—Binding effect of resolution plan once approved by committee of
creditors, on corporate debtor as well as the guarantor, held, is to ensure that guarantor cannot
escape payment by virtue of Section 133 of Contract Act, 1872. Section 133 of Contract Act
providing that any change made to the debt owed by the principal debtor, without the surety's
consent, would relieve the guarantor from payment, SBI v. V. Ramakrishnan, (2018) 17 SCC 394.
► Resolution plan.— Approved resolution plan is binding on all stakeholders, including
guarantors of the corporate debtor. Essar Steel (India) Ltd. v. Satish Kumar Gupta, (2020) 8 SCC
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531.
32. Appeal.—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.
103 [32-A. Liability for prior offences, etc.—(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—
(a) a promoter or in the management or control of the corporate debtor or a
related party of such a person; or
(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 to the relevant statutory authority or Court:
Provided that if a prosecution had been instituted during the corporate insolvency
resolution process against such corporate debtor, it shall stand discharged from the
date of approval of the resolution plan subject to requirements of this sub-section
having been fulfilled:
Provided further that every person who was a “designated partner” as defined in
clause (j) of Section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or an
“officer who is in default”, as defined in clause (60) of Section 2 of the Companies Act,
2013 (18 of 2013), or was in any manner incharge of, or responsible to the corporate
debtor for the conduct of its business or associated with the corporate debtor in any
manner and who was directly or indirectly involved in the commission of such offence
as per the report submitted or complaint filed by the investigating authority, shall
continue to be liable to be prosecuted and punished for such an offence committed by
the corporate debtor notwithstanding that the corporate debtor's liability has ceased
under this sub-section.
(2) No action shall be taken against the property of the corporate debtor in relation
to an offence committed prior to the commencement of the corporate insolvency
resolution process of the corporate debtor, where such property is covered under a
resolution plan approved by the Adjudicating Authority under Section 31, which
results in the change in control of the corporate debtor to a person, or sale of
liquidation assets under the provisions of Chapter III of Part II of this Code to a
person, who was not—
(i) a promoter or in the management or control of the corporate debtor or a
related party of such a person; or
(ii) 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 to the relevant statutory authority or Court.
Explanation.—For the purposes of this sub-section, it is hereby clarified that,—
(i) an action against the property of the corporate debtor in relation to an offence
shall include the attachment, seizure, retention or confiscation of such
property under such law as may be applicable to the corporate debtor;
(ii) nothing in this sub-section shall be construed to bar an action against the
property of any person, other than the corporate debtor or a person who has
acquired such property through corporate insolvency resolution process or
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liquidation process under this Code and fulfils the requirements specified in
this section, against whom such an action may be taken under such law as
may be applicable.
(3) Subject to the provisions contained in sub-sections (1) and (2), and
notwithstanding the immunity given in this section, the corporate debtor and any
person who may be required to provide assistance under such law as may be
applicable to such corporate debtor or person, shall extend all assistance and co-
operation to any authority investigating an offence committed prior to the
commencement of the corporate insolvency resolution process.]
► Section 32-A Constitutional validity.—Validity of Section 32-A, upheld. Working of Section
32-A [as inserted vide Act 1 of 2020] providing immunity to a corporate debtor, immunities granted
and conditions required to be complied with, explained in detail, Manish Kumar v. Union of India,
(2021) 5 SCC 1.
► Scope and ambit.—Section 32-A(1) clearly includes the liability of the corporate debtor for
all offences committed prior to the commencement of the corporate insolvency resolution process,
including offences based upon complaints under Section 2(d) CrPC. Thus, Section 138 NI Act
proceedings would be included, and would, after the moratorium period comes to an end with a
resolution plan by a new management being approved by the adjudicating authority, cease to be an
offence qua the corporate debtor, P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258.
Chapter III
LIQUIDATION PROCESS
33. Initiation of liquidation.—(1) Where the Adjudicating Authority,—
(a) before the expiry of the insolvency resolution process period or the maximum
period permitted for completion of the corporate insolvency resolution process
under Section 12 or the fast track corporate insolvency resolution process
under Section 56, as the case may be, does not receive a resolution plan
under sub-section (6) of Section 30; or
(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 the resolution professional, at any time during the corporate insolvency
resolution process but before confirmation of resolution plan, intimates the
Adjudicating Authority of the decision of the committee of creditors 104 [approved by
not less than sixty-six per cent of the voting share] to liquidate the corporate debtor,
the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses
(i), (ii) and (iii) of clause (b) of sub-section (1).
105
[Explanation.—For the purposes of this sub-section, it is hereby declared that the
committee of creditors may take the decision to liquidate the corporate debtor, any
time after its constitution under sub-section (1) of Section 21 and before the
confirmation of the resolution plan, including at any time before the preparation of the
information memorandum.]
(3) Where the resolution plan approved by the Adjudicating Authority 106 [under
Section 31 or under sub-section (1) of Section 54-L,] is contravened by the concerned
corporate debtor, any person other than the corporate debtor, whose interests are
prejudicially affected by such contravention, may make an application to the
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Adjudicating Authority for a liquidation order as referred to in sub-clauses (i), (ii) and
(iii) of clause (b) of sub-section (1).
determines that the corporate debtor has contravened the provisions of the resolution
plan, it shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of
clause (b) of sub-section (1).
(5) Subject to Section 52, when a liquidation order has been passed, no suit or
other legal proceeding shall be instituted by or against the corporate debtor:
Provided that a suit or other legal proceeding may be instituted by the liquidator,
on behalf of the corporate debtor, with the prior approval of the Adjudicating
Authority.
(6) The provisions of sub-section (5) shall not apply to legal proceedings in relation
to such transactions as may be notified by the Central Government in consultation
with any financial sector regulator.
(7) The order for liquidation under this section shall be deemed to be a notice of
discharge to the officers, employees and workmen of the corporate debtor, except
when the business of the corporate debtor is continued during the liquidation process
by the liquidator.
34. Appointment of liquidator and fee to be paid.—(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
107
[Chapter II 108 [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 required by him in managing the affairs of the
corporate debtor and provisions of Section 19 shall apply in relation to voluntary
liquidation process as they apply in relation to liquidation process with the substitution
of references to the liquidator for references to the interim resolution professional.
(4) The Adjudicating Authority shall by order replace the resolution professional, if—
(a) the resolution plan submitted by the resolution professional under Section 30
was rejected for failure to meet the requirements mentioned in sub-section
(2) of Section 30; or
(b) the Board recommends the replacement of a resolution professional to the
Adjudicating Authority for reasons to be recorded 109 [in writing; or].
110
[(c) the resolution professional fails to submit written consent under sub-
section (1).]
(5) For the purposes of 111 [clauses (a) and (c)] of sub-section (4), the Adjudicating
Authority may direct the Board to propose the name of another insolvency professional
to be appointed as a liquidator.
(6) The Board shall propose the name of another insolvency professional 112 [along
with written consent from the insolvency professional in the specified form,] within ten
days of the direction issued by the Adjudicating Authority under sub-section (5).
(7) The Adjudicating Authority shall, on receipt of the proposal of the Board for the
appointment of an insolvency professional as liquidator, by an order appoint such
insolvency professional as the liquidator.
(8) An insolvency professional proposed to be appointed as a liquidator shall charge
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such fee for the conduct of the liquidation proceedings and in such proportion to the
value of the liquidation estate assets, as may be specified by the Board.
(9) The fees for the conduct of the liquidation proceedings under sub-section (8)
shall be paid to the liquidator from the proceeds of the liquidation estate under
Section 53.
35. Powers and duties of liquidator.—(1) Subject to the directions of the
Adjudicating Authority, the liquidator shall have the following powers and duties,
namely:—
(a) to verify claims of all the creditors;
(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 to transfer such property to any person or body
corporate, or to sell the same in parcels in such manner as may be specified:
113 [Provided that the liquidator shall not sell the immovable and movable
property or actionable claims of the corporate debtor in liquidation to any

person who is not eligible to be a resolution applicant.]
(g) to draw, accept, make and endorse any negotiable instruments including bill
of exchange, hundi or promissory note in the name and on behalf of the
corporate debtor, with the same effect with respect to the liability as if such
instruments were drawn, accepted, made or endorsed by or on behalf of the
corporate debtor in the ordinary course of its business;
(h) to take out, in his official name, letter of administration to any deceased
contributory and to do in his official name any other act necessary for
obtaining payment of any money due and payable from a contributory or his
estate which cannot be ordinarily done in the name of the corporate debtor,
and in all such cases, the money due and payable shall, for the purpose of
enabling the liquidator to take out the letter of administration or recover the
money, be deemed to be due to the liquidator himself;
(i) to obtain any professional assistance from any person or appoint any
professional, in discharge of his duties, obligations and responsibilities;
(j) to invite and settle claims of creditors and claimants and distribute proceeds
in accordance with the provisions of this Code;
(k) to institute or defend any suit, prosecution or other legal proceedings, civil or
criminal, in the name of on behalf of the corporate debtor;
(l) to investigate the financial affairs of the corporate debtor to determine
undervalued or preferential transactions;
(m) to take all such actions, steps, or to sign, execute and verify any paper,
deed, receipt document, application, petition, affidavit, bond or instrument
and for such purpose to use the common seal, if any, as may be necessary for
liquidation, distribution of assets and in discharge of his duties and obligations
and functions as liquidator;
(n) to apply to the Adjudicating Authority for such orders or directions as may be
necessary for the liquidation of the corporate debtor and to report the progress
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of the liquidation process in a manner as may be specified by the Board; and

(o) to perform such other functions as may be specified by the Board.
(2) The liquidator shall have the power to consult any of the stakeholders entitled to
a distribution of proceeds under Section 53:
Provided that any such consultation shall not be binding on the liquidator:
Provided further that the records of any such consultation shall be made available to
all other stakeholders not so consulted, in a manner specified by the Board.
36. Liquidation Estate.—(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:—
(a) any assets over which the corporate debtor has ownership rights, including
all rights and interests therein as evidenced in the balance sheet of the
corporate debtor or an information utility or records in the registry or any
depository recording securities of the corporate debtor or by any other means
as may be specified by the Board, including shares held in any subsidiary of
(b) assets that may or may not be in possession of the corporate debtor
including but not limited to encumbered assets;
(c) tangible assets, whether movable or immovable;
(d) intangible assets including but not limited to intellectual property, securities
(including shares held in a subsidiary of the corporate debtor) and financial
instruments, insurance policies, contractual rights;
(e) assets subject to the determination of ownership by the court or authority;
(f) any assets or their value recovered through proceedings for avoidance of
transactions in accordance with this Chapter;
(g) any asset of the corporate debtor in respect of which a secured creditor has
relinquished security interest;
(h) any other property belonging to or vested in the corporate debtor at the
insolvency commencement date; and
(i) all proceeds of liquidation as and when they are realised.
(4) The following shall not be included in the liquidation estate assets and shall not
be used for recovery in the liquidation—
(a) assets owned by a third party which are in possession of the corporate
debtor, including—
(i) assets held in trust for any third party;
(ii) bailment contracts;
(iii) all sums due to any workman or employee from the provident fund, the
pension fund and the gratuity fund;
(iv) other contractual arrangements which do not stipulate transfer of title but
only use of the assets; and
(v) such other assets as may be notified by the Central Government in
consultation with any financial sector regulator;
(b) assets in security collateral held by financial services providers and are
subject to netting and set-off in multilateral trading or clearing transactions;
(c) personal assets of any shareholder or partner of a corporate debtor as the
case may be provided such assets are not held on account of avoidance
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transactions that may be avoided under this Chapter;

(d) assets of any Indian or foreign subsidiary of the corporate debtor; or
(e) any other assets as may be specified by the Board, including assets which
could be subject to setoff on account of mutual dealings between the
corporate debtor and any creditor.
37. Powers of liquidator to access information.—(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:—
(a) an information utility;
(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
(g) any other source as may be specified by the Board.
(2) The creditors may require the liquidator to provide them any financial
information relating to the corporate debtor in such manner as may be specified.
(3) The liquidator shall provide information referred to in sub-section (2) to such
creditors who have requested for such information within a period of seven days from
the date of such request or provide reasons for not providing such information.
38. Consolidation of claims.—(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 financial debt in the manner
as provided in sub-section (2) and to the extent of his operational debt under sub-
section (3).
(5) A creditor may withdraw or vary his claim under this section within fourteen
days of its submission.
39. Verification of claims.—(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.
40. Admission or rejection of claims.—(1) The liquidator may, after verification of
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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.
41. Determination of valuation of claims.—The liquidator shall determine the value
of claims admitted under Section 40 in such manner as may be specified by the Board.
42. Appeal against the decision of liquidator.—A creditor may appeal to the
Adjudicating Authority against the decision of the liquidator 114 [accepting or] rejecting
the claims within fourteen days of the receipt of such decision.
43. Preferential transactions and relevant time.—(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—
(a) there is a transfer of property or an interest thereof of the corporate debtor
for the benefit of a creditor or a surety or a guarantor for or on account of an
antecedent financial debt or operational debt or other liabilities owed by the
corporate debtor; and
(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 have been in the
event of a distribution of assets being made in accordance with Section 53.
(3) For the purposes of sub-section (2), a preference shall not include the following
transfers—
(a) transfer made in the ordinary course of the business or financial affairs of the
corporate debtor or the transferee;
(b) any transfer creating a security interest in property acquired by the corporate
debtor to the extent that—
(i) such security interest secures new value and was given at the time of or
after the signing of a security agreement that contains a description of such
property as security interest and was used by corporate debtor to acquire
such property; and
(ii) such transfer was registered with an information utility on or before thirty
days after the corporate debtor receives possession of such property:
Provided that any transfer made in pursuance of the order of a court shall not,
preclude such transfer to be deemed as giving of preference by the corporate debtor.
Explanation.—For the purpose of sub-section (3) of this section, “new value” means
money or its worth in goods, services, or new credit, or release by the transferee of
property previously transferred to such transferee in a transaction that is neither void
nor voidable by the liquidator or the resolution professional under this Code, including
proceeds of such property, but does not include a financial debt or operational debt
substituted for existing financial debt or operational debt.
(4) A preference shall be deemed to be given at a relevant time, if—
(a) it is given to a related party (other than by reason only of being an
employee), during the period of two years preceding the insolvency
commencement date; or
(b) a preference is given to a person other than a related party during the period
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of one year preceding the insolvency commencement date.

► Preferential nature of transactions — Determination/Identification of.— Satisfaction of
three fold requirements i.e. (I) Twin requirements of Section 43(2); (II) “Relevant time” requirement
of Section 43(4); and (III) Non-satisfaction of/being outside the ambit of exclusions carved out in
Section 43(3), is necessary for “preferential transaction” to be considered as offending and thereby
subject to consequences provided therefore. Intention to enter into preferential transaction is
irrelevant in view of deeming provision. Exclusion from the purview of preferential transaction is not
permissible where transferee alone is acting in the ordinary course of its business or financial
affairs, Jaypee Infratech Ltd. v. Axis Bank Ltd., (2020) 8 SCC 401.
44. Orders in case of preferential transactions.—(1) The Adjudicating Authority,
may, on an application made by the resolution professional or liquidator under sub-
section (1) of Section 43, by an order:
(a) require any property transferred in connection with the giving of the
preference to be vested in the corporate debtor;
(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
(d) require any person to pay such sums in respect of benefits received by him
from the corporate debtor, such sums to the liquidator or the resolution
professional, as the 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 debts or operational
debts to that person as the Adjudicating Authority deems appropriate;
(f) direct for providing security or charge on any property for the discharge of
any financial debt or operational debt under the order, and such security or
charge to have the same priority as a security or charge released or
discharged wholly or in part by the giving of the preference; and
(g) direct for providing the extent to which any person whose property is so
vested in the corporate debtor, or on whom financial debts or operational
debts are imposed by the order, are to be proved in the liquidation or the
corporate insolvency resolution process for financial debts or operational debts
which arose from, or were released or discharged wholly or in part by the
giving of the preference:
Provided that an order under this section shall not—
(a) affect any interest in property which was acquired from a person other than
the corporate debtor or any interest derived from such interest and was
acquired in good faith and for value;
(b) require a person, who received a benefit from the preferential transaction in
good faith and for value to pay a sum to the liquidator or the resolution
professional.
Explanation I.—For the purpose of this section, it is clarified that where a person,
who has acquired an interest in property from another person other than the corporate
debtor, or who has received a benefit from the preference or such another person to
whom the corporate debtor gave the preference,—
(i) had sufficient information of the initiation or commencement of insolvency
resolution process of the corporate debtor;
(ii) is a related party,
it shall be presumed that the interest was acquired or the benefit was received
otherwise than in good faith unless the contrary is shown.
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Explanation II.—A person shall be deemed to have sufficient information or

opportunity to avail such information if a public announcement regarding the corporate
insolvency resolution process has been made under Section 13.
45. Avoidance of undervalued transactions.—(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) 115 [* * *] 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—
(a) makes a gift to a person; or
(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 ordinary course of business of the
corporate debtor.
46. Relevant period for avoidable transactions.—(1) In an application for avoiding a
transaction at undervalue, the liquidator or the resolution professional, as the case
may be, shall demonstrate that—
(i) such transaction was made with any person within the period of one year
preceding the insolvency commencement date; or
(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.
47. Application by creditor in cases of undervalued transactions.—(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—
(a) undervalued transactions had occurred; and
(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—
(a) restoring the position as it existed before such transactions and reversing
the effects thereof in the manner as laid down in Section 45 and Section
48;
(b) requiring the Board to initiate disciplinary proceedings against the
liquidator or the resolution professional as the case may be.
48. Order in cases of undervalued transactions.—(1) The order of the Adjudicating
Authority under sub-section (1) of Section 45 may provide for the following—
(a) require any property transferred as part of the transaction, to be vested in
(b) release or discharge (in whole or in part) any security interest granted by the
corporate debtor;
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(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.
49. Transactions defrauding creditors.—(1) 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—
(a) for keeping assets of the corporate debtor beyond the reach of any person
who is entitled to make a claim against the corporate debtor; or
(b) in order to adversely affect the interests of such a person in relation to the
claim,
the Adjudicating Authority shall make an order—
(i) restoring the position as it existed before such transaction as if the
transaction had not been entered into; and
(ii) protecting the interests of persons who are victims of such transactions:
Provided that an order under this section—
(a) shall not affect any interest in property which was acquired from a person
other than the corporate debtor and was acquired in good faith, for value and
without notice of the relevant circumstances, or affect any interest deriving
from such an interest, and
(b) shall not require a person who received a benefit from the transaction in good
faith, for value and without notice of the relevant circumstances to pay any
sum unless he was a party to the transaction.
50. Extortionate credit transactions.—(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.
51. Orders of Adjudicating Authority in respect of extortionate credit transactions.—
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—
(a) restore the position as it existed prior to such transaction;
(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
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resolution professional, as the case may be.

52. Secured creditor in liquidation proceedings.—(1) A secured creditor in the
liquidation proceedings may—
(a) relinquish its security interest to the liquidation estate and receive proceeds
from the sale of assets by the liquidator in the manner specified in Section 53;
or
(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—
(a) by the records of such security interest maintained by an information utility;
or
(b) by such other means as may be specified by the Board.
(4) A secured creditor may enforce, realise, settle, compromise or deal with the
secured assets in accordance with such law as applicable to the security interest being
realised and to the secured creditor and apply the proceeds to recover the debts due
to it.
(5) If in the course of realising a secured asset, any secured creditor faces
resistance from the corporate debtor or any person connected therewith in taking
possession of, selling or otherwise disposing off the security, the secured creditor may
make an application to the Adjudicating Authority to facilitate the secured creditor to
realise such security interest in accordance with law for the time being in force.
(6) The Adjudicating Authority, on the receipt of an application from a secured
creditor under sub-section (5) may pass such order as may be necessary to permit a
secured creditor to realise security interest in accordance with law for the time being
in force.
(7) Where the enforcement of the security interest under sub-section (4) yields an
amount by way of proceeds which is in excess of the debts due to the secured creditor,
the secured creditor shall—
(a) account to the liquidator for such surplus; and
(b) tender to the liquidator any surplus funds received from the enforcement of
such secured assets.
(8) The amount of insolvency resolution process costs, due from secured creditors
who realise their security interests in the manner provided in this section, shall be
deducted from the proceeds of any realisation by such secured creditors, and they
shall transfer such amounts to the liquidator to be included in the liquidation estate.
(9) Where the proceeds of the realisation of the secured assets are not adequate to
repay debts owed to the secured creditor, the unpaid debts of such secured creditor
shall be paid by the liquidator in the manner specified in clause (e) of sub-section (1)
of Section 53.
53. Distribution of assets.—(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—
(a) the insolvency resolution process costs and the liquidation costs paid in full;
(b) the following debts which shall rank equally between and among the
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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 commencement date;
(d) financial debts owed to unsecured creditors;
(e) the following dues shall rank equally between and among the following:—
(i) any amount due to the Central Government and the State Government
including the amount to be received on account of the Consolidated Fund of
India and the Consolidated Fund of a State, if any, in respect of the whole
or any part of the period of two years preceding the liquidation
commencement date;
(ii) debts owed to a secured creditor for any amount unpaid following the
enforcement of security interest;
(f) any remaining debts and dues;
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case may be.
(2) Any contractual arrangements between recipients under sub-section (1) with
equal ranking, if disrupting the order of priority under that sub-section shall be
disregarded by the liquidator.
(3) The fees payable to the liquidator shall be deducted proportionately from the
proceeds payable to each class of recipients under sub-section (1), and the proceeds
to the relevant recipient shall be distributed after such deduction.
Explanation.—For the purpose of this section—
(i) it is hereby clarified that at each stage of the distribution of proceeds in
respect of a class of recipients that rank equally, each of the debts will either
be paid in full, or will be paid in equal proportion within the same class of
recipients, if the proceeds are insufficient to meet the debts in full; and
(ii) the term “workmen's dues” shall have the same meaning as assigned to it in
Section 326 of the Companies Act, 2013 (18 of 2013).
► Applicability.— Section 53, held, would be applicable only during liquidation and not at the
stage of resolving insolvency. Section 30(2)(b) refers to Section 53 not in the context of priority of
payment of creditors, but only to provide for a minimum payment to operational creditors. However,
this again does not in any manner limit the Committee of Creditors from classifying creditors as
financial or operational and as secured or unsecured. Essar Steel (India) Ltd. v. Satish Kumar
Gupta, (2020) 8 SCC 531.
54. Dissolution of corporate debtor.—(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.
116 [Chapter III-A
PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS

54-A. Corporate debtors eligible for pre-packaged insolvency resolution process.—
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(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—
(a) it has not undergone pre-packaged insolvency resolution process or
completed corporate insolvency resolution process, as the case may be, during
the period of three years preceding the initiation date;
(b) it is not undergoing a corporate insolvency resolution process;
(c) no order requiring it to be liquidated is passed under Section 33;
(d) it is eligible to submit a resolution plan under Section 29-A;
(e) the financial creditors of the corporate debtor, not being its related parties,
representing such number and in such manner as may be specified, have
proposed the name of the insolvency professional to be appointed as
resolution professional for conducting the pre-packaged insolvency resolution
process of the corporate debtor, and the financial creditors of the corporate
debtor, not being its related parties, representing not less than sixty-six per
cent. in value of the financial debt due to such creditors, have approved such
proposal in such form as may be specified:
Provided that where a corporate debtor does not have any financial creditors,
not being its related parties, the proposal and approval under this clause shall
be provided by such persons as may be specified;
(f) the majority of the directors or partners of the corporate debtor, as the case
may be, have made a declaration, in such form as may be specified, stating,
inter alia, that—
(i) the corporate debtor shall file an application for initiating pre-packaged
insolvency resolution process within a definite time period not exceeding
ninety days;
(ii) the pre-packaged insolvency resolution process is not being initiated to
defraud any person; and
(iii) the name of the insolvency professional proposed and approved to be
appointed as resolution professional under clause (e);
(g) the members of the corporate debtor have passed a special resolution, or at
least three-fourth of the total number of partners, as the case may be, of the
corporate debtor have passed a resolution, approving the filing of an
application for initiating pre-packaged insolvency resolution process.
(3) The corporate debtor shall obtain an approval from its financial creditors, not
being its related parties, representing not less than sixty-six per cent. in value of the
financial debt due to such creditors, for the filing of an application for initiating pre-
packaged insolvency resolution process, in such form as may be specified:
Provided that where a corporate debtor does not have any financial creditors, not
being its related parties, the approval under this sub-section shall be provided by such
persons as may be specified.
(4) Prior to seeking approval from financial creditors under sub-section (3), the
corporate debtor shall provide such financial creditors with—
(a) the declaration referred to in clause (f) of sub-section (2);
(b) the special resolution or resolution referred to in clause (g) of sub-section
(2);
(c) a base resolution plan which conforms to the requirements referred to in
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Section 54-K, and such other conditions as may be specified; and

