THE INSOLVENCY AND BANKRUPTCY CODE, 2016 
Last Update 18-8-2021 
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ARRANGEMENT OF SECTIONS 
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PART I 

PRELIMINARY 

SECTIONS 

1.  Short title, extent and commencement. 

2. Application. 

3. Definitions. 

PART II 
INSOLVENCY RESOLUTION AND LIQUIDATION FOR CORPORATE PERSONS 

4. Application of this Part. 

5. Definitions. 

CHAPTER I 

PRELIMINARY 

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. 

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

11. Persons not entitled to make application. 

11A. Disposal of applications under section 54C and under section 7 or section 9 or section 10. 

12. Time-limit for completion of insolvency resolution process. 

12A. 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. 

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SECTIONS 

19. Personnel to extend co-operation 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. 

25A. 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. 

29A. Person not eligible to be resolution applicant. 

30. Submission of resolution plan. 

31.  Approval of resolution plan. 

32. Appeal. 

32A. 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. 

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. 

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SECTIONS 

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 

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

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

process. 

54C. Application to initiate pre-packaged insolvency resolution process. 

54D. Time-limit for completion of pre-packaged insolvency resolution process. 

54E. Declaration of moratorium and public announcement during pre-packaged insolvency resolution 

process. 

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

54G. List of claims and preliminary information memorandum. 

54H. Management of affairs of corporate debtor. 

54-I. Committee of creditors. 

54J. Vesting management of corporate debtor with resolution professional. 

54K. Consideration and approval of resolution plan. 

54L. Approval of resolution plan. 

54M. Appeal against order under section 54L. 

54N. Termination of pre-packaged insolvency resolution process. 

54-O. Initiation of corporate insolvency resolution process. 

54P. Application of provisions of Chapters II, III, VI and VII to this Chapter. 

CHAPTER IV 

FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS 

55. Fast track corporate 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. 

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CHAPTER V 

VOLUNTARY LIQUIDATION OF CORPORATE PERSONS 

SECTIONS 

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. 

67A. Fraudulent management of corporate debtor during pre-packaged insolvency resolution process. 

CHAPTER VII 

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 repayment of debt by operational creditor. 

77. Punishment for providing false information in application made by corporate debtor. 

77A. Punishment for offences related to pre-packaged insolvency resolution process. 

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INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS 

PART III 

SECTIONS 

78. Application. 

79. Definitions. 

CHAPTER I 

PRELIMINARY 

CHAPTER II 

FRESH START PROCESS 

80. Eligibility for making an application. 

81. Application for fresh start order. 

82. Appointment of resolution professional. 

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. 

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. 

97. Appointment of resolution professional. 

98. Replacement of resolution professional. 

99. Submission of report by resolution professional. 

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SECTIONS 

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. 

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. 

120. Standard of conduct. 

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. 

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SECTIONS 

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 bankruptcy. 

137. Completion of administration. 

138. Discharge order. 

139. Effect of discharge. 

140. Disqualification of bankrupt. 

141. Restrictions on bankrupt. 

142. Modification or recall of bankruptcy order. 

143. Standard of conduct. 

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. 

ADMINISTRATION AND DISTRIBUTION OF THE ESTATE OF THE BANKRUPT 

CHAPTER V 

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. 

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SECTIONS 

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. 

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. 

ADJUDICATING AUTHORITY FOR INDIVIDUALS AND PARTNERSHIP FIRMS 

179. Adjudicating authority for individuals and partnership firms. 

CHAPTER VI 

180. Civil court not to have jurisdiction. 

181. Appeal to Debt Recovery Appellate Tribunal. 

182. Appeal to Supreme Court. 

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SECTIONS 

183. Expeditious disposal of applications. 

CHAPTER VII 

OFFENCES AND PENALTIES 

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 

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. 

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SECTIONS 

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 

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. 

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PART V 

MISCELLANEOUS 

SECTIONS 

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. 

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. 

235A. 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. 

238A. Limitation. 

239. Power to make rules. 

240. Power to make regulations. 

240A. 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. 

246. Amendments of Act 1 of 1944. 

247. Amendments of Act 43 of 1961. 

248. Amendments of Act 52 of 1962. 

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SECTIONS 

249. Amendments of Act 51 of 1993. 

250. Amendments of Act 32 of 1994. 

251. Amendments of Act 54 of 2002. 

252. Amendments of Act 1 of 2004. 

253. Amendments of Act 51 of 2007. 

254. Amendments of Act 6 of 2009. 

255. Amendments of Act 18 of 2013. 

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. 

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THE INSOLVENCY AND BANKRUPTCY CODE, 2016 
ACT NO. 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:— 

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: 
1* 
(3)  It  shall  come  into  force  on  such  date2  as  the  Central  Government  may,  by  notification  in  the 

* 

* 

* 

* 

Official Gazette, appoint: 

1. The proviso omitted by the Jammu and Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, vide notification 
No. S.O. 1123(E) dated (18-3-2020) and vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 
2020, notification No. S.O. 3774(E), dated (23-10-2020). 