(d) such other information and documents as may be specified.
54-B. Duties of insolvency professional before initiation of pre-packaged insolvency
resolution process.—(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 54-A, namely:—
(a) prepare a report in such form as may be specified, confirming whether the
corporate debtor meets the requirements of Section 54-A, and the base
resolution plan conforms to the requirements referred to in clause (c) of sub-
section (4) of Section 54-A;
(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,—
(a) the corporate debtor fails to file an application for initiating pre-packaged
insolvency resolution process within the time period as stated under the
declaration referred to in clause (f) of sub-section (2) of Section 54-A; or
(b) the application for initiating pre-packaged insolvency resolution process is
admitted or rejected by the Adjudicating Authority,
as the case may be.
(3) The fees payable to the insolvency professional in relation to the duties
performed under sub-section (1) shall be determined and borne in such manner as
may be specified and such fees shall form part of the pre-packaged insolvency
resolution process costs, if the application for initiation of pre-packaged insolvency
resolution process is admitted.
54-C. Application to initiate pre-packaged insolvency resolution process.—(1)
Where a corporate debtor meets the requirements of Section 54-A, 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—
(a) the declaration, special resolution or resolution, as the case may be, and the
approval of financial creditors for initiating pre-packaged insolvency resolution
process in terms of Section 54-A;
(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 54-A, and his report
as referred to in clause (a) of sub-section (1) of Section 54-B;
(c) a declaration regarding the existence of any transactions of the corporate
debtor that may be within the scope of provisions in respect of avoidance of
transactions under Chapter III or fraudulent or wrongful trading under
Chapter VI, in such form as may be specified;
(d) information relating to books of account of the corporate debtor and such
other documents relating to such period as may be specified.
(4) The Adjudicating Authority shall, within a period of fourteen days of the receipt
of the application, by an order,—
(a) admit the application, if it is complete; or
(b) reject the application, if it is incomplete:
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Provided that the Adjudicating Authority shall, before rejecting an application, give
notice to the applicant to rectify the defect in the application within seven days from
the date of receipt of such notice from the Adjudicating Authority.
(5) The pre-packaged insolvency resolution process shall commence from the date
of admission of the application under clause (a) of sub-section (4).
54-D. Time-limit for completion of pre-packaged insolvency resolution process.—(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 54
-K, 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.
54-E. Declaration of moratorium and public announcement during prepackaged
insolvency resolution process.—(1) The Adjudicating Authority shall, on the pre-
packaged insolvency commencement date, along with the order of admission under
Section 54-C—
(a) declare a moratorium for the purposes referred to in sub-section (1) read
with sub-section (3) of Section 14, which shall, mutatis mutandis apply, to
the proceedings under this Chapter;
(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.
(2) The order of moratorium shall have effect from the date of such order till the
date on which the pre-packaged insolvency resolution process period comes to an end.
54-F. Duties and powers of resolution professional during prepackaged insolvency
resolution process.—(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—
(a) confirm the list of claims submitted by the corporate debtor under Section 54
-G, in such manner as may be specified;
(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 and
regulations made thereunder;
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(f) constitute the committee of creditors and convene and attend all its
meetings;
(g) prepare the information memorandum on the basis of the preliminary
information memorandum submitted under Section 54-G and any other
relevant information, in such form and manner as may be specified;
(h) file applications for avoidance of transactions under Chapter III or fraudulent
or wrongful trading under Chapter VI, if any; and
(i) such other duties as may be specified.
(3) The resolution professional shall exercise the following powers, namely:—
(a) access all books of account, records and information available with the
corporate debtor;
(b) access the electronic records of the corporate debtor from an information
utility having financial information of the corporate debtor;
(c) access the books of account, records and other relevant documents of the
corporate debtor available with Government authorities, statutory auditors,
accountants and such other persons as may be specified;
(d) attend meetings of members, Board of Directors and committee of directors,
or partners, as the case may be, of the corporate debtor;
(e) appoint accountants, legal or other professionals in such manner as may be
specified;
(f) collect all information relating to the assets, finances and operations of the
corporate debtor for determining the financial position of the corporate debtor
and the existence of any transactions that may be within the scope of
provisions relating to avoidance of transactions under Chapter III or
fraudulent or wrongful trading under Chapter VI, including information
relating to—
(i) business operations for the previous two years from the date of pre-
packaged insolvency commencement date;
(ii) financial and operational payments for the previous two years from the
date of pre-packaged insolvency commencement date;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified;
(g) take such other actions in such manner as may be specified.
(4) From the date of appointment of the resolution professional, the financial
institutions maintaining accounts of the corporate debtor shall furnish all information
relating to the corporate debtor available with them to the resolution professional, as
and when required by him.
(5) The personnel of the corporate debtor, its promoters and any other person
associated with the management of the corporate debtor shall extend all assistance
and cooperation to the resolution professional as may be required by him to perform
his duties and exercise his powers, and for such purposes, the provisions of sub-
sections (2) and (3) of Section 19 shall, mutatis mutandis apply, in relation to the
proceedings under this Chapter.
(6) The fees of the resolution professional and any expenses incurred by him for
conducting the pre-packaged insolvency resolution process shall be determined in
such manner as may be specified:
Provided that the committee of creditors may impose limits and conditions on such
fees and expenses:
Provided further that the fees and expenses for the period prior to the constitution
of the committee of creditors shall be subject to ratification by it.
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(7) The fees and expenses referred to in sub-section (6) shall be borne in such
manner as may be specified.
54-G. List of claims and preliminary information memorandum.—(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:—
(a) a list of claims, along with details of the respective creditors, their security
interests and guarantees, if any; and
(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—
(a) is a promoter or director or partner of the corporate debtor, as the case may
be, at the time of submission of the list of claims or the preliminary
information memorandum by the corporate debtor; or
(b) has authorised the submission of the list of claims or the preliminary
information memorandum by the corporate debtor,
shall, without prejudice to Section 77-A, be liable to pay compensation to
every person who has sustained such loss or damage.
(3) No person shall be liable under sub-section (2), if the list of claims or the
preliminary information memorandum was submitted by the corporate debtor without
his knowledge or consent.
(4) Subject to Section 54-E, any person, who sustained any loss or damage as a
consequence of omission of material information or inclusion of any misleading
information in the list of claims or the preliminary information memorandum shall be
entitled to move a court having jurisdiction for seeking compensation for such loss or
damage.
54-H. Management of affairs of corporate debtor.—During the pre-packaged
insolvency resolution process period,—
(a) the management of the affairs of the corporate debtor shall continue to vest
in the Board of Directors or the partners, as the case may be, of the corporate
debtor, subject to such conditions as may be specified;
(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.
54-I. Committee of creditors.—(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 54-F:
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.
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(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-sections (9) and (10) of Section 21, shall be construed as
references to “corporate debtor or the resolution professional”.
54-J. Vesting management of corporate debtor with resolution professional.—(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—
(a) the affairs of the corporate debtor have been conducted in a fraudulent
manner; or
(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) Notwithstanding anything to the contrary contained in this Chapter, the
provisions of—
(a) sub-sections (2) and (2-A) of Section 14;
(b) Section 17;
(c) clauses (e) to (g) of Section 18;
(d) Sections 19 and 20;
(e) sub-section (1) of Section 25;
(f) clauses (a) to (c) and clause (k) of sub-section (2) of Section 25; and
(g) Section 28,
shall, mutatis mutandis apply, to the proceedings under this Chapter, from the date of
the order under sub-section (2), until the pre-packaged insolvency resolution process
period comes to an end.
54-K. Consideration and approval of resolution plan.—(1) The corporate debtor shall
submit the base resolution plan, referred to in clause (c) of sub-section (4) of Section
54-A, 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 resolution plan for submission
to the Adjudicating Authority if it does not impair any claims owed by the corporate
debtor to the operational creditors.
(5) Where—
(a) the committee of creditors does not approve the base resolution plan under
sub-section (4); or
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(b) the base resolution plan impairs any claims owed by the corporate debtor to
the operational creditors,
the resolution professional shall invite prospective resolution applicants to submit a
resolution plan or plans, to compete with the base resolution plan, in such manner as
may be specified.
(6) The resolution applicants submitting resolution plans pursuant to invitation
under sub-section (5), shall fulfil such criteria as may be laid down by the resolution
professional with the approval of the committee of creditors, having regard to the
complexity and scale of operations of the business of the corporate debtor and such
other conditions as may be specified.
(7) The resolution professional shall provide to the resolution applicants,—
(a) the basis for evaluation of resolution plans for the purposes of sub-section
(9), as approved by the committee of creditors subject to such conditions as
may be specified; and
(b) the relevant information referred to in Section 29, which shall, mutatis
mutandis apply, to the proceedings under this Chapter,
in such manner as may be specified.
(8) The resolution professional shall present to the committee of creditors, for its
evaluation, resolution plans which conform to the requirements referred to in sub-
section (2) of Section 30.
(9) The committee of creditors shall evaluate the resolution plans presented by the
resolution professional and select a resolution plan from amongst them.
(10) Where, on the basis of such criteria as may be laid down by it, the committee
of creditors decides that the resolution plan selected under sub-section (9) is
significantly better than the base resolution plan, such resolution plan may be selected
for approval under sub-section (12):
Provided that the criteria laid down by the committee of creditors under this sub-
section shall be subject to such conditions as may be specified.
(11) Where the resolution plan selected under sub-section (9) is not considered for
approval or does not fulfil the requirements of sub-section (10), it shall compete with
the base resolution plan, in such manner and subject to such conditions as may be
specified, and one of them shall be selected for approval under sub-section (12).
(12) The resolution plan selected for approval under sub-section (10) or sub-section
(11), as the case may be, may be approved by the committee of creditors for
submission to the Adjudicating Authority:
Provided that where the resolution plan selected for approval under sub-section
(11) is not approved by the committee of creditors, the resolution professional shall
file an application for termination of the pre-packaged insolvency resolution process in
such form and manner as may be specified.
(13) The approval of the resolution plan under sub-section (4) or sub-section (12),
as the case may be, by the committee of creditors, shall be by a vote of not less than
sixty-six per cent. of the voting shares, after considering its feasibility and viability,
the manner of distribution proposed, taking into account the order of priority amongst
creditors as laid down in sub-section (1) of Section 53, including the priority and value
of the security interest of a secured creditor and such other requirements as may be
specified.
(14) While considering the feasibility and viability of a resolution plan, where the
resolution plan submitted by the corporate debtor provides for impairment of any
claims owed by the corporate debtor, the committee of creditors may require the
promoters of the corporate debtor to dilute their shareholding or voting or control
rights in the corporate debtor:
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Provided that where the resolution plan does not provide for such dilution, the
committee of creditors shall, prior to the approval of such resolution plan under sub-
section (4) or sub-section (12), as the case may be, record reasons for its approval.
(15) The resolution professional shall submit the resolution plan as approved by the
committee of creditors under sub-section (4) or sub-section (12), as the case may be,
to the Adjudicating Authority.
Explanation I.—For the removal of doubts, it is hereby clarified that, the corporate
debtor being a resolution applicant under clause (25) of Section 5, may submit the
base resolution plan either individually or jointly with any other person.
Explanation II.—For the purposes of sub-sections (4) and (14), claims shall be
considered to be impaired where the resolution plan does not provide for the full
payment of the confirmed claims as per the updated list of claims maintained by the
54-L. Approval of resolution plan.—(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 54-K, 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 plan does not
conform to the requirements referred to in sub-section (1), it may, within thirty days
of the receipt of such resolution plan, by an order, reject the resolution plan and pass
an order under Section 54-N.
(4) Notwithstanding anything to the contrary contained in this section, where the
Adjudicating Authority has passed an order under sub-section (2) of Section 54-J and
the resolution plan approved by the committee of creditors under sub-section (4) or
sub-section (12), as the case may be of Section 54-K, does not result in the change in
the management or control of the corporate debtor to a person who was not a
promoter or in the management or control of the corporate debtor, the Adjudicating
Authority shall pass an order—
(a) rejecting such resolution plan;
(b) terminating the pre-packaged insolvency resolution process and passing a
liquidation order in respect of the corporate debtor as referred to in sub-
clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of Section 33; and
(c) declaring that the pre-packaged insolvency resolution process costs, if any,
shall be included as part of the liquidation costs for the purposes of liquidation
54-M. Appeal against order under Section 54-L.—Any appeal against an order
approving the resolution plan under sub-section (1) of Section 54-L, shall be on the
grounds laid down in sub-section (3) of Section 61.
54-N. Termination of pre-packaged insolvency resolution process.—(1) Where the
resolution professional files an application with the Adjudicating Authority,—
(a) under the proviso to sub-section (12) of Section 54-K; or
(b) under sub-section (3) of Section 54-D,
the Adjudicating Authority shall, within thirty days of the date of such application, by
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an order,—
(i) terminate the pre-packaged insolvency resolution process; and
(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 67-A, 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 54-K, intimates the
Adjudicating Authority of the decision of the committee of creditors, approved by a
vote of not less than sixty-six per cent. of the voting shares, to terminate the pre-
packaged insolvency resolution process, the Adjudicating Authority shall pass an order
under sub-section (1).
(3) Where the Adjudicating Authority passes an order under sub-section (1), the
corporate debtor shall bear the pre-packaged insolvency resolution process costs, if
any.
(4) Notwithstanding anything to the contrary contained in this section, where the
Adjudicating Authority has passed an order under sub-section (2) of Section 54-J and
the pre-packaged insolvency resolution process is required to be terminated under sub
-section (1), the Adjudicating Authority shall pass an order—
(a) of liquidation in respect of the corporate debtor as referred to in sub-clauses
(i), (ii) and (iii) of clause (b) of sub-section (1) of Section 33; and
(b) declare that the pre-packaged insolvency resolution process costs, if any,
shall be included as part of the liquidation costs for the purposes of liquidation
54-O. Initiation of corporate insolvency resolution process.—(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 54-K, 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—
(a) terminate the pre-packaged insolvency resolution process and initiate
corporate insolvency resolution process under Chapter II in respect of the
corporate debtor;
(b) appoint the resolution professional referred to in clause (b) of sub-section (1)
of Section 54-E as the interim resolution professional, subject to submission of
written consent by such resolution professional to the Adjudicating Authority
in such form as may be specified; and
(c) declare that the pre-packaged insolvency resolution process costs, if any,
shall be included as part of insolvency resolution process costs for the
purposes of the corporate insolvency resolution process of the corporate
debtor.
(3) Where the resolution professional fails to submit written consent under clause
(b) of sub-section (2), the Adjudicating Authority shall appoint an interim resolution
professional by making a reference to the Board for recommendation, in the manner as
provided under Section 16.
(4) Where the Adjudicating Authority passes an order under sub-section (2)—
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(a) such order shall be deemed to be an order of admission of an application

under Section 7 and shall have the same effect;
(b) the corporate insolvency resolution process shall commence from the date of
such order;
(c) the proceedings initiated for avoidance of transactions under Chapter III or
proceedings initiated under Section 66 and Section 67-A, if any, shall continue
during the corporate insolvency resolution process;
(d) for the purposes of Sections 43, 46 and 50, references to “insolvency
commencement date” shall mean “pre-packaged insolvency commencement
date”; and
(e) in computing the relevant time or the period for avoidable transactions, the
time-period for the duration of the pre-packaged insolvency resolution process
shall also be included, notwithstanding anything to the contrary contained in
Sections 43, 46 and 50.
54-P. Application of provisions of Chapters II, III, VI and VII to this Chapter.—(1)
Save as provided under this Chapter, the provisions of Sections 24, 25-A, 26, 27, 28,
29-A, 32-A, 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:—
(a) reference to “members of the suspended Board of Directors or the partners”
under clause (b) of sub-section (3) of Section 24 shall be construed as
reference to “members of the Board of Directors or the partners, unless an
order has been passed by the Adjudicating Authority under Section 54-J”;
(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 54-
F”;
(c) reference to “Section 16” under Section 27 shall be construed as reference to
“Section 54-E”;
(d) reference to “resolution professional” in sub-sections (1) and (4) of Section
28 shall be construed as “corporate debtor”;
(e) reference to “Section 31” under sub-section (3) of Section 61 shall be
construed as reference to “sub-section (1) of Section 54-L”;
(f) reference to “Section 14” in sub-sections (1) and (2) of Section 74 shall be
construed as reference to “clause (a) of sub-section (1) of Section 54-E”;
(g) reference to “Section 31” in sub-section (3) of Section 74 shall be construed
as reference to “sub-section (1) of Section 54-L”.
(2) Without prejudice to the provisions of this Chapter and unless the context
otherwise requires, where the provisions of Chapters II, III, VI and VII are applied to
the proceedings under this Chapter, references to—
(a) “insolvency commencement date” shall be construed as references to “pre-
packaged insolvency commencement date”;
(b) “resolution professional” or “interim resolution professional”, as the case may
be, shall be construed as references to the resolution professional appointed
under this Chapter;
(c) “corporate insolvency resolution process” shall be construed as references to
“pre-packaged insolvency resolution process”; and
(d) “insolvency resolution process period” shall be construed as references to
“pre-packaged insolvency resolution process period”.]
Chapter IV
FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS
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55. Fast track corporation insolvency resolution process.—(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—
(a) a corporate debtor with assets and income below a level as may be notified
by the Central Government; or
(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.
NOTIFICATIONS
Noti. No. S.O. 1911(E), dated June 14, 2017.—In exercise of the powers
conferred by sub-section (2) of Section 55 of the Insolvency and Bankruptcy Code,
2016 (31 of 2016), the Central Government hereby notifies that an application for fast
track corporate insolvency resolution process may be made in respect of the following
corporate debtors, namely—
(a) a small company as defined under clause (85) of Section 2 of Companies Act,
2013 (18 of 2013); or
(b) a Startup (other than the partnership firm) as defined in the notification of the
Government of India in the Ministry of Commerce and Industry, number G.S.R.
501(E), dated the 23rd May, 2017, published in the Gazette of India,
Extraordinary, Part II, Section 3, sub-section (i), dated the 23rd May, 2017; or
(c) an unlisted company with total assets, as reported in the financial statement of
the immediately preceding financial year, not exceeding Rupees One crore.
56. Time period for completion of fast track corporate insolvency resolution process.
—(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.
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 exceeding forty-five days:
Provided that any extension of the fast track corporate insolvency resolution process
under this section shall not be granted more than once.
57. Manner of initiating fast track corporate insolvency resolution process.—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—
(a) the proof of the existence of default as evidenced by records available with an
information utility or such other means as may be specified by the Board; and
(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. Manner of initiating fast track corporate insolvency resolution process.
58. Applicability of Chapter II to this Chapter.—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
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may require.
Chapter V
VOLUNTARY LIQUIDATION OF CORPORATE PERSONS
59. Voluntary liquidation of corporate persons.—(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—
(a) a declaration from majority of the directors of the company verified by an
affidavit stating that—
(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
(ii) the company is not being liquidated to defraud any person;
(b) the declaration under sub-clause (a) shall be accompanied with the following
documents, namely—
(i) audited financial statements and record of business operations of the
company for the previous two years or for the period since its incorporation,
whichever is later;
(ii) a report of the valuation of the assets of the company, if any prepared by a
registered valuer;
(c) within four weeks of a declaration under sub-clause (a), there shall be—
(i) a special resolution of the members of the company in a general meeting
requiring the company to be liquidated voluntarily and appointing an
insolvency professional to act as the liquidator; or
(ii) a resolution of the members of the company in a general meeting
requiring the company to be liquidated voluntarily as a result of expiry of
the period of its duration, if any, fixed by its articles or on the occurrence of
any event in respect of which the articles provide that the company shall be
dissolved, as the case may be and appointing an insolvency professional to
act as the liquidator:
Provided that the company owes any debt to any person, creditors representing two
-thirds in value of the debt of the company shall approve the resolution passed under
sub-clause (c) within seven days of such resolution.
(4) The company shall notify the Registrar of Companies and the Board about the
resolution under sub-section (3) to liquidate the company within seven days of such
resolution or the subsequent approval by the creditors, as the case may be.
(5) Subject to approval of the creditors under sub-section (3), the voluntary
liquidation proceedings in respect of a company shall be deemed to have commenced
from the date of passing of the resolution under sub-clause (c) of sub-section (3).
(6) The provisions of Sections 35 to 53 of Chapter III and Chapter VII shall apply to
voluntary liquidation proceedings for corporate persons with such modifications as may
be necessary.
(7) Where the affairs of the corporate person have been completely wound up, and
its assets completely liquidated, the liquidator shall make an application to the
Adjudicating Authority for the dissolution of such corporate person.
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(8) The Adjudicating Authority shall on an application filed by the liquidator under
sub-section (7), pass an order that the corporate debtor shall be dissolved from the
date of that order and the corporate debtor shall be dissolved accordingly.
(9) A copy of an order under sub-section (8) shall within fourteen days from the
date of such order, be forwarded to the authority with which the corporate person is
registered.
Chapter VI
ADJUDICATING AUTHORITY FOR CORPORATE PERSONS
60. Adjudicating Authority for corporate persons.—(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 117 [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 118 [liquidation or bankruptcy proceeding of a
corporate guarantor or personal guarantor, as the case may be, of the corporate
debtor] pending in any court or tribunal shall stand transferred to the Adjudicating
Authority dealing with insolvency resolution process or liquidation proceeding of such
corporate debtor.
(4) The National Company Law Tribunal shall be vested with all the powers of the
Debts Recovery Tribunal as contemplated under Part III of this Code for the purpose of
sub-section (2).
(5) Notwithstanding anything to the contrary contained in any other law for the
time being in force, the National Company Law Tribunal shall have jurisdiction to
entertain or dispose of—
(a) any application or proceeding by or against the corporate debtor or corporate
person;
(b) any claim made by or against the corporate debtor or corporate person,
including claims by or against any of its subsidiaries situated in India; and
(c) any question of priorities or any question of law or facts, arising out of or in
relation to the insolvency resolution or liquidation proceedings of the corporate
debtor or corporate person under this Code.
(6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or
in any other law for the time being in force, in computing the period of limitation
specified for any suit or application by or against a corporate debtor for which an order
of moratorium has been made under this Part, the period during which such
moratorium is in place shall be excluded.
► Bankruptcy proceeding qua personal guarantor of corporate debtor.—According to the
scheme of Sections 60(2) and (3), the moment there is a proceeding against the corporate debtor
pending under the 2016 Code, any bankruptcy proceeding against the personal guarantor of
corporate debtor will, if already initiated before the proceeding against the corporate debtor, be
transferred to the National Company Law Tribunal or, if initiated after such proceedings had been
commenced against the corporate debtor, be filed only in the National Company Law Tribunal.
However, as against individual personal guarantors the Tribunal is to decide such proceedings only
in accordance with the Presidency Towns Insolvency Act, 1909 or the Provincial Insolvency Act,
1920, as the case may be. Further, Section 60(4), which states that the Tribunal shall be vested with
all the powers of the Debts Recovery Tribunal, as contemplated under Pt. III of the Code, for the
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purposes of Section 60(2), would not take effect, as the Debts Recovery Tribunal has not yet been
empowered to hear bankruptcy proceedings against individuals under Section 179 of the Code, as
the said section has not yet been brought into force, SBI v. V. Ramakrishnan, (2018) 17 SCC 394.
► SARFAESI proceedings.—“Bankruptcy” mentioned in Section 60(2), held, has reference
only to Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920, and does not
include SARFAESI proceedings. Thus, SARFAESI proceedings against personal individual
guarantor of corporate debtor, can continue under the SARFAESI Act, even though a moratorium
may be in force against corporate debtor under Section 14 of 2016 Code, SBI v. V. Ramakrishnan,
(2018) 17 SCC 394.
► Claims filed after approval of resolution plan.— Raising of disputed claims outside the
provisions of the Code after approval of the resolution plan, not permissible. Essar Steel (India) Ltd.
v. Satish Kumar Gupta, (2020) 8 SCC 531.
► Jurisdiction of NCLT.—NCLT lack jurisdiction to issue directions in relation to a matter
covered by MMDR Act. Matters in the realm of public law are not within the jurisdiction of NCLT.
NCLT is not a superior court and not vested with the power of judicial review over administrative
action. Proper forum for adjudication of public law claims is writ jurisdiction of High Court, Embassy
Property Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308.
Consent of party is irrelevant for conferring jurisdiction where none exists, Embassy Property
Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308.
► Power of NCLT to determine fees payable to a professional.—Availability of grievance
redressal mechanism under the IBC against an insolvency professional does not divest NCLT of its
jurisdiction under Section 60(5)(c) IBC, Alok Kaushik v. Bhuvaneshwari Ramanathan, (2021) 5
SCC 787.
61. Appeals and Appellate Authority.—(1) Notwithstanding anything to the contrary
contained under the Companies Act, 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—
(i) the approved resolution plan is in contravention of the provisions of any law
for the time being in force;
(ii) there has been material irregularity in exercise of the powers by the
resolution professional during the corporate insolvency resolution period;
(iii) the debts owed to operational creditors of the corporate debtor have not
been provided for in the resolution plan in the manner specified by the Board;
(iv) the insolvency resolution process costs have not been provided for
repayment in priority to all other debts; or
(v) the resolution plan does not comply with any other criteria specified by the
Board.
119 [(4) An appeal against a liquidation order passed under Section 33, or sub-
section (4) of Section 54-L, or sub-section (4) of Section 54-N, may be filed on
grounds of material irregularity or fraud committed in relation to such a liquidation
order.
(5) An appeal against an order for initiation of corporate insolvency resolution
process passed under sub-section (2) of Section 54-O, may be filed on grounds of
material irregularity or fraud committed in relation to such an order.]
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► Jurisdiction of NCLT.—Inquiry into fraudulent tradings carried on by the corporate debtor

during the insolvency resolution by NCLT/NCLAT, permissible, Embassy Property Developments
(P) Ltd. v. State of Karnataka, (2020) 13 SCC 308.
62. Appeal to Supreme Court.—(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.
63. Civil court not to have jurisdiction.—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. Civil court not to have jurisdiction.
64. Expeditious disposal of applications.—(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.
65. Fraudulent or malicious initiation of proceedings.—(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.
120 [(3) If any person initiates the pre-packaged insolvency resolution process—
(a) fraudulently or with malicious intent for any purpose other than for the
resolution of insolvency; or
(b) 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.]
66. Fraudulent trading or wrongful trading.—(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
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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—
(a) before the insolvency commencement date, such director or partner knew or
ought to have known that the there was no reasonable prospect of avoiding
the commencement of a corporate insolvency resolution process in respect of
such corporate debtor; and
(b) such director or partner did not exercise due diligence in minimising the
potential loss to the creditors of the corporate debtor.
121 [(3) Notwithstanding anything contained in this section, no application shall be
filed by a resolution professional under sub-section (2), in respect of such default

against which initiation of corporate insolvency resolution process is suspended as per
Section 10-A.]
Explanation.—For the purposes of this section a director or partner of the corporate
debtor, as the case may be, shall be deemed to have exercised due diligence if such
diligence was reasonably expected of a person carrying out the same functions as are
carried out by such director or partner, as the case may be, in relation to the corporate
debtor.
67. Proceedings under Section 66.—(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—
(a) provide for the liability of any person under the order to be a charge on any
debt or obligation due from the corporate debtor to him, or on any mortgage
or charge or any interest in a mortgage or charge on assets of the corporate
debtor held by or vested in him, or any person on his behalf, or any person
claiming as assignee from or through the person liable or any person acting on
his behalf; and
(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 favour, by the directions of the person held liable under clause (a)
the debt, obligation, mortgage or charge was created, issued or transferred or the
interest created, but does not include an assignee for valuable consideration given in
good faith and without notice of any of the grounds on which the directions have been
made.
(2) Where the Adjudicating Authority has passed an order under sub-section (1) or
sub-section (2) of Section 66, as the case may be, in relation to a person who is a
creditor of the corporate debtor, it may, by an order, direct that the whole or any part
of any debt owed by the corporate debtor to that person and any interest thereon shall
rank in the order of priority of payment under Section 53 after all other debts owed by
the corporate debtor.
122 [67-A. Fraudulent management of corporate debtor during pre-packaged
insolvency resolution process.—On 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.]
Chapter VII
68. Punishment for concealment of property.—Where any officer of the corporate
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debtor has,—
(i) within the twelve months immediately preceding the insolvency
commencement date,—
(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 the property of the corporate debtor or its affairs; or
(f) wilfully created any security interest over, transferred or disposed of any
property of the corporate debtor which has been obtained on credit and has
not been paid for unless such creation, transfer or disposal was in the
ordinary course of the business of the corporate debtor; or
(g) wilfully concealed the knowledge of the doing by others of any of the acts
mentioned in clauses (c), (d) or clause (e); or
(ii) at any time after the insolvency commencement date, committed any of the
acts mentioned in sub-clauses (a) to (f) of clause (i) or has the knowledge of
the doing by others of any of the things mentioned in sub-clauses (c) to (e) of
clause (i); or
(iii) at any time after the insolvency commencement date, taken in pawn or
pledge, or otherwise received the property knowing it to be so secured,
transferred or disposed,
such officer 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:
Provided that nothing in this section shall render a person liable to any punishment
under this section if he proves that he had no intent to defraud or to conceal the state
of affairs of the corporate debtor.
69. Punishment for transactions defrauding creditors.—123 [If] an officer of the
corporate debtor or the corporate debtor—
(a) has made or caused to be made any gift or transfer of, or charge on, or has
caused or connived in the execution of a decree or order against, the property
of 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 clause (a) were committed more than five years before the insolvency
commencement date; or if he proves that, at the time of commission of those acts, he
had no intent to defraud the creditors of the corporate debtor.
70. Punishment for misconduct in course of corporate insolvency resolution process.
—(1) On or after the insolvency commencement date, where an officer of the corporate
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debtor—
(a) does not disclose to the resolution professional all the details of property of
the corporate debtor, and details of transactions thereof, or any such other
information as the resolution professional may require; or
(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 production of any book or paper affecting or relating to the
property or affairs of the corporate debtor; or
(f) accounts for any part of the property of the corporate debtor by fictitious
losses or expenses, or if he has so attempted at any meeting of the creditors
of the corporate debtor within the twelve months immediately preceding the
insolvency commencement date,
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:
Provided that nothing in this section shall render a person liable to any punishment
under this section if he proves that he had no intent to do so in relation to the state of
affairs of the corporate debtor.
(2) 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.
71. Punishment for falsification of books of corporate debtor.—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.
72. Punishment for wilful and material omissions from statements relating to affairs
of corporate debtor.—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
73. Punishment for false representations to creditors.—Where any officer of the
corporate debtor—
(a) on or after the insolvency commencement date, makes a false representation
or commits any fraud for the purpose of obtaining the consent of the creditors
of the corporate debtor or any of them to an agreement with reference to the
affairs of the corporate debtor, during the corporate insolvency resolution
process, or the liquidation process;
(b) prior to the insolvency commencement date, has made any false
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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
74. Punishment for contravention of moratorium or the resolution plan.—(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 Section 31, knowingly and wilfully
contravenes any of the terms of such resolution plan or abets such contravention, such
corporate debtor, officer, creditor or person shall be punishable with imprisonment of
not 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.
75. Punishment for false information furnished in application.—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.
76. Punishment for non-disclosure of dispute or 124 [payment] of debt by operational
creditor.—Where—
(a) an operational creditor has wilfully or knowingly concealed in an application
under Section 9 the fact that the corporate debtor had notified him of a
dispute in respect of the unpaid operational debt or the full and final 125
[payment] of the unpaid operational debt; or
(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.
77. Punishment for providing false information in application made by corporate
debtor.—Where—
(a) a corporate debtor provides information in the application under Section 10
which is false in material particulars, knowing it to be false and omits any
material fact, knowing it to be material; or
(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.
126 [* * *]
127
[77-A. Punishment for offences related to pre-packaged insolvency resolution
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process.—(1) Where—
(a) a corporate debtor provides any information in the application under Section
54-C which is false in material particulars, knowing it to be false or omits any
material fact, knowing it to be material; or
(b) a corporate debtor provides any information in the list of claims or the
preliminary information memorandum submitted under sub-section (1) of
Section 54-G 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
which may extend to one crore rupees, or with both.
(2) If a director or partner of the corporate debtor, as the case may be, deliberately
contravenes the provisions of Chapter III-A, such person shall be punishable with
imprisonment for not 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.
Explanation.—For the purposes of this section and Sections 75, 76 and 77, an
application shall be deemed to be false in material particulars in case the facts
mentioned or omitted in the application, if true, or not omitted from the application, as
the case may be, would have been sufficient to determine the existence of a default
under this Code.]
Part III
INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP
FIRMS
Chapter I
PRELIMINARY
78. Application.—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.
79. Definitions.—In this Part, unless the context otherwise requires,—
(1) “Adjudicating Authority” means the Debts Recovery Tribunal constituted
under sub-section (1) of Section 3 of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (51 of 1993);
(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 on the trustee
which may be exercised for the benefit of the debtor; and
(g) a company, where the debtor or the debtor along with his associates, own
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more than fifty per cent of the share capital of the company or control the
appointment of the board of directors of the company.
Explanation.—For the purposes of this sub-section, “relative”, with reference
to any person, means anyone who is related to another, if—
(i) they are members of a Hindu Undivided Family;
(ii) one person is related to the other in such manner as may be prescribed;
(3) “bankrupt” means—
(a) a debtor who has been adjudged as bankrupt by a bankruptcy order under
Section 126;
(b) each of the partners of a firm, where a bankruptcy order under Section
126 has been made against a firm; or
(c) any person adjudged as an undischarged insolvent;
(4) “bankruptcy” means the state of being bankrupt;
(5) “bankruptcy debt”, in relation to a bankrupt, means—
(a) any debt owed by him as on the bankruptcy commencement date;
(b) any debt for which he may become liable after bankruptcy commencement
date but before his discharge by reason of any transaction entered into
before the bankruptcy commencement date; and
(c) any interest which is a part of the debt under Section 171;
(6) “bankruptcy commencement date” means the date on which a bankruptcy
order is passed by the Adjudicating Authority under Section 126;
(7) “bankruptcy order” means an order passed by an Adjudicating Authority
under Section 126;
(8) “bankruptcy process” means a process against a debtor under Chapters IV
and V of this Part;
(9) “bankruptcy trustee” means the insolvency professional appointed as a
trustee for the estate of the bankrupt under Section 125;
(10) “Chapter” means a chapter under this Part;
(11) “committee of creditors” means a committee constituted under Section
134;
(12) “debtor” includes a judgment-debtor;
(13) “discharge order” means an order passed by the Adjudicating Authority
discharging the debtor under Sections 92, 119 and Section 138, as the case
may be;
(14) “excluded assets” for the purposes of this part includes—
(a) unencumbered tools, books, vehicles and other equipment as are
necessary to the debtor or bankrupt for his personal use or for the purpose
of his employment, business or vocation;
(b) unencumbered furniture, household equipment and provisions as are
necessary for satisfying the basic domestic needs of the bankrupt and his
immediate family;
(c) any unencumbered personal ornaments of such value, as may be
prescribed, of the debtor or his immediate family which cannot be parted
with, in accordance with religious usage;
(d) any unencumbered life insurance policy or pension plan taken in the name
of debtor or his immediate family; and
(e) an unencumbered single dwelling unit owned by the debtor of such value
as may be prescribed;
(15) “excluded debt” means—
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(a) liability to pay fine imposed by a court or tribunal;

(b) liability to pay damages for negligence, nuisance or breach of a statutory,
contractual or other legal obligation;
(c) liability to pay maintenance to any person under any law for the time
being in force;
(d) liability in relation to a student loan; and
(e) any other debt as may be prescribed;
(16) “firm” means a body of individuals carrying on business in partnership
whether or not registered under Section 59 of the Indian Partnership Act,
1932 (9 to 1932);
(17) “immediate family” of the debtor means his spouse, dependent children and
dependent parents;
(18) “partnership debt” means a debt for which all the partners in a firm are
jointly liable;
(19) “qualifying debt” means amount due, which includes interest or any other
sum due in respect of the amounts owed under any contract, by the debtor for
a liquidated sum either immediately or at certain future time and does not
include—
(a) an excluded debt;
(b) a debt to the extent it is secured; and
(c) any debt which has been incurred three months prior to the date of the
application for fresh start process;
(20) “repayment plan” means a plan prepared by the debtor in consultation with
the resolution professional under Section 105 containing a proposal to the
committee of creditors for restructuring of his debts or affairs;
(21) “resolution professional” means an insolvency professional appointed under
this part as a resolution professional for conducting the fresh start process or
insolvency resolution process;
(22) “undischarged bankrupt” means a bankrupt who has not received a
discharge order under Section 138.
Chapter II
FRESH START PROCESS
80. Eligibility for making an application.—(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—
(a) the gross annual income of the debtor does not exceed sixty thousand
rupees;
(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, insolvency resolution process or bankruptcy process is
not subsisting against him; and
(g) no previous fresh start order under this Chapter has been made in relation to
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him in the preceding twelve months of the date of the application for fresh
start.
81. Application for fresh start order.—(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,—
(i) any legal action or legal proceeding pending in respect of any of his debts
shall be deemed to have been stayed; and
(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—
(a) a list of all debts owed by the debtor as on the date of the said application
along with details relating to the amount of each debt, interest payable
thereon and the names of the creditors to whom each debt is owed;
(b) the interest payable on the debts and the rate thereof stipulated in the
contract;
(c) a list of security held in respect of any of the debts;
(d) the financial information of the debtor and his immediate family up to two
years prior to the date of the application;
(e) the particulars of the debtor's personal details, as may be prescribed;
(f) the reasons for making the application;
(g) the particulars of any legal proceedings which, to the debtor's knowledge has
been commenced against him;
(h) the confirmation that no previous fresh start order under this Chapter has
been made in respect of the qualifying debts of the debtor in the preceding
twelve months of the date of the application.
► Scope of “legal action or proceeding in respect of any debt”.—“In respect of” is a
phrase which is wide and includes anything done directly or indirectly. Moreover, the phrase used is
not “recovery of debt”. Thus, any legal proceeding even indirectly relatable to recovery of any debt
would be covered under Sections 81, 85, 96 and 101, P. Mohanraj v. Shah Bros. Ispat (P) Ltd.,
(2021) 6 SCC 258.
82. Appointment of resolution professional.—(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—
(a) confirmation of the appointment of the resolution professional who filed an
application under sub-section (1); or
(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 Adjudicating Authority shall direct the Board
within seven days of the date of the receipt of an application to nominate a resolution
professional for the fresh start process.
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(4) The Board shall nominate a resolution professional within ten days of receiving
the direction issued by the Adjudicating Authority under sub-section (3).
(5) The Adjudicating Authority shall by order appoint the resolution professional
recommended or nominated by the Board under sub-section (2) or sub-section (4), as
the case may be.
(6) A resolution professional appointed by the Adjudicating Authority under sub-
section (5) shall be provided a copy of the application for fresh start.
83. Examination of application by resolution professional.—(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—
(a) qualifying debts; and
(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 explanation within seven days of receipt of the request under sub-
section (3).
(5) The resolution professional shall presume that the debtor is unable to pay his
debts at the date of the application if—
(a) in his opinion the information supplied in the application indicates that the
debtor is unable to pay his debts and he has no reason to believe that the
information supplied is incorrect or incomplete; and
(b) he has reason to believe that there is no change in the financial
circumstances of the debtor since the date of the application enabling the
debtor to pay his debts.
(6) The resolution professional shall reject the application, if in his opinion—
(a) the debtor does not satisfy the conditions specified under Section 80; or
(b) the debts disclosed in the application by the debtor are not qualifying debts;
or
(c) the debtor has deliberately made a false representation or omission in the
application or with respect to the documents or information submitted.
(7) The resolution professional shall record the reasons for recommending the
acceptance or rejection of the application in the report to the Adjudicating Authority
under sub-section (1) and shall give a copy of the report to the debtor.
84. Admission or rejection of application by Adjudicating Authority.—(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.
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85. Effect of admission of application.—(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—
(a) any pending legal action or legal proceeding in respect of any debt shall be
deemed to have been stayed; and
(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—
(a) not act as a director of any company, or directly or indirectly take part in or
be concerned in the promotion, formation or management of a company;
(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 or commercial
transaction of such value as may be notified by the Central Government,
either individually or jointly, that he is undergoing a fresh start process;
(e) disclose the name under which he enters into business transactions, if it is
different from the name in the application admitted under Section 84;
(f) not travel outside India except with the permission of the Adjudicating
Authority.
(4) The moratorium ceases to have effect at the end of the period of one hundred
and eighty days beginning with the date of admission unless the order admitting the
application is revoked under sub-section (2) of Section 91.
86. Objections by creditor and their examination by resolution professional.—(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—
(a) inclusion of a debt as a qualifying debt; or
(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 objections, within ten days of the date of the
application.
(6) The resolution professional may examine any matter that appears to him to be
relevant to the making of a final list of qualifying debts for the purposes of Section 92.
(7) On the basis of the examination under sub-section (5) or sub-section (6), the
resolution professional shall—
(a) prepare an amended list of qualifying debts for the purpose of the discharge
order;
(b) make an application to the Adjudicating Authority for directions under
Section 90; or
(c) take such other steps as he considers necessary in relation to the debtor.
87. Application against decision of resolution professional.—(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
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Adjudicating Authority challenging such action on any of the following grounds,

namely:—
(a) that the resolution professional has not given an opportunity to the debtor or
the creditor to make a representation; or
(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 forward its order to the Board and the Board may take
such action as may be required under Chapter VI of Part IV against the resolution
professional.
88. General duties of debtor.—(1) The debtor shall—
(a) make available to the resolution professional all information relating to his
affairs, attend meetings and comply with the requests of the resolution
professional in relation to the fresh start process.
(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.
89. Replacement of resolution professional.—(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
(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
Adjudicating Authority under sub-section (2), recommend the name of an insolvency
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 directions to the resolution professional
replaced under sub-section (4)—
(a) to share all information with the new resolution professional in respect of the
fresh start process; and
(b) to co-operate with the new resolution professional as may be required.
90. Directions for compliances of restrictions, etc.—(1) The resolution professional
may apply to the Adjudicating Authority for any of the following directions, namely—
(a) compliance of any restrictions referred to in sub-section (3) of Section 85, in
case of non-compliance by the debtor; or
(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
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provisions have been made.

91. Revocation of order admitting application.—(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—
(a) if due to any change in the financial circumstances of the debtor, the debtor
is ineligible for a fresh start process; or
(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.
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.
(4) A copy of the order passed by the Adjudicating Authority under this section
shall be provided to the Board for the purpose of recording an entry in the register
referred to in Section 196.
92. Discharge order.—(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:—
(a) penalties in respect of the qualifying debts from the date of application till
the date of the discharge order;
(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 qualifying debts
from the date of application till the date of the discharge order.
(4) The discharge order shall not discharge the debtor from any debt not included
in sub-section (2) and from any liability not included under sub-section (3).
(5) The discharge order shall be forwarded to the Board for the purpose of recording
an entry in the register referred to in Section 196.
(6) A discharge order under sub-section (2) shall not discharge any other person
from any liability in respect of the qualifying debts.
93. Standard of conduct.—The resolution professional shall perform his functions
and duties in compliance with the code of conduct provided under Section 208.
Chapter III
INSOLVENCY RESOLUTION PROCESS
94. Application by debtor to initiate insolvency resolution process.—(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.
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(4) A debtor shall not be entitled to make an application under sub-section (1) if he
is—
(a) an undischarged bankrupt;
(b) undergoing a fresh start process;
(c) undergoing an insolvency resolution process; or
(d) undergoing a bankruptcy process.
(5) A debtor shall not be eligible to apply under sub-section (1) if an application
under this Chapter has been admitted in respect of the debtor during the period of
twelve months preceding the date of submission of the application under this section.
(6) The application referred to in sub-section (1) shall be in such form and manner
and accompanied with such fee as may be prescribed.
95. Application by creditor to initiate insolvency resolution 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—
(a) any one or more partners of the firm; or
(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 application under sub-section (1) shall be accompanied with details and
documents relating to—
(a) the debts owed by the debtor to the creditor or creditors submitting the
application for insolvency resolution process as on the date of application;
(b) the failure by the debtor to pay the debt within a period of fourteen days of
the service of the notice of demand; and
(c) relevant evidence of such default or non-repayment of debt.
(5) The creditor shall also provide a copy of the application made under sub-section
(1) to the debtor.
and accompanied by such fee as may be prescribed.
(7) The details and documents required to be submitted under sub-section (4) shall
be such as may be specified.
96. Interim-moratorium.—(1) When an application is filed under Section 94 or
Section 95—
(a) an interim-moratorium shall commence on the date of the application in
relation to all the debts and shall cease to have effect on the date of
admission of such application; and
(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.
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(3) The provisions of sub-section (1) shall not apply to such transactions as may be
notified by the Central Government in consultation with any financial sector regulator.
97. Appointment of resolution professional.—(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—
(a) confirming the appointment of the resolution professional; or
(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 filing of such
application, to nominate a resolution professional for the insolvency resolution process.
(4) The Board shall nominate a resolution professional within ten days of receiving
the direction issued by the Adjudicating Authority under sub-section (3).
(5) The Adjudicating Authority shall by order appoint the resolution professional
recommended under sub-section (2) or as nominated by the Board under sub-section
(4).
(6) A resolution professional appointed by the Adjudicating Authority under sub-
section (5) shall be provided a copy of the application for insolvency resolution
process.
98. Replacement of resolution professional.—(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 the
such resolution professional.
application under sub-section (1) make a reference to the Board for replacement of the
Adjudicating Authority under sub-section (2), recommend the name of the resolution
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, to replace the resolution
professional with a new resolution professional for implementation of the repayment
plan.
(5) Where the Adjudicating Authority admits an application made under sub-section
(1) or sub-section (4), it shall direct the Board to confirm that there are no disciplinary
proceedings pending against the proposed resolution professional.
(6) The Board shall send a communication within ten days of receipt of the direction
under sub-section (5) either—
(a) confirming appointment of the nominated resolution professional; or
(b) rejecting appointment of the nominated resolution professional and
recommend a new resolution professional.
(7) On the basis of the communication of the Board under sub-section (3) or sub-
section (6), the Adjudicating Authority shall pass an order appointing a new resolution
professional.
(8) The Adjudicating Authority may give directions to the resolution professional
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replaced under sub-section (7)—

(a) to share all information with the new resolution professional in respect of the
insolvency resolution process; and
(b) to co-operate with the new resolution professional in such matters as may be
required.
99. Submission of report by resolution professional.—(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—
(a) evidence of electronic transfer of the unpaid amount from the bank account
of the debtor;
(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 of such debt.
(4) For the purposes of examining an application, the resolution professional may
seek such further information or explanation in connection with the application as may
be required from the debtor or the creditor or any other person who, in the opinion of
the resolution professional, may provide such information.
(5) The person from whom information or explanation is sought under sub-section
(4) shall furnish such information or explanation within seven days of receipt of the
request.
(6) The resolution professional shall examine the application and ascertain that—
(a) the application satisfies the requirements set out in Section 94 or 95;
(b) the applicant has provided information and given explanation sought by the
resolution professional under sub-section (4).
(7) After examination of the application under sub-section (6), he may recommend
acceptance or rejection of the application in his report.
(8) Where the resolution professional finds that the debtor is eligible for a fresh
start under Chapter II, the resolution professional shall submit a report recommending
that the application by the debtor under Section 94 be treated as an application under
Section 81 by the Adjudicating Authority.
(9) The resolution professional shall record the reasons for recommending the
acceptance or rejection of the application in the report under sub-section (7).
(10) The resolution professional shall give a copy of the report under sub-section
(7) to the debtor or the creditor, as the case may be.
100. Admission or rejection of application.—(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
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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 basis of report submitted by the resolution
professional that the application was made with the intention to defraud his creditors
or the resolution professional, the order under sub-section (1) shall record that the
creditor is entitled to file for a bankruptcy order under Chapter IV.
101. Moratorium.—(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—
(a) any pending legal action or proceeding in respect of any debt shall be
deemed to have been stayed;
(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 moratorium under sub-section (1) shall operate against all the
partners of the firm.
(4) The provisions of this section shall not apply to such transactions as may be
102. Public notice and claims from creditors.—(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—
(a) details of the order admitting the application;
(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—
(a) published in at least one English and one vernacular newspaper which is in
circulation in the State where the debtor resides;
(b) affixed in the premises of the Adjudicating Authority; and
(c) placed on the website of the Adjudicating Authority.
103. Registering of claims by creditors.—(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.
104. Preparation of list of creditors.—(1) The resolution professional shall prepare a
list of creditors on the basis of—
(a) the information disclosed in the application filed by the debtor under Section
94 or 95, as the case may be;
(b) claims received by the resolution professional under Section 102. Preparation
of list of creditors.
(2) The resolution professional shall prepare the list mentioned in sub-section (1)
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within thirty days from the date of the notice.

105. Repayment plan.—(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—
(a) carry on the debtor's business or trade on his behalf or in his name; or
(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—
(a) justification for preparation of such repayment plan and reasons on the basis
of which the creditors may agree upon the plan;
(b) provision for payment of fee to the resolution professional;
(c) such other matters as may be specified.
106. Report of resolution professional on repayment plan.—(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—
(a) the repayment plan is in compliance with the provisions of any law for the
time being in force;
(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 date on which,
and the time and place at which, the meeting should be held if he is of the opinion
that a meeting of the creditors should be summoned.
(4) For the purposes of sub-section (3)—
(a) the date on which the meeting is to be held shall be not less than fourteen
days and not more than twenty-eight days from the date of submission of
report under sub-section (1);
(b) the resolution professional shall consider the convenience of creditors in
fixing the date and venue of the meeting of the creditors.
107. Summoning of meeting of creditors.—(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—
(a) a copy of the repayment plan;
(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
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manner and form as may be specified.

108. Conduct of meeting of creditors.—(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.
109. Voting rights in meeting of creditors.—(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.
(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—
(a) is not a creditor mentioned in the list of creditors under Section 104; or
(b) is an associate of the debtor.
110. Rights of secured creditors in relation to repayment plan.—(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—
(a) that the right to vote exercised by the secured creditor is only in respect of
the unsecured part of the debt; and
(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 unsecured parts of the
debt shall be treated as separate debts.
(5) The concurrence of the secured creditor shall be obtained if he does not
participate in the voting on repayment plan but provision of the repayment plan
affects his right to enforce security.
Explanation.—For the purposes of this section, “period of the repayment plan”
means the period from the date of the order passed under Section 114 till the date on
which the notice is given by the resolution professional under Section 117 or report
submitted by the resolution professional under Section 118, as the case may be.
Rights of secured creditors in relation to repayment plan.
111. Approval of repayment plan by creditors.—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. Approval of repayment plan by creditors.
112. Report of meeting of creditors on repayment plan.—(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—
(a) whether the repayment plan was approved or rejected and if approved, the
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list the modifications, if any;

(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.
113. Notice of decisions taken at meeting of creditors.—The resolution professional
shall provide a copy of the report of the meeting of creditors prepared under Section
99 to—
(a) the debtor;
(b) the creditors, including those who were not present at the meeting; and
(c) the Adjudicating Authority. Notice of decisions taken at meeting of creditors.
114. Order of Adjudicating Authority on repayment plan.—(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. Order of Adjudicating
Authority on repayment plan.
115. Effect of order of Adjudicating Authority on repayment plan.—(1) Where the
Adjudicating Authority has approved the repayment plan under Section 114, such
repayment plan shall—
(a) take effect as if proposed by the debtor in the meeting; and
(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.
shall be provided to the Board, for the purpose of recording an entry in the register
116. Implementation and supervision of repayment plan.—(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).
117. Completion of repayment plan.—(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:—
(a) a notice that the repayment plan has been fully implemented; and
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(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.
118. Repayment plan coming to end prematurely.—(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—
(a) the receipts and payments made in pursuance of the repayment plan;
(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 repayment plan have not been
fully satisfied, shall be entitled to apply for a bankruptcy order under Chapter IV.
(5) The Adjudicating Authority shall forward to the persons bound by the
repayment plan under Section 115, a copy of the—
(a) report submitted by the resolution professional to the Adjudicating Authority
under sub-section (2); and
(b) order passed by the Adjudicating Authority under sub-section (3).
(6) The Adjudicating Authority shall forward a copy of the order passed under sub-
section (4) to the Board, for the purpose of recording entries in the register referred to
in Section 196.
119. Discharge order.—(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—
(a) early discharge; or
(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.
120. Standard of conduct.—The resolution professional shall perform his functions
and duties in compliance with the code of conduct provided under Section 208.
Chapter IV
BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS
121. Application for bankruptcy.—(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—
(a) where an order has been passed by an Adjudicating Authority under sub-
section (4) of Section 100; or
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(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.
122. Application by debtor.—(1) The application for bankruptcy by the debtor shall
be accompanied by—
(a) the records of insolvency resolution process undertaken under Chapter III of
Part III;
(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.
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.
123. Application by creditor.—(1) The application for bankruptcy by the creditor
shall be accompanied by—
(a) the records of insolvency resolution process undertaken under Chapter III;
(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—
(a) a statement by the creditor having the right to enforce the security that he
shall, in the event of a bankruptcy order being made, give up his security for
the benefit of all the creditors of the bankrupt; or
(b) a statement by the creditor stating—
(i) that the application for bankruptcy is only in respect of the unsecured part
of the debt; and
(ii) an estimated value of the unsecured part of the debt.
(3) If a secured creditor makes an application for bankruptcy and submits a
statement under clause (b) of sub-section (2), the secured and unsecured parts of the
debt shall be treated as separate debts.
(4) The creditor may propose an insolvency professional as the bankruptcy trustee
in the application for bankruptcy.
(5) An application for bankruptcy under sub-section (1), in case of a deceased
debtor, may be filed against his legal representatives.
(6) The application for bankruptcy shall be in such form and manner and
accompanied by such fee as may be prescribed.
(7) An application for bankruptcy by the creditor shall not be withdrawn without the
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permission of the Adjudicating Authority.

124. Effect of application.—(1) When an application is filed under Section 122 or
123,—
(a) an interim-moratorium shall commence on the date of the making of the
application on all actions against the properties of the debtor in respect of his
debts and such moratorium shall cease to have effect on the bankruptcy
commencement date; and
(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 the making of the application.
(3) The provisions of this section shall not apply to such transactions as may be
125. Appointment of insolvency professional as bankruptcy trustee.—(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—
(a) confirm the appointment of the proposed insolvency professional as the
bankruptcy trustee for the bankruptcy process; or
(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 within seven
days of receiving the application to nominate a bankruptcy trustee for the bankruptcy
process.
(4) The Board shall nominate a bankruptcy trustee within ten days of receiving the
direction of the Adjudicating Authority under sub-section (3).
(5) The bankruptcy trustee confirmed or nominated under this section shall be
appointed as the bankruptcy trustee by the Adjudicating Authority in the bankruptcy
order under Section 126.
126. Bankruptcy order.—(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. Bankruptcy order.
(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:—
(a) a copy of the application for bankruptcy; and
(b) a copy of the bankruptcy order.
127. Validity of 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.
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128. Effect of bankruptcy order.—(1) On the passing of the bankruptcy order under
Section 126,—
(a) the estate of the bankrupt shall vest in the bankruptcy trustee as provided in
Section 154;
(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 entitled if the bankruptcy order had not
been passed:
Provided that no secured creditor shall be entitled to any interest in respect of his
debt after the bankruptcy commencement date if he does not take any action to
realise his security within thirty days from the said date.
(3) Where a bankruptcy order under Section 126 has been passed against a firm,
the order shall operate as if it were a bankruptcy order made against each of the
individuals who, on the date of the order, is a partner in the firm.
(4) The provisions of sub-section (1) shall not apply to such transactions as may be
129. Statement of financial position.—(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 the 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.
130. Public notice inviting claims from creditors.—(1) The Adjudicating Authority
shall—
(a) send notices within ten days of the bankruptcy commencement date, to the
creditors mentioned in—
(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—
(a) published in leading newspapers, one in English and another in vernacular
having sufficient circulation where the bankrupt resides;
(b) affixed on the premises of the Adjudicating Authority; and
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(c) placed on the website of the Adjudicating Authority.

(3) The notice to the creditors referred to under clause (a) of sub-section (1) shall
include such matters and details as may be prescribed.
131. Registration of claims.—(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.
132. Preparation of list of creditors.—The bankruptcy trustee shall, within fourteen
days from the bankruptcy commencement date, prepare a list of creditors of the
bankrupt on the basis of—
(a) the information disclosed by the bankrupt in the application for bankruptcy
filed by the bankrupt under Section 118 and the statement of affairs filed
under Section 125; and
(b) claims received by the bankruptcy trustee under sub-section (2) of Section
130.
133. Summoning of meeting of creditors.—(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—
(a) state the date of the meeting of the creditors, which shall not be later than
twenty-one days from the bankruptcy commencement date;
(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.
134. Conduct of meeting of creditors.—(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:—
(a) the establishment of a committee of creditors;
(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.
135. Voting rights of creditors.—(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.
(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:
—
(a) creditors who are not mentioned in the list of creditors under Section 132 and
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those who have not been given a notice by the bankruptcy trustee;
(b) creditors who are associates of the bankrupt.
136. Administration and distribution of estate of bankrupt.—The bankruptcy trustee
shall conduct the administration and distribution of the estate of the bankrupt in
accordance with the provisions of Chapter V.
137. Completion of administration.—(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.
138. Discharge order.—(1) The bankruptcy trustee shall apply to the Adjudicating
Authority for a discharge order—
(a) on the expiry of one year from the bankruptcy commencement date; or
(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.
139. Effect of discharge.—The discharge order under sub-section (2) of Section 138
shall release the bankrupt from all the bankruptcy debt:
Provided that discharge shall not—
(a) affect the functions of the bankruptcy trustee; or
(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.
140. Disqualification of bankrupt.—(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—
(a) being appointed or acting as a trustee or representative in respect of any
trust, estate or settlement;
(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—
(a) the bankruptcy order against him is modified or recalled under Section 142;
or
(b) he is discharged under Section 138.
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Explanation.—For the purposes of this section, the term “public servant” shall have
the same meaning as assigned to it in Section 21 of the Indian Penal Code (45 of
1860).
141. Restrictions on bankrupt.—(1) A bankrupt, from the bankruptcy
commencement date, shall—
(a) not act as a director of any company, or directly or indirectly take part in or
be concerned in the promotion, formation or management of a company;
(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
(f) not be permitted to travel overseas without the permission of the
(2) Any restriction to which a bankrupt may be subject under this section shall
cease to have effect, if—
(a) the bankruptcy order against him is modified or recalled under Section 142;
or
(b) he is discharged under Section 138.
142. Modification or recall of bankruptcy order.—(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—
(a) there exists an error apparent on the face of such order; or
(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.
shall be provided to the Board, for the purpose of recording an entry in the register
(4) The modification or recall of the order by the Adjudicating Authority under sub-
section (1) shall be binding on all creditors so far as it relates to any debts due to
them which form a part of the bankruptcy.
143. Standard of conduct.—The bankruptcy trustee shall perform his functions and
duties in compliance with the code of conduct provided under Section 208.
144. Fees of bankruptcy trustee.—(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
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provided in Section 178.

145. Replacement of bankruptcy trustee.—(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.
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 bankruptcy trustee for replacement against
whom no disciplinary proceedings are pending.
(6) The Adjudicating Authority shall, by an order, appoint the bankruptcy trustee as
recommended by the Board under sub-section (5) within fourteen days of receiving
such recommendation.
(7) The earlier bankruptcy trustee shall deliver possession of the estate of the
bankrupt to the bankruptcy trustee appointed under sub-section (6), on the date of
his appointment.
(8) The Adjudicating Authority may give directions to the earlier bankruptcy
trustee—
(a) to share all information with the new bankruptcy trustee in respect of the
bankruptcy process; and
(b) to co-operate with the new bankruptcy trustee in such matters as may be
required.
(9) The earlier bankruptcy trustee replaced under this section shall be released in
accordance with the provisions of Section 148.
(10) The bankruptcy trustee appointed under this section shall give a notice of his
appointment to the bankrupt within seven days of his appointment.
146. Resignation by bankruptcy trustee.—(1) A bankruptcy trustee may resign if—
(a) he intends to cease practising as an insolvency professional; or
(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.
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
his appointment.
(6) The Adjudicating Authority may give directions to the bankruptcy trustee who
has resigned—
bankruptcy process; and
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required.
(7) The bankruptcy trustee appointed under this section shall give a notice of his
appointment to the committee of creditors and the bankrupt within seven days of his
appointment.
(8) The bankruptcy trustee replaced under this section shall be released in
accordance with the provisions of Section 148.
147. Vacancy in office of bankruptcy trustee.—(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.
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
his appointment.
(6) The Adjudicating Authority may give directions to the bankruptcy trustee who
has vacated the office—
bankruptcy;
required.
(7) The bankruptcy trustee appointed under sub-section (4) shall give a notice of
his appointment to the committee of creditors and the bankrupt within seven days of
his appointment.
(8) The earlier bankruptcy trustee replaced under this section shall be released in
accordance with the provisions of Section 148:
Provided that this section shall not apply if the vacancy has occurred due to
temporary illness or temporary leave of the bankruptcy trustee.
148. Release of bankruptcy trustee.—(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.
Chapter V
ADMINISTRATION AND DISTRIBUTION OF THE ESTATE OF THE BANKRUPT
149. Functions of bankruptcy trustee.—(1) The bankruptcy trustee shall perform the
following functions in accordance with the provisions of this Chapter—
(a) investigate the affairs of the bankrupt;
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(b) realise the estate of the bankrupt; and

(c) distribute the estate of the bankrupt.
150. Duties of bankrupt towards bankruptcy trustee.—(1) The bankrupt shall assist
the bankruptcy trustee in carrying out his functions under this Chapter by—
(a) giving to the bankruptcy trustee the information of his affairs;
(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.
(3) The bankrupt shall continue to discharge the duties under sub-section (1) other
than the duties under clause (c) evenafter the discharge under Section 138.
151. Rights of bankruptcy trustee.—For the purpose of performing his functions
under this Chapter, the bankruptcy trustee may, by his official name—
(a) hold property of every description;
(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.
152. General powers of bankruptcy trustee.—The bankruptcy trustee may while
discharging his functions under this Chapter,—
(a) sell any part of the estate of the bankrupt;
(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
(f) deal with any property comprised in the estate of the bankrupt to which the
bankrupt is beneficially entitled in the same manner as he might have dealt
with it.
153. Approval of creditors for certain acts.—The bankruptcy trustee for the purposes
of this Chapter may after procuring the approval of the committee of creditors,—
(a) carry on any business of the bankrupt as far as may be necessary for winding
it up beneficially;
(b) bring, institute or defend any legal action or proceedings relating to the
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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;
(f) refer to arbitration or compromise on such terms as may be agreed, any debts
subsisting or supposed to subsist between the bankrupt and any person who
may have incurred any liability to the bankrupt;
(g) make compromise or other arrangement as may be considered expedient,
with the creditors;
(h) make compromise or other arrangement as he may deem expedient with
respect to any claim arising out of or incidental to the bankrupt's estate;
(i) appoint the bankrupt to—
(A) supervise the management of the estate of the bankrupt or any part of it;
(B) carry on his business for the benefit of his creditors;
(C) assist the bankruptcy trustee in administering the estate of the bankrupt.
154. Vesting of estate of bankrupt in bankruptcy trustee.—(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.
155. Estate of bankrupt.—(1) The estate of the bankrupt shall include,—
(a) all property belonging to or vested in the bankrupt at the bankruptcy
commencement date;
(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—
(a) excluded assets;
(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) such assets as may be notified by the Central Government in consultation
with any financial sector regulator.
156. Delivery of property and documents to bankruptcy trustee.—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.
157. Acquisition of control by 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.
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(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.
158. Restrictions on disposition of property.—(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—
(a) good faith;
(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.
159. After-acquired property of bankrupt.—(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—
(a) excluded assets; or
(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)—
(a) anything which comes to the knowledge of the bankruptcy trustee shall be
deemed to have come to the knowledge of the successor of the bankruptcy
trustee at the same time; and
(b) anything which comes to the knowledge of a person before he is appointed as
a bankruptcy trustee shall be deemed to have come to his knowledge on the
date of his appointment as bankruptcy trustee.
(5) The bankruptcy trustee shall not be entitled, by virtue of this section, to claim
from any person who has acquired any right over after-acquired property, in good
faith, for value and without notice of the bankruptcy.
(6) A notice may be served after the expiry of the period under sub-section (3) only
with the approval of the Adjudicating Authority.
Explanation.—For the purposes of this section, the term “after-acquired property”
means any property which has been acquired by or has devolved upon the bankrupt
after the bankruptcy commencement date.
160. Onerous property of bankrupt.—(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—
(a) determine, as from the date of such notice, the rights, interests and liabilities
of the bankrupt in respect of the onerous property disclaimed;
(b) discharge the bankruptcy trustee from all personal liability in respect of the
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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
property which has been claimed for the estate of the bankrupt under Section 155
without the permission of the committee of creditors.
(5) A notice of disclaimer under sub-section (1) shall not affect the rights or
liabilities of any other person, and any person who sustains a loss or damage in
consequence of the operation of a disclaimer under this section shall be deemed to be
a creditor of the bankrupt to the extent of the loss or damage.
Explanation.—For the purposes of this section, the term “onerous property”
means—
(i) any unprofitable contract; and
(ii) any other property comprised in the estate of the bankrupt which is
unsaleable or not readily saleable, or is such that it may give rise to a claim.
161. Notice to disclaim onerous property.—(1) No notice of disclaimer under Section
160 shall be necessary if—
(a) a person interested in the onerous property has applied in writing to the
bankruptcy trustee or his predecessor requiring him to decide whether the
onerous property should be disclaimed or not; and
(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.
162. Disclaimer of leaseholds.—(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—
(a) no application objecting to the disclaimer by the interested person, has been
filed with respect to the leasehold interest, within fourteen days of the date on
which notice was served; 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.
163. Challenge against disclaimed property.—(1) An application challenging the
disclaimer may be made by the following persons under this section to the
Adjudicating Authority—
(a) any person who claims an interest in the disclaimed property; or
(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
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to the Adjudicating Authority that it would be just to do so for the purpose of

compensating the person.
(4) The effect of an order under this section shall be taken into account while
assessing loss or damage sustained by any person in consequence of the disclaimer
under sub-section (5) of Section 160.
(5) An order under sub-section (2) vesting property in any person need not be
completed by any consequence, assignment or transfer.
164. Undervalued transactions.—(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—
(a) been entered into during the period of two years ending on the filing of the
application for bankruptcy; and
(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—
(a) pass an order declaring an undervalued transaction void;
(b) pass an order requiring any property transferred as a part of an undervalued
transaction to be vested with the bankruptcy trustee as a part of the estate of
the bankrupt; and
(c) pass any other order it thinks fit for restoring the position to what it would
have been if the bankrupt had not entered into the undervalued transaction.
(5) The order under clause (a) of sub-section (4) shall not be passed if it is proved
by the bankrupt that the transaction was undertaken in the ordinary course of
business of the bankrupt:
Provided that the provisions of this sub-section shall not be applicable to
undervalued transaction entered into between a bankrupt and his associate under sub-
section (3) of this section.
(6) For the purposes of this section, a bankrupt enters into an undervalued
transaction with any person if—
(a) he makes a gift to that person;
(b) no consideration has been received by that person from the bankrupt;
(c) it is in consideration of marriage; or
(d) it is for a consideration, the value of which in money or money's worth is
significantly less than the value in money or money's worth of the
consideration provided by the bankrupt.
165. Preference transactions.—(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.
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(5) On the application of the bankruptcy trustee under sub-section (1), the
Adjudicating Authority may—
(a) pass an order declaring a transaction giving preference void;
(b) pass an order requiring any property transferred in respect of a transaction
giving preference to be vested with the bankruptcy trustee as a part of the
estate of the bankrupt; and
(c) pass any other order it thinks fit for restoring the position to what it would
have been if the bankrupt had not entered into the transaction giving
preference.
(6) The Adjudicating Authority shall not pass an order under sub-section (5) unless
the bankrupt was influenced in his decision of giving preference to a person by a
desire to produce in relation to that person an effect under clause (b) of sub-section
(8).
(7) For the purpose of sub-section (6), if the person is an associate of the bankrupt,
(otherwise than by reason only of being his employee), at the time when the
preference was given, it shall be presumed that the bankrupt was influenced in his
decision under that sub-section.
(8) For the purposes of this section, a bankrupt shall be deemed to have entered
into a transaction giving preference to any person if—
(a) the person is the creditor or surety or guarantor for any debt of the bankrupt;
and
(b) the bankrupt does anything or suffers anything to be done which has the
effect of putting that person into a position which, in the event of the debtor
becoming a bankrupt, will be better than the position he would have been in,
if that thing had not been done.
166. Effect of order.—(1) Subject to the provision of sub-section (2), an order
passed by the Adjudicating Authority under Section 164 or Section 165 shall not,—
(a) give rise to a right against a person interested in the property which was
acquired in an undervalued transaction or a transaction giving preference,
whether or not he is the person with whom the bankrupt entered into such
transaction; and
(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—
(a) in good faith;
(b) for value;
(c) without notice that the bankrupt entered into the transaction at an
undervalue or for giving preference;
(d) without notice that the bankrupt has filed an application for bankruptcy or a
bankruptcy order has been passed; and
(e) by any person who at the time of acquiring the interest or receiving the
benefit was not an associate of the bankrupt.
(3) Any sum required to be paid to the bankruptcy trustee under sub-section (1)
shall be included in the estate of the bankrupt.
167. Extortionate credit transactions.—(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.
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(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—
(a) set aside the whole or part of any debt created by the transaction;
(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
bankrupt held as security for the purposes of the transaction.
(4) Any sum paid or any property surrendered to the bankruptcy trustee shall be
included in the estate of the bankrupt.
(5) For the purposes of this section, an extortionate credit transaction is a
transaction for or involving the provision of credit to the bankrupt by any person—
(a) on terms requiring the bankrupt to make exorbitant payments in respect of
the credit provided; or
(b) which is unconscionable under the principles of law relating to contracts.
(6) Any debt extended by a person regulated for the provision of financial services
in compliance with the law in force in relation to such debt, shall not be considered as
an extortionate credit transaction under this section.
168. Obligations under contracts.—(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—
(a) an order discharging the obligations of the applicant or the bankrupt under
the contract; and
(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.
169. Continuance of proceedings on death of bankrupt.—If a bankrupt dies, the
bankruptcy proceedings shall, continue as if he were alive.
170. Administration of estate of deceased bankrupt.—(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 legal
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representatives of the estate of the deceased bankrupt or dealt with in such manner as
may be prescribed.
171. Proof of debt.—(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—
(a) require the creditor to give full particulars of debt, including the date on
which the debt was contracted and the value at which that person assesses it;
(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 insofar as it is owed in respect of any period after the bankruptcy
commencement date.
(5) The bankruptcy trustee shall estimate the value of any bankruptcy debt which
does not have a specific value.
(6) The value assigned by the bankruptcy trustee under sub-section (5) shall be the
amount provable by the concerned creditor.
(7) A creditor may prove for a debt where payment would have become due at a
date later than the bankruptcy commencement date as if it were owed presently and
may receive dividends in a manner as may be prescribed.
(8) Where the bankruptcy trustee serves a notice under sub-section (1) and the
person on whom the notice is served does not file a proof of security within thirty days
after the date of service of the notice, the bankruptcy trustee may, with leave of the
Adjudicating Authority, sell or dispose of any property that was subject to the security,
free of that security.
172. Proof of debt by secured creditors.—(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.
173. Mutual credit and set-off.—(1) Where before the bankruptcy commencement
date, there have been mutual dealings between the bankrupt and any creditor, the
bankruptcy trustee shall—
(a) take an account of what is due from each party to the other in respect of the
mutual dealings and the sums due from one party shall be set-off against the
sums due from the other; and
(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.
174. Distribution of interim dividend.—(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.
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(3) In the calculation and distribution of the interim dividend, the bankruptcy
trustee shall make provision for—
(a) any bankruptcy debts which appear to him to be due to persons who, by
reason of the distance of their place of residence, may not have had sufficient
time to tender and establish their debts; and
(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 administration of the estate of the bankrupt.
175. Distribution of property.—(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 trustee
under sub-section (3) unless it is satisfied that the bankruptcy trustee acted in a case
of urgency and has sought its ratification without undue delay.
176. Final dividend.—(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—
(a) of his intention to declare a final dividend; or
(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—
(a) defray any outstanding expenses of the bankruptcy out of the estate of the
bankrupt; and
(b) if he intends to declare a final dividend, declare and distribute that dividend
among the creditors who have proved their debts, without regard to the
claims of any other persons.
(5) If a surplus remains after payment in full with interest to all the creditors of the
bankrupt and the payment of the expenses of the bankruptcy, the bankrupt shall be
entitled to the surplus.
(6) Where a bankruptcy order has been passed in respect of one partner in a firm, a
creditor to whom the bankrupt is indebted jointly with the other partners in the firm or
any of them shall not receive any dividend out of the separate property of the
bankrupt until all the separate creditors have received the full amount of their
respective debts.
177. Claims of creditors.—(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
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participated in it, the distribution of that dividend or any other dividend declared
before his debt was proved, but—
(a) when he has proved the debt, he shall be entitled to be paid any dividend or
dividends which he has failed to receive, out of any money for the time being
available for the payment of any further dividend; and
(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—
(a) pay the dividend; and
(b) pay, out of his own money—
(i) interest on the dividend; and
(ii) the costs of the proceedings in which the order to pay has been made.
178. Priority of payment of debts.—(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—
(a) firstly, the costs and expenses incurred by the bankruptcy trustee for the
bankruptcy process in full;
(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 India and the Consolidated Fund of a State, if any, in respect of the
whole or any part of the period of two years preceding the bankruptcy
commencement date;
(e) lastly, all other debts and dues owed by the bankrupt including unsecured
debts.
(2) The debts in each class specified in sub-section (1) shall rank in the order
mentioned in that sub-section but debts of the same class shall rank equally amongst
themselves, and shall be paid in full, unless the estate of the bankrupt is insufficient
to meet them, in which case they shall abate in equal proportions between
themselves.
(3) Where any creditor has given any indemnity or has made any payment of
moneys by virtue of which any asset of the bankrupt has been recovered, protected or
preserved, the Adjudicating Authority may make such order as it thinks just with
respect to the distribution of such asset with a view to giving that creditor an
advantage over other creditors in consideration of the risks taken by him in so doing.
(4) Unsecured creditors shall rank equally amongst themselves unless contractually
agreed to the contrary by such creditors.
(5) Any surplus remaining after the payment of the debts under sub-section (1)
shall be applied in paying interest on those debts in respect of the periods during
which they have been outstanding since the bankruptcy commencement date.
(6) Interest payments under sub-section (5) shall rank equally irrespective of the
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nature of the debt.

(7) In the case of partners, the partnership property shall be applicable in the first
instance in payment of the partnership debts and the separate property of each
partner shall be applicable in the first instance in payment of his separate debts.
(8) Where there is a surplus of the separate property of the partners, it shall be
dealt with as part of the partnership property; and where there is a surplus of the
partnership property, it shall be dealt with as part of the respective separate property
in proportion to the rights and interests of each partner in the partnership property.
Chapter VI
ADJUDICATING AUTHORITY FOR INDIVIDUALS AND PARTNERSHIP FIRMS
179. Adjudicating Authority for individuals and partnership firms.—(1) Subject to
the provisions of Section 60, the Adjudicating Authority, in relation to insolvency
matters of individuals and firms shall be the Debts 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 Debts Recovery Tribunal shall, notwithstanding anything contained in any
other law for the time being in force, have jurisdiction to entertain or dispose of—
(a) any suit or proceeding by or against the individual debtor;
(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.
(3) Notwithstanding anything contained in the Limitation Act, 1963 (14 of 1963) or
in any other law for the time being in force, in computing the period of limitation
specified for any suit or application in the name and on behalf of a debtor for which an
order of moratorium has been made under this Part, the period during which such
moratorium is in place shall be excluded.
180. Civil court not to have jurisdiction.—(1) No civil court or authority shall have
jurisdiction to entertain any suit or proceedings in respect of any matter on which the
Debts Recovery Tribunal or the Debts 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 Debts
Recovery Tribunal or the Debts Recovery Appellate Tribunal by or under this Code.
181. Appeal to Debts Recovery Appellate Tribunal.—(1) An appeal from an order of
the Debts Recovery Tribunal under this Code shall be filed within thirty days before the
Debts Recovery Appellate Tribunal.
(2) The Debts 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.
182. Appeal to Supreme Court.—(1) An appeal from an order of the Debts 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.
183. Expeditious disposal of applications.—Where an application is not disposed of
or order is not passed within the period specified in this Code, the Debts Recovery
Tribunal or the Debts 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
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Debts Recovery Appellate Tribunal, after taking into account the reasons so recorded,
extend the period specified in this Code, but not exceeding ten days.
Chapter VII
184. Punishment for false information, etc., by creditor in insolvency resolution
process.—(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.
185. Punishment for contravention of provisions.—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 lakh rupees, or with both.
186. Punishment for false information, concealment, etc., by bankrupt.—If the
bankrupt—
(a) knowingly makes a false representation or wilfully omits or conceals any
material information while making an application for bankruptcy under Section
122 or while providing any information during the bankruptcy process, he
shall be punishable with imprisonment which may extend to six months, or
with fine which may extend to five lakh rupees, or with both;
Explanation.—For the purposes of clause (a), a false representation or
omission includes non-disclosure 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 shall be punishable with
imprisonment which may extend to one year, or with fine, which may extend
to five lakh rupees, or with both;
(c) has contravened the restrictions under Section 140 or the provisions of
Section 141, he shall be punishable with imprisonment for a term which may
extend to six months, or with fine, which may extend to five lakh rupees, or
with both;
(d) has failed to deliver the possession of any property comprised in the estate of
the bankrupt under his possession or control, which he is required to deliver
under Section 156, he shall be punishable with imprisonment for a term which
may extend to six months, or with fine, which may extend to five lakh rupees,
or with both;
(e) has failed to account, without any reasonable cause or satisfactory
explanation, for any loss incurred of any substantial part of his property
comprised in the estate of the bankrupt from the date which is twelve months
before the filing of the bankruptcy application, he shall be punishable with
imprisonment for a term which may extend to two years, or with fine, which
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may extend to three times of the value of the loss, or with both:
Provided that that where such loss is not quantifiable, the total amount of fine
imposed shall not exceed five lakh rupees;
(f) has absconded or attempts to abscond after the bankruptcy commencement
date, 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;
Explanation.—For the purposes of this clause, a bankrupt shall be deemed to have
absconded if he leaves, or attempts to leave the country without delivering the
possession of any property which he is required to deliver to the bankruptcy trustee
under Section 156.
187. Punishment for certain actions.—(1) If a bankruptcy trustee,—
(a) has fraudulently misapplied, retained or accounted for any money or property
comprised in the estate of the bankrupt; or
(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 disposes of any property which is not comprised in the estate of the
bankrupt and at that time had reasonable grounds to believe that he is entitled to
seize or dispose that property.
Part IV
REGULATION OF INSOLVENCY PROFESSIONALS, AGENCIES AND INFORMATION
UTILITIES
Chapter I
THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
188. Establishment and incorporation of Board.—(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 Board may establish offices at other places in India.
NOTIFICATIONS
Noti. No. S.O. 3110(E), dated October 1, 2016.—In exercise of the powers
conferred by sub-sections (1) and (3) of Section 188 of the Insolvency and Bankruptcy
Code, 2016 (31 of 2016), the Central Government hereby appoints 1st October, 2016
as the date of establishment of Insolvency and Bankruptcy Board of India. The Head
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Office of the Insolvency and Bankruptcy Board of India shall be at New Delhi.
189. Constitution of Board.—(1) The Board shall consist of the following members
who shall be appointed by the Central Government, namely—
(a) a Chairperson;
(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.
(3) The appointment of the Chairperson and the members of the Board other than
the appointment of an ex officio member under this section shall be made after
obtaining the recommendation of a selection committee consisting of—
(a) Cabinet Secretary — Chairperson;
(b) Secretary to the Government of India to be nominated by the Central
Government — Member;
(c) Chairperson of the Insolvency and Bankruptcy Board of India (in case of
selection of members of the Board) — Member;
(d) three experts of repute from the field of finance, law, management,
insolvency and related subjects, to be nominated by the Central Government
— Members.
(4) The term of office of the Chairperson and members (other than ex officio
members) shall be five years or till they attain the age of sixty-five years, whichever is
earlier, and they shall be eligible for reappointment.
(5) The salaries and allowances payable to, and other terms and conditions of
service of, the Chairperson and members (other than the ex officio members) shall be
such as may be prescribed.
190. Removal of member from office.—The Central Government may remove a
member from office if he—
(a) is an undischarged bankrupt as defined under Part III;
(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.
191. Powers of Chairperson.—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.
192. Meetings of 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
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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.
193. Member not to participate in meetings in certain cases.—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.
194. Vacancies, etc., not to invalidate proceedings of Board, Officers and employees
of Board.—(1) No act or proceeding of the Board shall be invalid merely by reason of—
(a) any vacancy in, or any defect in the constitution of, the Board; or
(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.
195. Power to designate financial sector regulator.—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.
Chapter II
POWERS AND FUNCTIONS OF THE BOARD
196. Powers and functions of Board.—(1) The Board shall, subject to the general
direction of the Central Government, perform all or any of the following functions,
namely:—
(a) register insolvency professional agencies, insolvency professionals and
information utilities and renew, withdraw, suspend or cancel such
registrations;
128 [(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 129 [for carrying out the purposes of this Code,
including fee for registration and renewal] of insolvency professional agencies,
insolvency professionals and information utilities;
(d) specify by regulations standards for the functioning of insolvency professional
agencies, insolvency professionals and information utilities;
(e) lay down by regulations the minimum curriculum for the examination of the
insolvency professionals for their enrolment as members of the insolvency
professional agencies;
(f) carry out inspections and investigations on insolvency professional agencies,
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insolvency professionals and information utilities and pass such orders as may
be required for compliance of the provisions of this Code and the regulations
issued hereunder;
(g) monitor the performance of insolvency professional agencies, insolvency
professionals and information utilities and pass any directions as may be
required for compliance of the provisions of this Code and the regulations
issued hereunder;
(h) call for any information and records from the insolvency professional
agencies, insolvency professionals and information utilities;
(i) publish such information, data, research studies and other information as may
be specified by regulations;
(j) specify by regulations the manner of collecting and storing data by the
information utilities and for providing access to such data;
(k) collect and maintain records relating to insolvency and bankruptcy cases and
disseminate information relating to such cases;
(l) constitute such committees as may be required including in particular the
committees laid down in Section 197;
(m) promote transparency and best practices in its governance;
(n) maintain websites and such other universally accessible repositories of
electronic information as may be necessary;
(o) enter into memorandum of understanding with any other statutory
authorities;
(p) issue necessary guidelines to the insolvency professional agencies, insolvency
professionals and information utilities;
(q) specify mechanism for redressal of grievances against insolvency
professionals, insolvency professional agencies and information utilities and
pass orders relating to complaints filed against the aforesaid for compliance of
the provisions of this Code and the regulations issued hereunder;
(r) conduct periodic study, research and audit the functioning and performance
of to the insolvency professional agencies, insolvency professionals and
information utilities at such intervals as may be specified by the Board;
(s) specify mechanisms for issuing regulations, including the conduct of public
consultation processes before notification of any regulations;
(t) make regulations and guidelines on matters relating to insolvency and
bankruptcy as may be required under this Code, including mechanism for time
-bound disposal of the assets of the corporate debtor or debtor; and
(u) perform such other functions as may be prescribed.
(2) The Board may make model bye-laws to be to adopted by insolvency
professional agencies which may provide for—
(a) the minimum standards of professional competence of the members of
insolvency professional agencies;
(b) the standards for professional and ethical conduct of the members of
insolvency professional agencies;
(c) requirements for enrolment of persons as members of insolvency professional
agencies which shall be non-discriminatory.
Explanation.—For the purposes of this clause, the term “non-discriminatory”
means lack of discrimination on the grounds of religion, caste, gender or place
of birth and such other grounds as may be specified;
(d) the manner of granting membership;
(e) setting up of a governing board for internal governance and management of
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insolvency professional agency in accordance with the regulations specified by

the Board;
(f) the information required to be submitted by members including the form and
the time for submitting such information;
(g) the specific classes of persons to whom services shall be provided at
concessional rates or for no remuneration by members;
(h) the grounds on which penalties may be levied upon the members of
insolvency professional agencies and the manner thereof;
(i) a fair and transparent mechanism for redressal of grievances against the
members of insolvency professional agencies;
(j) the grounds under which the insolvency professionals may be expelled from
the membership of insolvency professional agencies;
(k) the quantum of fee and the manner of collecting fee for inducting persons as
its members;
(l) the procedure for enrolment of persons as members of insolvency professional
agency;
(m) the manner of conducting examination for enrolment of insolvency
professionals;
(n) the manner of monitoring and reviewing the working of insolvency
professional who are members;
(o) the duties and other activities to be performed by members;
(p) the manner of conducting disciplinary proceedings against its members and
imposing penalties;
(q) the manner of utilising the amount received as penalty imposed against any
insolvency professional.
(3) Notwithstanding anything contained in any other law for the time being in force,
while exercising the powers under this Code, the Board shall have the same powers as
are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while
trying a suit, in respect of the following matters, namely—
(i) the discovery and production of books of account and other documents, at
such place and such time as may be specified by the Board;
(ii) summoning and enforcing the attendance of persons and examining them on
oath;
(iii) inspection of any books, registers and other documents of any person at any
place;
(iv) issuing of commissions for the examination of witnesses or documents.
197. Constitution of advisory committee, executive committee or other committee.
—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.
198. Condonation of delay.—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.
Chapter III
INSOLVENCY PROFESSIONAL AGENCIES
199. No person to function as insolvency professional agency without valid
certificate of registration.—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
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certificate of registration issued in this behalf by the Board.

200. Principles governing registration of insolvency professional agency.—The Board
shall have regard to the following principles while registering the insolvency
professional agencies under this Code, namely—
(a) to promote the professional development of and regulation of insolvency
professionals;
(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.
201. Registration of insolvency professional agency.—(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 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.
(5) The Board may, by order, suspend or cancel the certificate of registration
granted to an insolvency professional agency on any of the following grounds,
namely—
(a) that it has obtained registration by making a false statement or
misrepresentation or by any other unlawful means;
(b) that it has failed to comply with the requirements of the regulations made by
the Board or bye-laws made by the insolvency professional agency;
(c) that it has contravened any of the provisions of the Act or the rules or the
(d) on any other ground as may be specified by regulations:
Provided that no order shall be made under this sub-section unless the insolvency
professional agency concerned has been given a reasonable opportunity of being
heard:
Provided further that no such order shall be passed by any member except whole-
time members of the Board.
202. Appeal to National Company Law Appellate Tribunal.—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.
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203. Governing Board of insolvency professional agency.—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—
(a) the setting up of a governing board of an insolvency professional agency;
(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.
204. Functions of insolvency professional agencies.—An insolvency professional
agency shall perform the following functions, namely—
(a) grant membership to persons who fulfil all requirements set out in its bye-
laws on payment of membership fee;
(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.
205. Insolvency professional agencies to make bye-laws.—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.
Chapter IV
INSOLVENCY PROFESSIONALS
206. Enrolled and registered persons to act as insolvency professionals.—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.
207. Registration of insolvency professionals.—(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.
208. Functions and obligations of insolvency professionals.—(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:—
(a) a fresh start order process under Chapter II of Part III;
(b) individual insolvency resolution process under Chapter III of Part III;
(c) corporate insolvency resolution process under Chapter II of Part II;
130
[(ca) pre-packaged insolvency resolution process under Chapter III-A of Part
II;]
(d) individual bankruptcy process under Chapter IV of Part III; and
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(e) liquidation of a corporate debtor firm under Chapter III of Part II.
131
[(1-A) Where the name of the insolvency professional proposed to be appointed
as a resolution professional, is approved under clause (e) of sub-section (2) of Section
54-A, it shall be the function of such insolvency professional to take such actions as
may be necessary to perform his functions and duties prior to the initiation of the pre-
packaged insolvency resolution process under Chapter III-A of Part II.]
(2) Every insolvency professional shall abide by the following code of conduct—
(a) to take reasonable care and diligence while performing his duties;
(b) to comply with all requirements and terms and conditions specified in the
bye-laws of the insolvency professional agency of which he is a member;
(c) to allow the insolvency professional agency to inspect his records;
(d) to submit a copy of the records of every proceeding before the Adjudicating
Authority to the Board as well as to the insolvency professional agency of
which he is a member; and
(e) to perform his functions in such manner and subject to such conditions as
may be specified.
Chapter V
INFORMATION UTILITIES
209. No person to function as information utility without certificate of registration.—
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.
210. Registration of information utility.—(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.
(5) The Board may, by order, suspend or cancel the certificate of registration
granted to an information utility on any of the following grounds, namely—
(a) that it has obtained registration by making a false statement or
misrepresentation or any other unlawful means;
(b) that it has failed to comply with the requirements of the regulations made by
the Board;
(c) that it has contravened any of the provisions of the Act or the rules or the
(d) on any other ground as may be specified by regulations:
Provided that no order shall be made under this sub-section unless the information
utility concerned has been given a reasonable opportunity of being heard:
Provided further that no such order shall be passed by any member except whole-
time members of the Board.
211. Appeal to National Company Law Appellate Tribunal.—Any information utility
which is aggrieved by the order of the Board made under Section 210 may prefer an
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appeal to the National Company Law Appellate Tribunal in such form, within such
period, and in such manner, as may be specified by regulations.
212. Governing Board of information utility.—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.
213. Core services, etc., of information utilities.—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.
214. Obligations of information utility.—For the purposes of providing core services
to any person, every information utility shall—
(a) create and store financial information in a universally accessible format;
(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 access such information in such manner as may be specified by
regulations;
(g) publish such statistical information as may be specified by regulations;
(h) have inter-operatability with other information utilities.
215. Procedure for submission, etc., of financial information.—(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.
216. Rights and obligations of persons submitting financial information.—(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.
Chapter VI
INSPECTION AND INVESTIGATION
217. Complaints against insolvency professional agency or its member or
information utility.—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.
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218. Investigation of insolvency professional agency or its member or information

utility.—(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 the same, and such person shall be bound to furnish
such document, record or information:
Provided that the Investigating Authority shall provide detailed reasons to such
person before requiring him to furnish such document, record or information.
(4) The Investigating Authority may, in the course of its inspection or investigation,
enter any building or place where they may have reasons to believe that any such
document, record or information relating to the subject-matter of the inquiry may be
found and may seize any such document, record or information or take extracts or
copies therefrom, subject to the provisions of Section 100 of the Code of Criminal
Procedure, 1973, insofar as they may be applicable.
(5) The Investigating Authority shall keep in its custody the books, registers, other
documents and records seized under this section for such period not later than the
conclusion of the investigation as it considers necessary and thereafter shall return the
same to the concerned person from whose custody or power they were seized:
Provided that the Investigating Authority may, before returning such books,
registers, other documents and record as aforesaid, place identification marks on them
or any part thereof.
(6) A detailed report of inspection or investigation shall be submitted to the Board
by the Investigating Authority.
219. Show-cause notice to insolvency professional agency or its member or
information utility.—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.
220. Appointment of Disciplinary Committee.—(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—
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(i) three times the amount of the loss caused, or likely to have been caused, to
persons concerned on account of such contravention; or
(ii) three times the amount of the unlawful gain made on account of such
contravention, whichever is higher:
Provided that where such loss or unlawful gain is not quantifiable, the total amount
of the penalty imposed shall not exceed more than one crore rupees.
(4) Notwithstanding anything contained in sub-section (3), the Board may direct
any person who has made unlawful gain or averted loss by indulging in any activity in
contravention of this Code, or the rules or regulations made thereunder, to disgorge an
amount equivalent to such unlawful gain or aversion of loss.
(5) The Board may take such action as may be required to provide restitution to the
person who suffered loss on account of any contravention from the amount so
disgorged, if the person who suffered such loss is identifiable and the loss so suffered
is directly attributable to such person.
(6) The Board may make regulations to specify—
(a) the procedure for claiming restitution under sub-section (5);
(b) the period within which such restitution may be claimed; and
(c) the manner in which restitution of amount may be made.
Chapter VII
FINANCE, ACCOUNTS AND AUDIT
221. Grants by Central Government.—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.
222. Board's Fund.—(1) There shall be constituted a Fund to be called the Fund of
the Insolvency and Bankruptcy Board and there shall be credited thereto—
(a) all grants, fees and charges received by the Board under this Code;
(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—
(a) the salaries, allowances and other remuneration of the members, officers and
other employees of the Board;
(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.
223. Accounts and audit.—(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
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accounts and, in particular, shall have the right to demand the production of books,
accounts, connected vouchers and other documents and papers and to inspect any of
the offices of the Board.
(4) The accounts of the Board as certified by the Comptroller and Auditor General of
India or any other person appointed by him in this behalf together with the audit
report thereon shall be forwarded annually to the Central Government and that
Government shall cause the same to be laid before each House of Parliament.
Part V
MISCELLENEOUS
224. Insolvency and Bankruptcy Fund.—(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—
(a) the grants made by the Central Government for the purposes of the Fund;
(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
not exceeding the amount contributed by it, for making payments to workmen,
protecting the assets of such persons, meeting the incidental costs during the
proceedings or such other purposes as may be prescribed.
(4) The Central Government shall, by notification, appoint an administrator to
administer the fund in such manner as may be prescribed.
225. Power of Central Government to issue directions.—(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.
226. Power of Central Government to supersede Board.—(1) If at any time the
Central Government is of opinion—
(a) that on account of grave emergency, the Board is unable to discharge the
functions and duties imposed on it by or under the provisions of this Code; or
(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 (1) superseding the
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Board,—(a) all the members shall, as from the date of supersession, vacate their
offices as such; (b) all the powers, functions and duties which may, by or under the
provisions of this Code, be exercised or discharged by or on behalf of the Board, shall
until the Board is reconstituted under sub-section (3), be exercised and discharged by
such person or persons as the Central Government may direct; and (c) all property
owned or controlled by the Board shall, until the Board is reconstituted under sub-
section (3), vest in the Central Government.
(3) On the expiration of the period of supersession specified in the notification
issued under sub-section (1), the Central Government may reconstitute the Board by a
fresh appointment and in such case any person or persons who vacated their offices
under clause (a) of sub-section (2), shall not be deemed disqualified for appointment:
Provided that the Central Government may, at any time, before the expiration of the
period of supersession, take action under this sub-section.
(4) The Central Government shall cause a notification issued under sub-section (1)
and a full report of any action taken under this section and the circumstances leading
to such action to be laid before each House of Parliament at the earliest.
227. Power of Central Government to notify financial service providers, etc.—
Notwithstanding anything to the contrary 132 [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.
133
[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.]
228. Budget.—(1) 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.
229. Annual Report.—(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.
230. Delegation.—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.
231. Bar of jurisdiction.—No civil court shall have jurisdiction in respect of any
matter in which the 134 [Adjudicating Authority or the 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 135 [Adjudicating Authority or the Board] under this Code.
232. Members, officers and employees of Board to the public servants.—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).
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233. Protection of action taken in good faith.—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.
234. Agreements with foreign countries.—(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.
235. Letter of request to a country outside India in certain cases.—(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 proceeding, may issue a letter of request to a court or an authority of such
country competent to deal with such request.
136
[235-A. Punishment where no specific penalty or punishment is provided.—If 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.]
236. Trial of offences by Special Court.—(1) Notwithstanding anything in the Code
of Criminal Procedure, 1973 (2 of 1974), offences under of 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 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 authorised by
the Central Government or the Board before the Court trying the offences shall not be
necessary unless the Court requires his personal attendance at the trial.
237. Appeal and revision.—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
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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.
238. Provisions of this Code to override other laws.—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.
Companies Act 2013, Employees Organization v. Jaipur Metals & Electricals Ltd., (2019) 4 SCC
227.
► Primacy of 2016 Code over Income Tax Act.—In view of Section 238 of the Code, held, the
Code will override anything inconsistent contained in any other enactment, including the Income Tax
Act. Affirming the High Court's ruling in Monnet Ispat & Energy Ltd., 2017 SCC OnLine Del 12759,
held, income tax dues, being in the nature of Crown debts, do not take precedence over secured
creditors, who are private persons, CIT v. Monnet Ispat & Energy Ltd., (2018) 18 SCC 786.
► Remedies available to allottees under RERA.—RERA is to be read harmoniously with the
Code, as amended by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018. The
remedies that are given to allottees of flats/apartments, held, are therefore concurrent remedies,
such allottees of flats/apartments being in a position to avail of remedies under the Consumer
Protection Act, 1986, RERA, as well as the triggering of the Code. Under Section 88, the provisions
of RERA are in addition to and not in derogation of the provisions of any other law for time being in
force and there is no provision similar to that of Section 88 of RERA in the Insovency Code.
Further, the non obstante clause of RERA (Section 89) came into force on 1-5-2016, as opposed to
the non obstante clause of the Code (Section 238) which came into force on 1-12-2016 and the
amendments by virtue of 2018 Act, came into force only on 6-6-2018 i.e. the Code as amended, is
later in point of time than RERA. Further, even by a process of harmonious construction RERA and
Code must co-exist, and, only in the event of a clash, RERA must give way to Code. Further, given
the different spheres within which these two enactments operate, different parallel remedies are
given to allottees under RERA to see that their flat/apartment is constructed and delivered to them in
time, barring which compensation for the same and/or refund of amounts is paid together with
interest, however, if the allottee wants that the corporate debtor's management itself be removed and
replaced, so that the corporate debtor can be rehabilitated, he may prefer a Section 7 application
under the Code, Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416.
► Prior consent of the Central Government.—Provisions of IBC, held, have overriding effect
over Tea Act, 1953. Section 16-G(1)(c) refers to consent qua proceeding for winding up of
company or for appointment of receiver while proceedings under Section 9 IBC are not be limited
and/or restricted to winding up and/or appointment of receiver only and the winding up/liquidation of
company is to be last resort and only on an eventuality when corporate insolvency resolution
process fails. Further, primary focus of legislation while enacting IBC is to ensure revival and
continuation of corporate debtor by protecting corporate debtor from its own management and from
a corporate debt by liquidation and such corporate insolvency resolution process is to be completed
in a time-bound manner. Therefore, entire “corporate insolvency resolution process” as such cannot
be equated with “winding-up proceedings”. Further, Section 238 IBC, which is a subsequent Act to
Tea Act, 1953, is applicable and the provisions of IBC shall have an overriding effect over Tea Act,
1953. Thus, held, that no prior consent of Central Government before initiation of the proceedings
under Section 7 or Section 9 IBC would be required and even without such consent of Central
Government, the insolvency proceedings under Section 7 or Section 9 IBC initiated by operational
creditor shall be maintainable, Duncans Industries Ltd. v. AJ Agrochem, (2019) 9 SCC 725.
► Allotment/Transfer of Government/Public property.—Authorisation from Municipal
Corporation for transfer/creation of interest in property owned by the Corporation i.e. adherence to
Sections 92 and 92-A of the MMC Act, not dispensable. Insolvency Code i.e. by virtue of Section
238 IBC, not to override Corporation's right to control and regulate how its properties are to be dealt
with. Section 238 IBC cannot be read as overriding Municipal Corporation's right, its public duty, to
control and regulate how its properties are to be dealt with. Further, Section 238 could be of
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importance when the properties and assets are of a debtor and not when a third party like Municipal
Corporation of Greater Mumbai (MCGM) is involved. Therefore, in the absence of approval in terms
of Sections 92 and 92-A of the MMC Act, the adjudicating authority under Insolvency Code cannot
enable creation of a fresh interest in respect of Corporation's properties and lands, Municipal
Corpn. of Greater Mumbai v. Abhilash Lal, (2020) 13 SCC 234.
137
[238-A. Limitation.—The provisions of the Limitation Act, 1963 (36 of 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.]
► Applicability.—Date of coming into force of IB Code does not and cannot form a trigger point
of limitation for applications filed under the Code and since “bapplications” are petitions which are
filed under the Code, it is Article 137 of the Limitation Act which will apply to such applications,
Sagar Sharma v. Phoenix ARC (P) Ltd., (2019) 10 SCC 353.
Section 433 of the Companies Act, applies to NCLT when it decides applications under Sections
7 and 9 of the Code. Also, given the fact that “procedure” that would apply to NCLT would be the
procedure contained inter alia in the Limitation Act, NCLT would have to decide applications made to
it under the Code in the same manner as it exercises its other jurisdiction under the Companies Act.
Further, insertion of Section 238-A would not serve its object unless it is construed as being
retrospective, as otherwise, applications seeking to resurrect time-barred claims would have to be
allowed, not being governed by law of limitation. Legislature did not contemplate enabling a creditor
who has allowed period of limitation to elapse to allow such delayed claims through mechanism of
the Code and the expression “debt due” in definition sections of the Code would obviously only refer
to debts that are “due and payable” in law i.e. debts that are not time-barred. Further, expressions
“due” and “due and payable” occurring in Sections 3(11) and 3(12) of the Code, refer to a “default”
which is non-payment of a debt that is due in law i.e. that such debt is not barred by law of limitation
and expression “default” bears the same meaning in Sections 7 and 8 of the Code, making it clear
that corporate insolvency resolution process against corporate debtor can only be initiated either by
financial or operational creditor in relation to debts which have not become time-barred. Thus, since
the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from
inception of the Code, Article 137 of the Limitation Act gets attracted and “the right to sue”,
therefore, accrues when a default occurs, B.K. Educational Services (P) Ltd. v. Parag Gupta &
Associates, (2019) 11 SCC 633.
► Applicability of Limitation Act.—Article 137 of Limitation Act provides for a limitation period
of 3 years, while Article 62 of Limitation Act providing for limitation period of 12 years for recovery
of debts secured with immovable property. Date of enforcement of Insolvency and Bankruptcy Code
is irrelevant for computation of limitation period i.e. no new lease of life to be given to debts which
are already time-barred, Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd.,
(2019) 10 SCC 572.
► Applicanbility of Section 18 of Limitation Act.—Section 18 of the Limitation Act gets
attracted the moment acknowledgment in writing signed by the party against whom such right to
initiate resolution process under Section 7 IBC enures. Section 18 of the Limitation Act would come
into play every time when the principal borrower and/or the guarantor, as the case may be,
acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the
expiration of the prescribed period of limitation including the fresh period of limitation due to
acknowledgment of the debt, from time to time, for institution of the proceedings under Section 7
IBC. Further, the acknowledgment must be of a liability in respect of which the financial creditor can
initiate action under Section 7 IBC, Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal, (2021)
6 SCC 366.
► Limitation.—An application under Section 7 before NCLT, pursuant to transfer of winding-up
petition (on ground of company being unable to pay its debts) by High Court, held, would be barred
by limitation, when the winding-up petition itself was filed beyond the prescribed period of limitation.
Filing of civil suit for recovery would not extend the period of limitation for filing winding-up petition.
If a winding-up petition, on the date that it was filed, is barred by lapse of time then Section 238-A of
the Code will not give a new lease of life to such a time-barred petition. Further held, a suit for
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recovery based upon a cause of action that is within limitation cannot in any manner impact the
separate and independent remedy of a winding-up proceeding. Further, qua winding-up petition on
ground of company being unable to pay its debts under Section 433(e) of the Companies Act, 1956,
the trigger for limitation is the inability of a company to pay its debts and this trigger occurs when a
default takes place, after which the debt remains outstanding and is not paid. It is this date alone that
is relevant for the purpose of triggering limitation for the filing of a winding-up petition, Jignesh Shah
v. Union of India, (2019) 10 SCC 750.
239. Power to make rules.—(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—
(a) any other instrument which shall be a financial product under clause (15) of
Section 3;
(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, the manner and the fee for making application before the
operational creditor under sub-section (2) of Section 9;
138 [(ea) other proof confirming that there is no payment of an unpaid operational
debt by the corporate debtor or such other information under clause (e) of sub
-section (3) of Section 9;]
(f) the form, the manner and the fee for making application before the
corporate applicant under sub-section (2) of Section 10;
139 [(fa) the transactions under the second proviso to sub-section (2) of Section
21;
(fb) the transactions under Explanation I to clause (c) of Section 29-A;
(fc) the transactions under the second proviso to clause (j) of Section 29-A;]
140 [(fd) the form, particulars, manner and fee for making application before the
Adjudicating Authority under sub-section (2) of Section 54-C;

(fe) the conditions and restrictions with which the promoters, members,
personnel and partners of the corporate debtor shall exercise and discharge
contractual or statutory rights and obligations under clause (c) of Section 54-
H;]
(g) the persons who shall be relative under clause (ii) of the Explanation to sub-
section (1) of Section 79;
(h) the value of unencumbered single dwelling unit owned by the debtor under
clause (e) of sub-section (13) of Section 79;
(i) the value under clause (c), and any other debt under clause (f), of sub-
(j) the form, the manner and the fee for making application for fresh start order
(k) the particulars of the debtor's personal details under clause (e) of sub-section
(3) of Section 81;
(l) the information and documents to support application under sub-section (3)
of Section 86;
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(m) the form, the manner and the fee for making application for initiating the
insolvency resolution process by the debtor under sub-section (6) of Section
94;
(n) the form, the manner and the fee for making application for initiating the
insolvency resolution process by the creditor under sub-section (6) of Section
95;
(o) the particulars to be provided by the creditor to the resolution professional
(p) the form and the manner for making application for bankruptcy by the debtor
under clause (b) of sub-section (1) of Section 122;
(q) the form and the manner of the statement of affairs of the debtor under sub-
(r) the other information under clause (d) of sub-section (1) of Section 123;
(s) the form, the manner and the fee for making application for bankruptcy
(t) the form and the manner in which statement of financial position shall be
submitted under sub-section (2) of Section 129;
(u) the matters and the details which shall be included in the public notice under
sub-section (2) of Section 130;
(v) the matters and the details which shall be included in the notice to the
creditors under sub-section (3) of Section 130;
(w) the manner of sending details of the claims to the bankruptcy trustee and
other information under sub-sections (1) and (2) of Section 131;
(x) the value of financial or commercial transaction under clause (d) of sub-
(y) the other things to be done by a bankrupt to assist bankruptcy trustee in
carrying out his functions under clause (d) of sub-section (1) of Section 150;
(z) the manner of dealing with the surplus under sub-section (4) of Section 170;
(za) the form and the manner of proof of debt under clause (c) of sub-section (2)
of Section 171;
(zb) the manner of receiving dividends under sub-section (7) of Section 171;
(zc) the particulars which the notice shall contain under sub-section (2) of
Section 176;
(zd) the salaries and allowances payable to, and other terms and conditions of
service of, the Chairperson and members of the Board under sub-section (5)
of Section 189;
(ze) the other functions of the Board under clause (u) of sub-section (1) of
Section 196;
(zf) the other funds under clause (c) of sub-section (1) of Section 222;
(zg) the other purposes for which the fund shall be applied under clause (d) of
(zh) the form in which annual statement of accounts shall be prepared under sub
-section (1) of Section 223;
(zi) the purpose for which application for withdrawal of funds may be made
(zj) the manner of administering the fund under sub-section (4) of Section 224;
(zk) the manner of conducting insolvency and liquidation proceedings under
Section 227;
(zl) the form and the time for preparing budget by the Board under Section 228;
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(zm) the form and the time for preparing annual report under sub-section (1) of
Section 229;
(zn) the time up to which a person appointed to any office shall continue to hold
such office under clause (vi) of sub-section (2) of Section 243.
227.
240. Power to make regulations.—(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:—
(a) the form and the manner of accepting electronic submission of financial
information under sub-clause (a) of clause (9) of Section 3;
(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 cost under sub-section (16) of Section 5;
141 [(ea) the other costs under sub-clause (e) of clause (23-C) of Section 5;]
(f) the other record or evidence of default under clause (a), and any other
information under clause (c), of sub-section (3) of Section 7;
(g) 142 [* * *]
(h) the period under clause (a) of sub-section (3) of Section 10;
(i) the supply of essential goods or services to the corporate debtor under sub-
143
[(ia) circumstances in which supply of critical goods or services may be
terminated, suspended or interrupted during the period of moratorium under
sub-section (2-A) of Section 14;]
(j) the manner of making public announcement under sub-section (2) of Section
15;
144 [(ja) the last date for submission of claims under clause (c) of sub-section (1)
of Section 15;]
(k) the manner of taking action and the restrictions thereof under clause (b) of
(l) the other persons under clause (d) of sub-section (2) of Section 17;
(m) the other matters under clause (d) of sub-section (2) of Section 17;
(n) the other matters under sub-clause (iv) of clause (a), and the other duties to
be performed by the interim resolution professional under clause (g), of
Section 18;
145 [(na) the number of creditors within a class of creditors under clause (b) of
sub-section (6-A) of Section 21;

(nb) the remuneration payable to authorised representative under clause (ii) of
the proviso to sub-section (6-B) of Section 21;
(nc) the manner of voting and determining the voting share in respect of
financial debts under sub-section (7) of Section 21;]
(o) the persons who shall comprise the committee of creditors, the functions to
be exercised such committee and the manner in which functions shall be
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exercised under the proviso to sub-section (8) of Section 21;

(p) the other electronic means by which the members of the committee of
creditors may meet under sub-section (1) of Section 24;
(q) the manner of assigning voting share to each creditor under sub-section (7)
of Section 24;
(r) the manner of conducting the meetings of the committee of creditors under
(s) the manner of appointing accountants, lawyers and other advisors under
clause (d) of sub-section (2) of Section 25;
146
[(sa) other conditions under clause (h) of sub-section (2) of Section 25;]
(t) the other actions under clause (k) of sub-section (2) of Section 25;
(u) the form and the manner in which an information memorandum shall be
prepared by the resolution professional sub-section (1) of Section 29;
(v) the other matter pertaining to the corporate debtor under the Explanation to
(w) the manner of making payment of insolvency resolution process costs under
clause (a), the manner of 147 [payment of debts] under clause (b), and the
other requirements to which a resolution plan shall conform to under clause
(d), of sub-section (2) of Section 30;
148 [(wa) other requirements under sub-section (4) of Section 30;]
(x) the fee for the conduct of the liquidation proceedings and proportion to the
value of the liquidation estate assets under sub-section (8) of Section 34;
(y) the manner of evaluating the assets and property of the corporate debtor
under clause (c), the manner of selling property in parcels under clause (f),
the manner of reporting progress of the liquidation process under clause (n),
and the other functions to be performed under clause (o), of sub-section (1)
of Section 35;
(z) the manner of making the records available to other stakeholders under sub-
(za) the other means under clause (a) of sub-section (3) of Section 36;
(zb) the other assets under clause (e) of sub-section (4) of Section 36;
(zc) the other source under clause (g) of sub-section (1) of Section 37;
(zd) the manner of providing financial information relating to the corporate
debtor under sub-section (2) of Section 37;
(ze) the form, the manner and the supporting documents to be submitted by
operational creditor to prove the claim under sub-section (3) of Section 38;
(zf) the time within which the liquidator shall verify the claims under sub-section
(1) of Section 39;
(zg) the manner of determining the value of claims under Section 41;
(zh) the manner of relinquishing security interest to the liquidation estate and
receiving proceeds from the sale of assets by the liquidator under clause (a),
and the manner of realising security interest under clause (b) of sub-section
(1) of Section 52;
(zi) the other means under clause (b) of sub-section (3) of Section 52;
(zj) the manner in which secured creditor shall be paid by the liquidator under
(zk) the period and the manner of distribution of proceeds of sale under sub-
149 [(zka) such number of financial creditors and the manner of proposing the
insolvency professional, and the form for approving such insolvency

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professional by the financial creditors under clause (e), the persons who shall
provide approval under the proviso to clause (e), the form for making a
declaration under clause (f) of sub-section (2) of Section 54-A;
(zkb) the form for obtaining approval from financial creditors under sub-section
(3), and the persons who shall provide approval under the proviso to sub-
section (3) of Section 54-A;
(zkc) the other conditions for the base resolution plan under clause (c), and such
information and documents under clause (d) of sub-section (4) of Section 54-
A;
(zkd) the form in which the report is to be prepared under clause (a), such
reports and other documents under clause (b), and such other duties under
clause (c) of sub-section (1), and the manner of determining and bearing the
fees in sub-section (3) of Section 54-B;
(zke) the form for providing written consent of the insolvency professional under
clause (b), the form for declaration under clause (c), the information relating
to books of account and such other documents relating to such period under
clause (d) of sub-section (3) of Section 54-C;
(zkf) the form and manner for making application for termination of the pre-
packaged insolvency resolution process under sub-section (3) of Section 54-
D;
(zkg) the form and manner of making public announcement under clause (c) of
sub-section (1) of Section 54-E;
(zkh) the manner of confirming the list of claims under clause (a), the manner of
informing creditors under clause (b), the manner of maintaining an updated
list of claims under clause (c), the form and manner of preparing the
information memorandum under clause (g), and such other duties under
clause (i) of sub-section (2) of Section 54-F;
(zki) such other persons under clause (c), the manner of appointing accountants,
legal or other professionals under clause (e), such other matters under sub-
clause (iv) of clause (f) and the manner of taking other actions under clause
(g) of sub-section (3) of Section 54-F;
(zkj) the manner of determination of fees and expenses as may be incurred by
the resolution professional under sub-section (6) of Section 54-F;
(zkk) the manner of bearing fees and expenses under sub-section (7) of Section
54-F;
(zkl) the form and manner of list of claims and preliminary information
memorandum under sub-section (1) of Section 54-G;
(zkm) the conditions under clause (a) of Section 54-H;
(zkn) the manner of alteration of the composition of the committee of creditors
under the proviso to sub-section (1) of Section 54-I;
(zko) the form and manner of making application under sub-section (1) of
Section 54-J;
(zkp) the manner of inviting prospective resolution applicants under sub-section
(5) of Section 54-K;
(zkq) the other conditions under sub-section (6) of Section 54-K;
(zkr) the conditions under clause (a) and the manner of providing the basis for
evaluation of resolution plans and the information referred to in Section 29
under sub-section (7) of Section 54-K;
(zks) the conditions under the proviso to sub-section (10) of Section 54-K;
(zkt) the manner and conditions under sub-section (11) of Section 54-K;
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(zku) the form and manner of filing application under the proviso to sub-section
(12) of Section 54-K;
(zkv) the other requirements under sub-section (13) of Section 54-K;
(zkw) the form for submission of written consent under clause (b) of sub-section
(2) of Section 54-O;]
(zl) the other means under clause (a) and the other information under clause (b)
of Section 57;
(zm) the conditions and procedural requirements under sub-section (2) of
Section 59;
(zn) the details and the documents required to be submitted under sub-section
(7) of Section 95;
(zo) the other matters under clause (c) of sub-section (3) of Section 105;
(zp) the manner and form of proxy voting under sub-section (4) of Section 107;
(zq) the manner of assigning voting share to creditor under sub-section (2) of
Section 109;
(zr) the manner and form of proxy voting under sub-section (3) of Section 133;
(zs) the fee to be charged under sub-section (1) of Section 144;
(zt) the appointment of other officers and employees under sub-section (2), and
the salaries and allowances payable to, and other terms and conditions of
service of, such officers and employees of the Board under sub-section (3), of
Section 194;
(zu) the other information under clause (i) of sub-section (1) of Section 196;
(zv) the intervals in which the periodic study, research and audit of the
functioning and performance of the insolvency professional agencies,
insolvency professionals and information utilities under clause (r), and
mechanism for disposal of assets under clause (t), of sub-section (1) of
Section 196;
(zw) the place and the time for discovery and production of books of account and
other documents under clause (i) of sub-section (3) of Section 196;
(zx) the other committees to be constituted by the Board and the other members
of such committees under Section 197;
(zy) the other persons under clause (b) and clause (d) of Section 200;
(zz) the form and the manner of application for registration, the particulars to be
contained therein and the fee it shall accompany under sub-section (1) of
Section 201;
(zza) the form and manner of issuing a certificate of registration and the terms
and conditions thereof, under sub-section (3) of Section 201;
(zzb) the manner of renewal of the certificate of registration and the fee therefor,
(zzc) the other ground under clause (d) of sub-section (5) of Section 201;
(zzd) the form of appeal to the National Company Law Appellate Tribunal, the
period within which it shall be filed under Section 202;
(zze) the other information under clause (g) of Section 204;
(zzf) the other grounds under Explanation to Section 196;
(zzg) the setting up of a governing board for its internal governance and
management under clause (e), the curriculum under clause (l), the manner of
conducting examination under clause (m), of Section 196;
(zzh) the time within which, the manner in which, and the fee for registration of
insolvency professional under sub-section (1) of Section 207;
(zzi) the categories of professionals or persons, the qualifications and experience
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and the fields under sub-section (2) of Section 207;

(zzj) the manner and the conditions subject to which the insolvency professional
shall perform his function under clause (f) of sub-section (2) of Section 208;
(zzk) the form and manner in which, and the fee for registration of information
utility under sub-section (1) of Section 210;
(zzl) the form and manner for issuing certificate of registration and the terms
and conditions thereof, under sub-section (3) of Section 210;
(zzm) the manner of renewal of the certificate of registration and the fee
therefor, under sub-section (4) of Section 210;
(zzn) the other ground under clause (d) of sub-section (5) of Section 210;
(zzo) the form, the period and the manner of filing appeal to the National
Company Law Appellate Tribunal under Section 211;
(zzp) the number of independent members under Section 212;
(zzq) the services to be provided by information utility and the terms and
conditions under Section 213;
(zzr) the form and manner of accepting electronic submissions of financial
information under clause (b) and clause (c) of Section 214;
(zzs) the minimum service quality standards under clause (d) of Section 214;
(zzt) the information to be accessed and the manner of accessing such
information under clause (f) of Section 214;
(zzu) the statistical information to be published under clause (g) of Section 214;
(zzv) the form, the fee and the manner for submitting or accessing information
(zzw) the form and manner for submitting financial information and information
relating to assets under sub-section (2) of Section 215;
(zzx) the manner and the time within which financial information may be
updated or modified or rectified under Section 216;
(zzy) the form, manner and time of filing complaint under Section 217;
(zzz) the time and manner of carrying out inspection or investigation under sub-
(zzza) the manner of carrying out inspection of insolvency professional agency or
insolvency professional or information utility and the time for giving reply
under Section 219;
(zzzb) the procedure for claiming restitution under sub-section (6), the period
within which such restitution may be claimed and the manner in which
restitution of amount may be made under sub-section (7) of Section 220;
(zzzc) the other funds of clause (c) of sub-section (1) of Section 222.
150 [240-A. Application of this Code to micro, small and medium enterprises.—(1)
Notwithstanding anything to the contrary contained in this Code, the provisions of

clauses (c) and (h) of Section 29-A shall not apply to the resolution applicant in
respect of corporate insolvency resolution process 151 [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—
(a) not apply to micro, small and medium enterprises; or
(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 or in two or more successive
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sessions.
(4) If both Houses agree in disapproving the issue of notification or both Houses
agree in making any modification in the notification, the notification shall not be
issued or shall be issued only in such modified form as may be agreed upon by both
the Houses, as the case may be.
(5) The period of thirty days referred to in sub-section (3) shall not include any
period during which the House referred to in sub-section (4) is prorogued or adjourned
for more than four consecutive days.
(6) Every notification issued under this section shall be laid, as soon as may be
after it is issued, before each House of Parliament.
Explanation.—For the purposes of this section, the expression “micro, small and
medium enterprises” means any class or classes of enterprises classified as such under
sub-section (1) of Section 7 of the Micro, Small and Medium Enterprises Development
Act, 2006 (27 of 2006).]
241. Rules and regulations to be laid before Parliament.—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.
242. Power to remove difficulties.—(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.
243. Repeal of certain enactments and savings.—(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),—
(i) all proceedings pending under and relating to the Presidency-Towns
Insolvency Act, 1909, and the Provincial Insolvency Act, 1920 immediately
before the commencement of this Code shall continue to be governed under
the aforementioned Acts and be heard and disposed of by the concerned
courts or tribunals, as if the aforementioned Acts have not been repealed;
(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, continue to be in force, and shall have effect as
if the aforementioned Acts have not been repealed;
(iii) anything done or any action taken or purported to have been done or taken,
including any rule, notification, inspection, order or notice made or issued or
any appointment or declaration made or any operation undertaken or any
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direction given or any proceeding taken or any penalty, punishment, forfeiture

or fine imposed under the repealed enactments shall be deemed valid;
(iv) any principle or rule of law, or established jurisdiction, form or course of
pleading, practice or procedure or existing usage, custom, privilege, restriction
or exemption shall not be affected, notwithstanding that the same
respectively may have been in any manner affirmed or recognised or derived
by, in, or from, the repealed enactments;
(v) any prosecution instituted under the repealed enactments and pending
immediately before the commencement of this Code before any court or
tribunal shall, subject to the provisions of this Code, continue to be heard and
disposed of by the concerned court or tribunal;
(vi) any person appointed to any office under or by virtue of any repealed
enactment shall continue to hold such office until such time as may be
prescribed; and
(vii) any jurisdiction, custom, liability, right, title, privilege, restriction,
exemption, usage, practice, procedure or other matter or thing not in
existence or in force shall not be revised or restored.
(3) The mention of particular matters in sub-section (2) shall not be held to
prejudice the general application of Section 6 of the General Clauses Act, 1897 (10 of
1897) with regard to the effect of repeal of the repealed enactments or provisions of
the enactments mentioned in the Schedule.
244. Transitional provisions.—(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—
(a) recognition of persons, categories of professionals and persons having such
qualifications and experience in the field of finance, law, management or
insolvency as it deems necessary, as insolvency professionals and insolvency
professional agencies under this Code;
(b) recognition of persons with technological, statistical, and data protection
capability as it deems necessary, as information utilities under this Code; and
(c) conduct of the corporate insolvency resolution process, insolvency resolution
process, liquidation process, fresh start process and bankruptcy process under
this Code.
245. Amendments of Act 9 of 1932.—The Indian Partnership Act, 1932 shall be
amended in the manner specified in the First Schedule.
246. Amendments of Act 1 of 1944.—The Central Excise Act, 1944 shall be
amended in the manner specified in the Second Schedule.
247. Amendments of Act 43 of 1961.—The Income Tax Act, 1961 shall be amended
in the manner specified in the Third Schedule.
248. Amendments of Act 52 of 1962.—The Customs Act, 1962 shall be amended in
the manner specified in the Fourth Schedule.
249. Amendments of Act 51 of 1993.—The Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 shall be amended in the manner specified in the Fifth
Schedule.
250. Amendments of Act 32 of 1994.—The Finance Act, 1994 shall be amended in
the manner specified in the Sixth Schedule.
251. Amendments of Act 54 of 2002.—The Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 shall be amended in
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the manner specified in the Seventh Schedule.

252. Amendments of Act 1 of 2004.—The Sick Industrial Companies (Special
Provisions) Repeal Act, 2003 shall be amended in the manner specified in the Eighth
Schedule.
253. Amendments of Act 51 of 2007.—The Payment and Settlement Systems Act,
2007 shall be amended in the manner specified in the Ninth Schedule.
254. Amendments of Act 6 of 2009.—The Limited Liability Partnership Act, 2008
shall be amended in the manner specified in the Tenth Schedule.
255. Amendments of Act 18 of 2013.—The Companies Act, 2013 shall be amended
in the manner specified in the Eleventh Schedule.
227.
THE FIRST SCHEDULE
(See Section 245)
AMENDMENT TO THE I NDIAN PARTNERSHIP ACT, 1932
(9 of 1932)
1. In Section 41, clause (a) shall be omitted.
THE SECOND SCHEDULE
(See Section 246)
AMENDMENT TO THE CENTRAL EXCISE ACT, 1944
(1 of 1944)
1. In Section 11-E, 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.
THE THIRD SCHEDULE
(See Section 247)
AMENDMENT TO THE I NCOME 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.
THE FOURTH SCHEDULE
(See Section 248)
AMENDMENT TO THE CUSTOMS ACT, 1962
(52 of 1962)
In Section 142-A, for the words and figures “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.
THE FIFTH SCHEDULE
(See Section 249)
AMENDMENT TO THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL I NSTITUTIONS ACT,
1993
(51 of 1993)
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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,—
(a) in sub-section (1), for the words “Due to Banks and Financial Institutions” the
words “and Bankruptcy” shall be substituted;
(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—
“(1-A) The Central Government shall by notification establish such number of
Debts Recovery Tribunals and its Benches as it may consider necessary, to exercise
the jurisdiction, powers and authority of the Adjudicating Authority conferred on
such Tribunal by or under the Insolvency and Bankruptcy Code, 2016.”.
4. In Section 8, after sub-section (1), the following section shall be inserted,
namely—
“(1-A) The Central Government shall, by notification, establish such number of
Debts Recovery Appellate Tribunals to exercise jurisdiction, powers and authority to
entertain appeal against the order made by the Adjudicating Authority under Part
III of the Insolvency and Bankruptcy Code, 2016.”.
5. In Section 17,—
(i) after sub-section (1), the following sub-section shall be inserted, namely—
“(1-A) Without prejudice to sub-section (1),—
(a) the Tribunal shall exercise, on and from the date to be appointed by the
Central Government, the jurisdiction, powers and authority to entertain and
decide applications under Part III of Insolvency and Bankruptcy Code, 2016;
(b) the Tribunal shall have circuit sittings in all district headquarters.”.
(ii) after sub-section (2), the following sub-section shall be inserted, namely—
“(2-A) Without prejudice to sub-section (2), the Appellate Tribunal shall exercise, on
and from the date to be appointed by the Central Government, the jurisdiction, powers
and authority to entertain appeals against the order made by the Adjudicating
Authority under Part III of the Insolvency and Bankruptcy Code, 2016.”.
6. After Section 19, the following section shall be inserted, namely—
“19-A. The application made to Tribunal for exercising the powers of the Adjudicating
Authority under the Insolvency and Bankruptcy Code, 2016 shall be dealt with in the
manner as provided under that Code.”.
7. In Section 20, in sub-section (4), after the word, brackets and figure “sub-
section (1)”, the words, brackets and figures “or under sub-section (1) of Section 181
of the Insolvency and Bankruptcy Code, 2016” shall be inserted.
THE SIXTH SCHEDULE
(See Section 250)
AMENDMENT TO THE FINANCE ACT, 1994
(32 of 1994)
In Section 88, for the words and figures “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.
THE SEVENTH SCHEDULE
(See Section 251)
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AMENDMENT TO THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND

ENFORCEMENT OF SECURITY I NTEREST 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.
THE EIGHTH SCHEDULE
(See Section 252)
AMENDMENT TO THE SICK I NDUSTRIAL COMPANIES (SPECIAL PROVISIONS) REPEAL ACT, 2003
(1 of 2004)
In Section 4, for sub-clause (b), the following sub-clause shall be substituted,
namely—
“(b) On such date as may be notified by the Central Government in this behalf,
any appeal preferred to the Appellate Authority or any reference made or inquiry
pending to or before the Board or any proceeding of whatever nature pending
before the Appellate Authority or the Board under the Sick Industrial Companies
(Special Provisions) Act, 1985 (1 of 1986) shall stand abated:
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 accordance with the provisions of the Insolvency and Bankruptcy Code, 2016:
Provided further that no fees shall be payable for making such reference under
Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or
inquiry stands abated under this clause.”
Insolvency and Bankruptcy Code (Removal of Difficulties) Order, 2017152
Whereas, the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter
referred to as the said Code) received the assent of the President on 28th May, 2016
and was published in the Official Gazette on the same date;
And, whereas, Section 252 of the said Code amended the Sick Industrial Companies
(Special Provisions) Repeal Act, 2003 (1 of 2004) in the manner specified in the
Eighth Schedule to the said Code;
And, whereas, the unamended second proviso to clause (b) of Section 4 of the Sick
Industrial Companies (Special Provisions) Repeal Act, 2003, provides that any scheme
sanctioned under sub-section (4) or any scheme under implementation under sub-
section (12) of Section 18 of the repealed enactment i.e. the Sick Industrial
Companies (Special Provisions) Act, 1985 (1 of 1986) shall be deemed to be a scheme
under implementation under Section 424-D of the Companies Act, 1956 (1 of 1956)
and shall be dealt with in accordance with the provisions contained in Part VI-A of the
Companies Act, 1956;
And, whereas, Section 424-D of the Companies Act, 1956 provided for review or
monitoring of schemes that are sanctioned or are under implementation;
And, whereas the Companies Act, 1956 has been repealed and re-enacted as the
Companies Act, 2013 (18 of 2013) which, inter alia, provides for scheme of revival and
rehabilitation, sanction of scheme, scheme to be binding and for the implementation
of scheme under Sections 261 to 264 of the Companies Act, 2013;
And, whereas, Sections 253 to 269 of the Companies Act, 2013 have been omitted
by Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016;
And, whereas, clause (b) of Section 4 of the Sick Industrial Companies (Special
Provisions) Repeal Act, 2003 has been substituted by the Eighth Schedule to the
Code, which provides that any appeal preferred to the Appellate Authority or any
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reference made or inquiry pending to or before the Board or any proceeding of

whatever nature pending before the Appellate Authority or the Board under the Sick
Industrial Companies (Special Provisions) Act, 1985 shall stand abated. Further, it was
provided that a company in respect of which such appeal or reference or inquiry stands
abated under this clause may make a reference to the National Company Law Tribunal
under the Code within one hundred and eighty days from the date of commencement
of the Code;
And, whereas, difficulties have arisen regarding review or monitoring of the
schemes sanctioned under sub-section (4) or any scheme under implementation under
sub-section (12) of Section 18 of the Sick Industrial Companies (Special Provisions)
Act, 1985 (1 of 1986) in view of the repeal of the Sick Industrial Companies (Special
Provisions) Act, 1985, substitution of clause (b) of Section 4 of the Sick Industrial
Companies (Special Provisions) Repeal Act, 2003 and omission of Sections 253 to 269
of the Companies Act, 2013;
Now, therefore, in exercise of the powers conferred by the sub-section (1) of the
Section 242 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central
Government hereby makes the following order to remove the abovesaid difficulties,
namely—
1. Short title and commencement.—(1) This Order may be called the
Insolvency and Bankruptcy Code (Removal of Difficulties) Order, 2017.
2. In the Insolvency and Bankruptcy Code, 2016, in the Eighth Schedule, relating
to amendment to the Sick Industrial Companies (Special Provisions) Repeal Act, 2003,
in Section 4, in clause (b), after the second proviso, the following provisos shall be
inserted, namely—
“Provided also that any scheme sanctioned under sub-section (4) or any scheme
under implementation under sub-section (12) of Section 18 of the Sick Industrial
Companies (Special Provisions) Act, 1985 shall be deemed to be an approved
resolution plan under sub-section (1) of Section 31 of the Insolvency and
Bankruptcy Code, 2016 and the same shall be dealt with, in accordance with the
provisions of Part II of the said Code:
Provided also that in case, the statutory period within which an appeal was
allowed under the Sick Industrial Companies (Special Provisions) Act, 1985 against
an order of the Board had not expired as on the date of notification of this Act, an
appeal against any such deemed approved resolution plan may be preferred by any
person before National Company Law Appellate Tribunal within ninety days from the
date of publication of this order.”.
THE NINTH SCHEDULE
(See Section 253)
AMENDMENT 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 and figures “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 23-A, in sub-section (3), after the words and figures “the Companies
Act, 2013”, the words and figures “or the Insolvency and Bankruptcy Code, 2016”
shall be inserted.
THE TENTH SCHEDULE
(See Section 254)
AMENDMENT TO THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
(6 of 2009)
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In Section 64, clause (c) shall be omitted.

THE ELEVENTH SCHEDULE
(See Section 255)
AMENDMENTS TO THE COMPANIES ACT, 2013
(18 of 2013)
1. In Section 2,—
(a) for clause (23), the following clause shall be substituted, namely—
‘(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—
‘(94-A) “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 “the Rehabilitation and Insolvency
Fund formed under Section 269”, the words “Insolvency and Bankruptcy Fund formed
under Section 224 of the Insolvency and Bankruptcy Code, 2016” shall be substituted.
3. In Section 66, in sub-section (8), for the words, brackets and figures “is unable,
within the meaning of sub-section (2) of Section 271, to pay the amount of his debt or
claim,”, the words and figures “commits a default, within the meaning of Section 6 of
the Insolvency and Bankruptcy Code, 2016, in respect of the amount of his debt or
claim,” shall be substituted.
4. In Section 77, in sub-section (3), after the words “the liquidator”, the words and
figures “appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the
case may be,” shall be inserted.
5. In Section 117, in sub-section (3), in clause (f), for the word and figures
“Section 304”, the words and figures “Section 59 of the Insolvency and Bankruptcy
Code, 2016” shall be substituted.
6. In Section 224, in sub-section (2), after the words “wound up under this Act”,
the words and figures “or under the Insolvency and Bankruptcy Code, 2016” shall be
inserted.
6-A. In Section 230,—
(a) in sub-section (1), after the word “liquidator”, the words “appointed under this
Act or under the Insolvency and Bankruptcy Code, 2016, as the case may be,”
shall be inserted;
(b) in sub-section (6), after the word “on the liquidator”, the words “appointed
under this Act or under the Insolvency and Bankruptcy Code, 2016, as the case
may be,” shall be inserted.
7. In Section 249, in sub-section (1), for clause (e), the following clause shall be
substituted, namely—
“(e) is being wound up under Chapter XX of this Act or under the Insolvency and
Bankruptcy Code, 2016.”.
8. Sections 253 to 269 shall be omitted.
9. For Section 270, the following section shall be substituted, namely:—
“270. Winding up by Tribunal.—The provisions of Part I shall apply to the
winding up of a company by the Tribunal under this Act.”.
10. For Section 271, the following section shall be substituted, namely—
“271. Circumstances in which company may be wound up by Tribunal.—A
company may, on a petition under Section 272, be wound up by the Tribunal,—
(a) if the company has, by special resolution, resolved that the company be wound
up by the Tribunal;
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(b) if the company has acted against the interests of the sovereignty and integrity
of India, the security of the State, friendly relations with foreign States, public
order, decency or morality;
(c) if on an application made by the Registrar or any other person authorised by the
Central Government by notification under this Act, the Tribunal is of the opinion
that the affairs of the company have been conducted in a fraudulent manner or
the company was formed for fraudulent and unlawful purpose or the persons
concerned in the formation or management of its affairs have been guilty of
fraud, misfeasance or misconduct in connection therewith and that it is proper
that the company be wound up;
(d) if the company has made a default in filing with the Registrar its financial
statements or annual returns for immediately preceding five consecutive financial
years; or
(e) if the Tribunal is of the opinion that it is just and equitable that the company
should be wound up.”.
“272. Petition for winding up.—(1) Subject to the provisions of this section, a
petition to the Tribunal for the winding up of a company shall be presented by—
(a) the company;
(b) any contributory or contributories;
(c) all or any of the persons specified in clauses (a) and (b);
(d) the Registrar;
(e) any person authorised by the Central Government in that behalf; or
(f) in a case falling under clause (b) of Section 271, by the Central Government or a
State Government.
(2) A contributory shall be entitled to present a petition for the winding up of a
company, notwithstanding that he may be the holder of fully paid-up shares, or
that the company may have no assets at all or may have no surplus assets left for
distribution among the shareholders after the satisfaction of its liabilities, and
shares in respect of which he is a contributory or some of them were either
originally allotted to him or have been held by him, and registered in his name, for
at least six months during the eighteen months immediately before the
commencement of the winding up or have devolved on him through the death of a
former holder.
(3) The Registrar shall be entitled to present a petition for winding up under
Section 271, except on the grounds specified in clause (a) or clause (e) of that sub-
section:
Provided that the Registrar shall obtain the previous sanction of the Central
Government to the presentation of a petition:
Provided further that the Central Government shall not accord its sanction unless
the company has been given a reasonable opportunity of making representations.
(4) A petition presented by the company for winding up before the Tribunal shall
be admitted only if accompanied by a statement of affairs in such form and in such
manner as may be prescribed.
(5) A copy of the petition made under this section shall also be filed with the
Registrar and the Registrar shall, without prejudice to any other provisions, submit
his views to the Tribunal within sixty days of receipt of such petition.”.
(a) for sub-section (2), the following sub-section shall be substituted, namely—
“(2) The provisional liquidator or the Company Liquidator, as the case may, shall be
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appointed by the Tribunal from amongst the insolvency professionals registered under
the Insolvency and Bankruptcy Code, 2016.”;
(b) sub-section (4) shall be omitted.
“280. Jurisdiction of Tribunal.—The Tribunal shall, notwithstanding anything
contained in any other law for the time being in force, have jurisdiction to entertain,
or dispose of,—
(a) any suit or proceeding by or against the company;
(b) any claim made by or against the company, including claims by or against any
of its branches in India;
(c) any application made under Section 233;
(d) any question of priorities or any other question whatsoever, whether of law or
facts, including those relating to assets, business, actions, rights, entitlements,
privileges, benefits, duties, responsibilities, obligations or in any matter arising
out of, or in relation to winding up of the company,
whether such suit or proceeding has been instituted, or is instituted, or such claim or
question has arisen or arises or such application has been made or is made or such
scheme has been submitted, or is submitted, before or after the order for the winding
up of the company is made.”.
15. Section 289 shall be omitted.
15-A. The heading “Part II.—Voluntary winding up” shall be omitted.
16. Sections 304 to 323 shall be omitted.
17. Section 325 shall be omitted.
‘326. Overriding preferential payments.—(1) In the winding up of a company
under this Act, the following debts shall be paid in priority to all other debts:—
(a) workmen's dues; and
(b) where a secured creditor has realised a secured asset, so much of the debts due
to such secured creditor as could not be realised by him or the amount of the
workmen's portion in his security (if payable under the law), whichever is less,
pari passu with the workmen's dues:
Provided that in case of the winding up of a company, the sums referred to in sub-
clauses (i) and (ii) of clause (b) of the Explanation, which are payable for a period of
two years preceding the winding-up order or such other period as may be prescribed,
shall be paid in priority to all other debts (including debts due to secured creditors),
within a period of thirty days of sale of assets and shall be subject to such charge over
the security of secured creditors as may be prescribed.
(2) The debts payable under the proviso to sub-section (1) shall be paid in full
before any payment is made to secured creditors and thereafter debts payable
under that sub-section shall be paid in full, unless the assets are insufficient to
meet them, in which case they shall abate in equal proportions.
Explanation.—For the purposes of this section, and Section 327—
(a) “workmen”, in relation to a company, means the employees of the company,
being workmen within the meaning of clause (s) of Section 2 of the Industrial
Disputes Act, 1947 (14 of 1947);
(b) “workmen's dues”, in relation to a company, means the aggregate of the
following sums due from the company to its workmen, namely—
(i) all wages or salary including wages payable for time or piecework and salary
earned wholly or in part by way of commission of any workman in respect of
services rendered to the company and any compensation payable to any
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workman under any of the provisions of the Industrial Disputes Act, 1947 (14
of 1947);
(ii) all accrued holiday remuneration becoming payable to any workman or, in
the case of his death, to any other person in his right on the termination of his
employment before or by the effect of the winding up order or resolution;
(iii) unless the company is being wound up voluntarily merely for the purposes of
reconstruction or amalgamation with another company or unless the company
has, at the commencement of the winding up, under such a contract with
insurers as is mentioned in Section 14 of the Workmen's Compensation Act,
1923 (19 of 1923), rights capable of being transferred to and vested in the
workmen, all amount due in respect of any compensation or liability for
compensation under the said Act in respect of the death or disablement of any
workman of the company;
(iv) all sums due to any workman from the provident fund, the pension fund, the
gratuity fund or any other fund for the welfare of the workmen, maintained by
the company;
(c) “workmen's portion”, in relation to the security of any secured creditor of a
company, means the amount which bears to the value of the security the same
proportion as the amount of the workmen's dues bears to the aggregate of the
amount of workmen's dues and the amount of the debts due to the secured
creditors.
Illustration
The value of the security of a secured creditor of a company is Rs. 1,00,000. The
total amount of the workmen's dues is Rs. 1,00,000. The amount of the debts due
from the company to its secured creditors is Rs. 3,00,000. The aggregate of the
amount of workmen's dues and the amount of debts due to secured creditors is Rs.
4,00,000. The workmen's portion of the security is, therefore, one-fourth of the
value of the security, that is Rs. 25,000.’.
(a) after sub-section (6), the following sub-section shall be inserted, namely:—
“(7) Sections 326 and 327 shall not be applicable in the event of liquidation under the
Insolvency and Bankruptcy Code, 2016.”;
(b) in the Explanation, for clause (c), the following clause shall be substituted,
namely:—
“(c) the expression “relevant date” means in the case of a company being wound up
by the Tribunal, the date of appointment or first appointment of a provisional
liquidator, or if no such appointment was made, the date of the winding up order,
unless, in either case, the company had commenced to be wound up voluntarily before
that date under the Insolvency and Bankruptcy Code, 2016;”.
“329. Transfers not in good faith to be void.—Any transfer of property, movable
or immovable, or any delivery of goods, made by a company, not being a transfer or
delivery made in the ordinary course of its business or in favour of a purchaser or
encumbrancer in good faith and for valuable consideration, if made within a period
of one year before the presentation of a petition for winding up by the Tribunal
under this Act shall be void against the Company Liquidator.”.
“334. Transfer, etc., after commencement of winding up to be void.—In the case
of a winding up by the Tribunal, any disposition of the property including actionable
claims, of the company and any transfer of shares in the company or alteration in
the status of its members, made after the commencement of the winding up shall,
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unless the Tribunal otherwise orders, be void.”.

22. In Section 336, in sub-section (1), in the opening paragraph, for the words
“whether by the Tribunal or voluntarily, or which is subsequently ordered to be wound
up by the Tribunal or which subsequently passes a resolution for voluntary winding
up”, the words “by the Tribunal under this Act or which is subsequently ordered to be
wound up by the Tribunal under this Act” shall be substituted.
23. In Section 337, for the words “or which subsequently passes a resolution for
voluntary winding up,”, the words “under this Act”, shall be substituted.
24. In Section 342, sub-sections (2), (3) and (4) shall be omitted.
25. In Section 343, for sub-section (1), the following sub-section shall be
“(1) The Company Liquidator may, with the sanction of the Tribunal, when the
company is being wound up by the Tribunal,—
(i) pay any class of creditors in full;
(ii) make any compromise or arrangement with creditors or persons claiming to be
creditors, or having or alleging themselves to have any claim, present or future,
certain or contingent, against the company, or whereby the company may be
rendered liable; or
(iii) compromise any call or liability to call, debt, and liability capable of resulting in
a debt, and any claim, present or future, certain or contingent, ascertained or
sounding only in damages, subsisting or alleged to subsist between the company
and a contributory or alleged contributory or other debtor or person
apprehending liability to the company, and all questions in any way relating to or
affecting the assets or liabilities or the winding up of the company, on such
terms as may be agreed, and take any security for the discharge of any such call,
debt, liability or claim, and give a complete discharge in respect thereof.”.
“(1) When the affairs of a company have been completely wound up and it is
about to be dissolved, the books and papers of such company and those of the
Company Liquidator may be disposed of in such manner as the Tribunal directs.”.
“(1) If the winding up of a company is not concluded within one year after its
commencement, the Company Liquidator shall, unless he is exempted from so
doing, either wholly or in part by the Central Government, within two months of the
expiry of such year and thereafter until the winding up is concluded, at intervals of
not more than one year or at such shorter intervals, if any, as may be prescribed,
file a statement in such form containing such particulars as may be prescribed, duly
audited, by a person qualified to act as auditor of the company, with respect to the
proceedings in, and position of, the liquidation, with the Tribunal:
Provided that no such audit as is referred to in this sub-section shall be
necessary where the provisions of Section 294 apply;”.
“357. Commencement of winding up by Tribunal.—The winding up of a company
by the Tribunal under this Act shall be deemed to commence at the time of the
presentation of the petition for the winding up.”.
29. In Section 370, in the proviso, after the words “obtained for the winding up the
company”, the words “in accordance with the provisions of this Act or of the
Insolvency and Bankruptcy Code, 2016” shall be inserted.
30. In Section 372, after the words “The provisions of this Act”, the words “or of the
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Insolvency and Bankruptcy Code, 2016, as the case may be,” shall be inserted.
“(4) The Central Government shall, by notification, establish such number of
benches of the Tribunal, as it may consider necessary, to exercise the jurisdiction,
powers and authority of the Adjudicating Authority conferred on such Tribunal by or
under Part II of the Insolvency and Bankruptcy Code, 2016.”.
(i) in sub-section (1), after the words, “other provisions of this Act”, the words “or
of the Insolvency and Bankruptcy Code, 2016” shall be inserted;
(ii) in sub-section (2), after the words, “under this Act”, the words “or under the
Insolvency and Bankruptcy Code, 2016” shall be inserted.
“(1) The Tribunal may, in any proceedings for winding up of a company under
this Act or in any proceedings under the Insolvency and Bankruptcy Code, 2016, in
order to take into custody or under its control all property, books of account or other
documents, request, in writing, the Chief Metropolitan Magistrate, Chief Judicial
Magistrate or the District Collector within whose jurisdiction any such property,
books of account or other documents of such company under this Act or of
corporate persons under the said Code, are situated or found, to take possession
thereof, and the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the
District Collector, as the case may be, shall, on such request being made to him,—
(a) take possession of such property, books of account or other documents; and
(b) cause the same to be entrusted to the Tribunal or other persons authorised by
it.”.
“434. Transfer of certain pending proceedings.—(1) On such date as may be
notified by the Central Government in this behalf,—
(a) all matters, proceedings or cases pending before the Board of Company Law
Administration (herein in this section referred to as the Company Law Board)
constituted under sub-section (1) of Section 10-E of the Companies Act, 1956 (1
of 1956), immediately before such date shall stand transferred to the Tribunal
and the Tribunal shall dispose of such matters, proceedings or cases in
accordance with the provisions of this Act;
(b) any person aggrieved by any decision or order of the Company Law Board made
before such date may file an appeal to the High Court within sixty days from the
date of communication of the decision or order of the Company Law Board to him
on any question of law arising out of such order:
Provided that the High Court may if it is satisfied that the appellant was prevented by
sufficient cause from filing an appeal within the said period, allow it to be filed within a
further period not exceeding sixty days; and
(c) all proceedings under the Companies Act, 1956 (1 of 1956), including
proceedings relating to arbitration, compromise, arrangements and
reconstruction and winding up of companies, pending immediately before such
date before any District Court or High Court, shall stand transferred to the
Tribunal and the Tribunal may proceed to deal with such proceedings from the
stage before their transfer:
Provided that only such proceedings relating to the winding up of companies shall be
transferred to the Tribunal that are at a stage as may be prescribed by the Central
Government.
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(2) The Central Government may make rules consistent with the provisions of
this Act to ensure timely transfer of all matters, proceedings or cases pending
before the Company Law Board or the courts, to the Tribunal under this section.”.
substituted, namely:—
“(2) In particular, and without prejudice to the generality of the foregoing power,
such rules may provide for all or any of the following matters, namely—
(i) as to the mode of proceedings to be held for winding up of a company by the
Tribunal under this Act;
(ii) for the holding of meetings of creditors and members in connection with
proceedings under Section 230;
(iii) for giving effect to the provisions of this Act as to the reduction of the capital;
(iv) generally for all applications to be made to the Tribunal under the provisions of
this Act;
(v) the holding and conducting of meetings to ascertain the wishes of creditors and
contributories;
(vi) the settling of lists of contributories and the rectifying of the register of
members where required, and collecting and applying the assets;
(vii) the payment, delivery, conveyance, surrender or transfer of money, property,
books or papers to the liquidator;
(viii) the making of calls; and
(ix) the fixing of a time within which debts and claims shall be proved.”.
36. In Schedule V, in Part II, in Section III, for clause (b), the following clause
shall be substituted, namely—
“(b) where the company—
(i) is a newly incorporated company, for a period of seven years from the date of its
incorporation, or
(ii) is a sick company, for whom a scheme of revival or rehabilitation has been
ordered by the Board for Industrial and Financial Reconstruction for a period of
five years from the date of sanction of scheme of revival, or
(iii) is a company in relation to which a resolution plan has been approved by the
National Company Law Tribunal under the Insolvency and Bankruptcy Code,
2016 for a period of five years from the date of such approval,
it may pay remuneration up to two times the amount permissible under Section
II.”.
153 [THE TWELFTH SCHEDULE
[See clause (d) of Section 29-A]

Acts for the purposes of clause (d) of Section 29-A
(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);
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(11) The Air (Prevention and Control of Pollution) Act, 1981 (14 of 1981);
(12) The Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);
(13) The Environment (Protection) Act, 1986 (29 of 1986);
(14) The Prohibition of Benami Property Transactions Act, 1988 (45 of 1988);
(15) The Prevention of Corruption Act, 1988 (49 of 1988);
(16) The Securities and Exchange Board of India Act, 1992 (15 of 1992);
(17) The Foreign Exchange Management Act, 1999 (42 of 1999);
(18) The Competition Act, 2002 (12 of 2003);
(19) The Prevention of Money-laundering Act, 2002 (15 of 2003);
(20) The Limited Liability Partnership Act, 2008 (6 of 2009);
(21) The Foreign Contribution (Regulation) Act, 2010 (42 of 2010);
(22) The Companies Act, 2013 (18 of 2013) or any previous company law;
(23) The Black Money (Undisclosed Foreign Income and Assets) and Imposition of
Tax Act, 2015 (22 of 2015);
(24) The Insolvency and Bankruptcy Code, 2016 (31 of 2016);
(25) The Central Goods and Services Tax Act, 2017 (12 of 2017) and respective
State Acts imposing State goods and services tax;
(26) such other Acts as may be notified by the Central Government.
Every notification issued under this Schedule shall be laid, as soon as may be after it
is issued, before each House of Parliament.]
———
1.Received the assent of the President on May 28, 2016 and published in the Gazette of India, Extra., Part II,
Section 1, dated 28th May, 2016, pp. 1-109, No. 37.
2. The word “and” omitted by Act 8 of 2018, S. 2(i) (w.r.e.f. 23-11-2017).
3.
Subs. by Act 8 of 2018, S. 2(ii) (w.r.e.f. 23-11-2017). Prior to substitution it read as:
“(e) partnership firms and individuals,”

4. Ins. by Act 8 of 2018, S. 2(ii) (w.r.e.f. 23-11-2017).
5.
Subs. for “repaid” by Act 26 of 2018, S. 2 (w.r.e.f. 6-6-2018).
6. Ins. by Act 26 of 2021, S. 2 (w.r.e.f. 4-4-2021).
7.
Ins. by Act 26 of 2021, S. 3(i) (w.r.e.f. 4-4-2021).
8.
Ins. by Act 26 of 2021, S. 3(ii) (w.r.e.f. 4-4-2021).
9. Ins. by Act 26 of 2018, S. 3(i) (w.r.e.f. 6-6-2018).
11.
Ins. by Act 26 of 2021, S. 3(iii) (w.r.e.f. 4-4-2021).
12.
Omitted by Act 1 of 2020, S. 2(i) (w.r.e.f. 28-12-2019). Prior to omission it read as:
“Provided that where the interim resolution professional is not appointed in the order admitting application
under Section 7, 9 or Section 10, the insolvency commencement date shall be the date on which such
interim resolution professional is appointed by the Adjudicating Authority;”
13.
Ins. by Act 26 of 2021, S. 3(iv) (w.r.e.f. 4-4-2021).
15. Ins. by Act 26 of 2021, S. 3(v) (w.r.e.f. 4-4-2021).
16.
Subs. for “repayment” by Act 26 of 2018, S. 3(iv) (w.r.e.f. 6-6-2018).
17.
Ins. by Act 26 of 2021, S. 3(vi) (w.r.e.f. 4-4-2021).
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18. Ins. by Act 26 of 2018, S. 3(v) (w.r.e.f. 6-6-2018).

19.
Subs. by Act 8 of 2018, S. 3(a) (w.r.e.f. 23-11-2017). Prior to substitution it read as:
“(25) “resolution applicant” means any person who submits a resolution plan to the resolution
professional;’
20. Ins. by Act 26 of 2021, S. 3(vii) (w.r.e.f. 4-4-2021).
21.
Subs. for “any person” by Act 8 of 2018, S. 3(b) (w.r.e.f. 23-11-2017).
22. Ins. by Act 26 of 2019, S. 2 (w.e.f. 16-8-2019).
23.
Ins. by Act 26 of 2021, S. 3(viii) (w.r.e.f. 4-4-2021).
24.
Subs. for “other financial creditors” by Act 26 of 2018, S. 4 (w.r.e.f. 6-6-2018).
25. In exercise of the powers conferred by sub-section (1) of Section 7 of the Insolvency and Bankruptcy Code,
2016 (31 of 2016), the Central Government hereby notifies following persons who may file an application for
initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority,
on behalf of the financial creditor—
(i) a guardian;
(ii) an executor or administrator of an estate of a financial creditor;
(iii) a trustee (including a debenture trustee); and
(iv) a person duly authorised by the Board of Directors of a Company. [Vide Noti. No. S.O. 1091(E), dated 27
-2-2019, published in the Gazette of India, Extra., Part II, Section 3(ii), dated 1-3-2019]
27. Ins. by Act 26 of 2019, S. 3 (w.e.f. 16-8-2019).

28. Subs. for “if any, and” by Act 26 of 2018, S. 5(a)(i) (w.r.e.f. 6-6-2018).
29. Subs. for “repayment” by Act 26 of 2018, S. 5(a)(ii) (w.r.e.f. 6-6-2018).
30. Subs. for “repayment” by Act 26 of 2018, S. 5(b) (w.r.e.f. 6-6-2018).
31. Subs. for “by the corporate debtor; and” by Act 26 of 2018, S. 6(a)(i) (w.r.e.f. 6-6-2018).
32. Subs. by Act 26 of 2018, S. 6(a)(ii) (w.r.e.f. 6-6-2018).
“(d) such other information as may be specified.”

33. Ins. by Act 26 of 2018, S. 6(a)(ii) (w.r.e.f. 6-6-2018).
34. Subs. for “repayment” by Act 26 of 2018, S. 6(b)(A) (w.r.e.f. 6-6-2018).
35.
Subs. for “repayment” by Act 26 of 2018, S. 6(b)(B) (w.r.e.f. 6-6-2018).
36. Subs. by Act 26 of 2018, S. 7(a) (w.r.e.f. 6-6-2018). Prior to substitution it read as:
“(3) The corporate applicant shall, along with the application furnish the information relating to—
(a) its books of account and such other documents relating to such period as may be specified; and
(b) the resolution professional proposed to be appointed as an interim resolution professional.”

37. Ins. by Act 26 of 2018, S. 7(b)(i) (w.r.e.f. 6-6-2018).
38. Ins. by Act 26 of 2018, S. 7(b)(ii) (w.r.e.f. 6-6-2018).

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42. Ins. by Act 26 of 2021, S. 4(iii) (w.r.e.f. 4-4-2021).

43. Renumbered by Act 1 of 2020, S. 4 (w.r.e.f. 28-12-2019).
46. Subs. for “seventy-five” by Act 26 of 2018, S. 8 (w.r.e.f. 6-6-2018).
47. Ins. by Act 26 of 2019, S. 4 (w.e.f. 16-8-2019).
49.
Ins. by Act 1 of 2020, S. 5(a) (w.r.e.f. 28-12-2019).
50. Ins. by Act 1 of 2020, S. 5(b) (w.r.e.f. 28-12-2019).
51. Subs. by Act 26 of 2018, S. 10 (w.r.e.f. 6-6-2018). Prior to substitution it read as:
“(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the
Central Government in consultation with any financial sector regulator.”
52. Subs. by Act 1 of 2020, S. 5(c ) (w.r.e.f. 28-12-2019). Prior to substitution it read as:
“(a) such transaction as may be notified by the Central Government in consultation with any financial
regulator;”
53. Subs. for “claims” by Act 26 of 2018, S. 11 (w.r.e.f. 6-6-2018).
Subs. for “within fourteen days from the insolvency commencement date” by Act 1 of 2020, S. 6 (w.r.e.f. 28-
54.
12-2019).
Subs. for “shall not exceed thirty days from date of his appointment” by Act 26 of 2018, S. 12 (w.r.e.f. 6-6-
55.
2018).
56. Subs. for “may be specified” by Act 26 of 2018, S. 13(i) (w.r.e.f. 6-6-2018).

58. Subs. for “sub-section” by Act 26 of 2018, S. 14 (w.r.e.f. 6-6-2018).
59.Subs. for “related party to whom a corporate debtor owes a financial debt” by Act 26 of 2018, S. 15(i)(a)
(w.r.e.f. 6-6-2018).
60. Ins. by Act 26 of 2018, S. 15(i)(b) (w.r.e.f. 6-6-2018).

61.
Ins. by Act 1 of 2020, S. 7 (w.r.e.f. 28-12-2019).
62.
Subs. for “Where” by Act 26 of 2018, S. 15(ii) (w.r.e.f. 6-6-2018).
63. The words “or issued as securities” omitted by Act 26 of 2018, S. 15(iii) (w.r.e.f. 6-6-2018).
64. Ins. by Act 26 of 2018, S. 15(iv) (w.r.e.f. 6-6-2018).
65. Subs. by Act 26 of 2018, S. 15(v) (w.r.e.f. 6-6-2018). Prior to substitution it read as:
“(7) The Board may specify the manner of determining the voting share in respect of financial debts
issued as securities under sub-section (6).
(8) All decisions of the committee of creditors shall be taken by a vote of not less than seventy-five per
cent of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the committee of creditors
shall be constituted and comprise of such persons to exercise such functions in such manner as may be
specified by the Board.”
66.
Subs. for “seventy-five” by Act 26 of 2018, S. 16(a) (w.r.e.f. 6-6-2018).
67. Ins. by Act 26 of 2018, S. 16(b)(i) (w.r.e.f. 6-6-2018).
68. Ins. by Act 26 of 2018, S. 16(b)(ii) (w.r.e.f. 6-6-2018).
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69.
Subs. by Act 1 of 2020, S. 8 (w.r.e.f. 28-12-2019). Prior to substitution it read as:
“Provided that the resolution professional shall, if the resolution plan under sub-section (6) of Section 30
has been submitted, continue to manage the operations of the corporate debtor after the expiry of the
corporate insolvency resolution process period until an order is passed by the Adjudicating Authority under
Section 31.”
70. Subs. for “Committee of creditors” by Act 26 of 2018, S. 18(i) (w.r.e.f. 6-6-2018).
71.
Subs. for “Any creditor” by Act 26 of 2018, S. 18(ii) (w.r.e.f. 6-6-2018).
“(h) invite prospective lenders, investors, and any other persons to put forward resolution plans;”
73.
74. Ins. by Act 26 of 2019, S. 5 (w.e.f. 16-8-2019).
“(2) The committee of creditors may, at a meeting, by a vote of seventy-five per cent of voting shares,
propose to replace the resolution professional appointed under Section 22 with another resolution
professional.”
76. Subs. for “seventy-five” by Act 26 of 2018, S. 21 (w.r.e.f. 6-6-2018).
78.
Subs. for “has an account,” by Act 26 of 2018, S. 22(i)(A) (w.r.e.f. 6-6-2018).
79. Ins. by Act 26 of 2018, S. 22(i)(B) (w.r.e.f. 6-6-2018).
80. Ins. by Act 26 of 2018, S. 22(i)(C) (w.r.e.f. 6-6-2018).
81.
82. Subs. by Act 26 of 2018, S. 22(ii) (w.r.e.f. 6-6-2018). Prior to substitution it read as:
“(d) has been convicted for any offence punishable with imprisonment for two years or more;”
83.
Ins. by Act 26 of 2018, S. 22(iii) (w.r.e.f. 6-6-2018).
84.
Ins. by Act 26 of 2018, S. 22(iv) (w.r.e.f. 6-6-2018).
85. Subs. for “an enforceable guarantee” by Act 26 of 2018, S. 22(v)(A) (w.r.e.f. 6-6-2018).
86.
Ins. by Act 26 of 2018, S. 22(v)(B) (w.r.e.f. 6-6-2018).
87. Subs. for “has been” by Act 26 of 2018, S. 22(vi) (w.r.e.f. 6-6-2018).
88. Renembered by Act 26 of 2018, S. 22(vii) (w.r.e.f. 6-6-2018).
89.
Subs. by Act 26 of 2018, S. 22(vii) (w.r.e.f. 6-6-2018). Prior to substitution it read as:
“Provided that nothing in clause (iii) of this Explanation shall apply to—
(A) a scheduled bank; or
(B) an asset reconstruction company registered with the Reserve Bank of India under Section 3 of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54
of 2002); or
(C) an Alternate Investment Fund registered with the Securities and Exchange Board of India.”
91.
Ins. by Act 26 of 2018, S. 22(viii) (w.r.e.f. 6-6-2018).
92.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
93. Subs. for “repayment” by Act 26 of 2018, S. 23(ii)(A) (w.r.e.f. 6-6-2018).

94.
Subs. by Act 26 of 2019, S. 6(a) (w.e.f. 16-8-2019). Prior to substitution it read as:
“(b) provides for the payment of the debts of operational creditors in such manner as may be specified by
the Board which shall not be less than the amount to be paid to the operational creditors in the event of a
liquidation of the corporate debtor under Section 53;”
95.
Ins. by Act 26 of 2018, S. 23(ii)(B) (w.r.e.f. 6-6-2018).
96.
Subs. by Act 8 of 2018, S. 6 (w.r.e.f. 23-11-2017). Prior to substitution it read as:
“(4) The committee of creditors may approve a resolution plan by a vote of not less than seventy-five
per cent of voting share of the financial creditors.”
97. Subs. for “seventy-five” by Act 26 of 2018, S. 23(iii)(a) (w.r.e.f. 6-6-2018).
98.
Ins. by Act 26 of 2019, S. 6(b) (w.e.f. 16-8-2019).
99. Ins. by Act 26 of 2018, S. 23(iii)(b) (w.r.e.f. 6-6-2018).
100. Ins. by Act 26 of 2019, S. 7 (w.e.f. 16-8-2019).
101.
Ins. by Act 26 of 2018, S. 24(a) (w.r.e.f. 6-6-2018).
102. Ins. by Act 26 of 2018, S. 24(b) (w.r.e.f. 6-6-2018).
105. Ins. by Act 26 of 2019, S. 8 (w.e.f. 16-8-2019).

107. Subs. for “Chapter II shall” by Act 26 of 2018, S. 26(a) (w.r.e.f. 6-6-2018).

109. Subs. for “in writing” by Act 26 of 2018, S. 26(b)(i) (w.r.e.f. 6-6-2018).
110.
Ins. by Act 26 of 2018, S. 26(b)(ii) (w.r.e.f. 6-6-2018).
111.
Subs. for “clause (a)” by Act 26 of 2018, S. 26(c ) (w.r.e.f. 6-6-2018).
112. Ins. by Act 26 of 2018, S. 26(d) (w.r.e.f. 6-6-2018).
115. The words “of Section 43” omitted by Act 26 of 2018, S. 28 (w.r.e.f. 6-6-2018).
Subs. for “bankruptcy of a personal guarantor of such corporate debtor” by Act 26 of 2018, S. 29(a) (w.r.e.f.
117.
6-6-2018).
118.Subs. for “bankruptcy proceeding of a personal guarantor of the corporate debtor” by Act 26 of 2018, S. 29
(b) (w.r.e.f. 6-6-2018).
“(4) An appeal against a liquidation order passed under Section 33 may be filed on grounds of material
irregularity or fraud committed in relation to such a liquidation order.”
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123. Subs. for “On or after the insolvency commencement date, if” by Act 26 of 2018, S. 30 (w.r.e.f. 6-6-2018).
124. Subs. for “repayment” by Act 26 of 2018, S. 31(a) (w.r.e.f. 6-6-2018).
125. Subs. for “repayment” by Act 26 of 2018, S. 31(b) (w.r.e.f. 6-6-2018).
126. Omitted by Act 26 of 2021, S. 12 (w.r.e.f. 4-4-2021). Prior to omission it read as:
“Explanation.—For the purposes of this section and Sections 75 and 76, an application shall be deemed to
be false in material particulars in case the facts mentioned or omitted in the application, if true, or not
omitted from the application as the case may be, would have been sufficient to determine the existence of a
default under this Code.”

129. Subs. for “for the registration” by Act 26 of 2018, S. 32(ii) (w.r.e.f. 6-6-2018).

132. Subs. for “examined in this Code” by Act 1 of 2020, S. 11(i) (w.r.e.f. 28-12-2019).

134. Subs. for “Adjudicating Authority” by Act 26 of 2018, S. 33 (w.r.e.f. 6-6-2018).
135. Subs. for “Adjudicating Authority” by Act 26 of 2018, S. 33 (w.r.e.f. 6-6-2018).


141.
142.
Omitted by Act 26 of 2018, S. 36(i) (w.r.e.f. 6-6-2018). Prior to omission it read as:
“(g) the other information under clause (d) of sub-section (3) of Section 9;”
145. Ins. by Act 26 of 2018, S. 36(iii) (w.r.e.f. 6-6-2018).
147. Subs. for “repayment of debts of operational creditors” by Act 26 of 2019, S. 9 (w.e.f. 16-8-2019).
Ministry of Corporate Affairs, Noti. No. S.O. 1683(E), dated May 24, 2017, published in the Gazette of India,
152.
Extra., Part II, Section 3(ii), dated 24th May, 2017, pp. 2-3, No. 1490
153.
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/
notification is being circulated on the condition and understanding that the publisher would not be liable in any manner by reason of any mistake
or omission or for any action taken or omitted to be taken or advice rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/
-----------------------------------------------------------------------------------------------------------------------------------------------------------
rule/ regulation/ circular/ notification. All disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The
authenticity of this text must be verified from the original source.

Insolvency Bankruptcy Code

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SCC Online Web Edition, © 2021 EBC Publishing Pvt. Ltd.

Page 1 Wednesday, December 01, 2021

1. Short title, extent and commencement

INSOLVENCY RESOLUTION AND LIQUIDATION FOR CORPORATE PERSONS

4. Application of this Part

CORPORATE INSOLVENCY RESOLUTION PROCESS

6. Persons who may initiate corporate insolvency resolution process

7. Initiation of corporate insolvency resolution process by financial creditor

8. Insolvency resolution by operational creditor

9. Application for initiation of corporate insolvency resolution process by operational

10. Initiation of corporate insolvency resolution process by corporate applicant

10-A. Suspension of initiation of corporate insolvency resolution process

11. Persons not entitled to make application

12. Time-limit for completion of insolvency resolution process

12-A. Withdrawal of application admitted under Section 7, 9 or 10

13. Declaration of moratorium and public announcement

15. Public announcement of corporate insolvency resolution process

16. Appointment and tenure of interim resolution professional

17. Management of affairs of corporate debtor by interim resolution professional

18. Duties of interim resolution professional

19. Personnel to extend cooperation to interim resolution professional

20. Management of operations of corporate debtor as going concern

21. Committee of creditors

22. Appointment of resolution professional

23. Resolution professional to conduct corporate insolvency resolution process

24. Meeting of committee of creditors

25. Duties of resolution professional

25-A. Rights and duties of authorised representative of financial creditors

26. Application for avoidance of transactions not to affect proceedings

27. Replacement of resolution professional by committee of creditors

28. Approval of committee of creditors for certain actions

29. Preparation of information memorandum

30. Submission of resolution plan

31. Approval of resolution plan

32-A. Liability for prior offences, etc

33. Initiation of liquidation

34. Appointment of liquidator and fee to be paid

35. Powers and duties of liquidator

36. Liquidation Estate

37. Powers of liquidator to access information

38. Consolidation of claims

39. Verification of claims

40. Admission or rejection of claims

41. Determination of valuation of claims

42. Appeal against the decision of liquidator

43. Preferential transactions and relevant time

44. Orders in case of preferential transactions

45. Avoidance of undervalued transactions

46. Relevant period for avoidable transactions

47. Application by creditor in cases of undervalued transactions

48. Order in cases of undervalued transactions

49. Transactions defrauding creditors

50. Extortionate credit transactions

51. Orders of Adjudicating Authority in respect of extortionate credit transactions

52. Secured creditor in liquidation proceedings

53. Distribution of assets

54. Dissolution of corporate debtor

PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS

54-A. Corporate debtors eligible for pre-packaged insolvency resolution process

54-B. Duties of insolvency professional before initiation of pre-packaged insolvency