2.  5th  August,  2016,  vide  Notification  no.  S.O.  2618(E),  dated  5th  August,  2016  (ss.  188  to  194),  see  Gazette  of  India, 

Extraordinary, Part II, sec. 3(ii). 
19th August, 2016—S. 3, cls. (1), (5), (22), (26), (28), (37), ss. 221, 222, 225, 230, 232, 233, sub-section (1) of cls. (zd), sub-
section (2) of section 239, sub-section (1) and cls. (zt), sub-section (2) of section 240; ss. 241 and 242; vide notification No. 
S.O. 2746(E), dated 19th August 2016, see Gazette of India, Extraordinary, Part II, sec. 3(ii). 
1st November, 2016—S. 3 of Cla. (2), (3), (4), (6), (7), (8), (9), (10), (11), (12),(13), (14), (15), (16), (17), (18), (19), (20), 
(21), (23), (24), (25), (27), (29), (30), (31), (32), (33), (34), (35), (36), ss. 196, 197, 223, sub-section (2) of section 239, clause 
(ze),  (zf),  (zg),  (zh),  (zl),  (zm),  sub-section  (2)  of  section  240;cls.  (a)  to  (zm);  (zu)  to  (zzzc);  s.  244,  246  to  248  (both 
inclusive); 250, 252, vide notification No. S.O. 3344(E), see Gazette of India, Extraordinary, Part II, sec. 3(ii). 
15th  November,  2016—S.  199  to  207  (both  inclusive),  sub-section  (1)  of  208,  Cl.(c),  (e),  s.  208(2),  s.  217  to  220  (both 
inclusive), ss. 251, 253, 254 and 255, vide Notification No. S.O. 3453(E), dated 15th November, 2016  
1st December, 2016 —S. 2, Cl.(a) to (d)(except with regard to voluntary liquidation or Bankruptcy), s. 60, 61, 62, 63, 64, 65, 
66, 67, 68, 69, 70 (both inclusive), ss. 198, 231, 236, 237, 238(both inclusive), sub-section (2) of s. 239, cl (a), (b), (c), (d), 
(e), (d), (f), vide notification No. S.O. 3594(E) dated 30th November 2016, see Gazette of India, Extraordinary, Part II, sec. 
3(ii). 
15th December 2016—Ss 33 to 54 (both inclusive), vide notification No. S.O. 3687(E), dated 9th December 2016, see Gazette 
of India, Extraordinary, Part II, sec. 3(ii). 
1st April 2017—Sub-section (2) of cls. (a) to (d),  vide notification No. S.O. 1570(E), dated 15th May 2017,  see Gazette of 
India, Extraordinary, Part II, sec. 3(ii). 
1st April 2017—S. 59; Ss. 209 to 215 (both inclusive); Sub-section (1) of S 216; Ss. 234 and 235 vide notification No. S.O. 
1005(E), dated 30th March 2017, see Gazette of India, Extraordinary, Part II, sec. 3(ii). 
14th June 2017—Ss 55 to 58 (both inclusive), vide notification No. S.O. 1910(E), dated 14th June 2017, see Gazette of India, 
Extraordinary, Part II, sec. 3(ii). 
1st May, 2018—Ss. 227 to 229 (both inclusive), vide notification No. S.O. 1817(E), dated 1st May 2018, see Gazette of India, 
Extraordinary, Part II, sec. 3(ii). 
1st  December, 2019—S. 2 clause (e), s. 78 (except with regard to fresh start process) and s. 79, ss. 94 to 187 (both inclusive), clause (g) to 
clause (i) of sub-section (2) of s. 239, clause (m) to clause (zc) of sub-section (2) of s. 239, clause (zn) to clause (zs) of sub-section (2) of s. 
240  and  s.  249,  in  so  far  as  they  relate  to  personal  guarantors  to  corporate  debtors,  vide  notification  No.  S.  O.  4126  (E),  dated  15th 
November, 2019, see Gazette of India, Extraordinary, Part II, sec. 3(ii). 

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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. 

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 in so far as 

the said provisions are inconsistent with the provisions of such special Act; 

(c)  any  Limited  Liability  Partnership  incorporated  under  the  Limited  Liability  Partnership                 

Act, 2008 (6 of 2009);  

(d)  such  other  body  incorporated  under  any  law  for  the  time  being  in  force,  as  the  Central 

Government may, by notification, specify in this behalf; 1*** 

2[(e) personal guarantors to corporate debtors;  
(f) partnership firms and proprietorship firms; and 

(g) individuals, other than persons referred to in clause (e),] 

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; 

1. The word “and” omitted by Act 8 of 2018, s. 2 (w.e.f. 23-11-2017). 
2. Subs. by s. 2, ibid., for clause (e) (w.e.f. 23-11-2017). 

14 

                                                                                                                                                                           
 
(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 1[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; 

(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; 

1. Subs. by Act 26 of 2018, s. 2 for “repaid” (w.e.f. 6-6-2018). 

15 

                                                      
(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; 

(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); 

16 

(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. 
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 1[one crore rupees]:  
Provided that the Central Government may, by notification, specify the minimum amount of default 

of higher value which shall not be more than one crore rupees. 

2[Provided further that the Central Government may, by notification, specify such minimum amount 
of default of higher value, which shall not be more than one crore rupees, for matters relating to the pre-
packaged insolvency resolution process of corporate debtors under Chapter III-A.] 

5. Definitions.—In this Part, unless the context otherwise requires,— 

1. Subs. by Notification No. S.O. 1205(E), for “one lakh rupees” (w.e.f. 24-3-2020). 
2. Ins. by Act 26 of 2021, s. 2 (w.e.f. 4-4-2021). 

17 

                                                      
(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 (38 of 1949); 

1[(2A)  “base  resolution  plan”  means  a  resolution  plan  provided  by  the  corporate  debtor  under 

clause (c) of sub-section (4) of section 54A;] 

(3) “Chapter” means a Chapter under this Part; 

(4) “constitutional document”, in relation to a corporate person, includes articles of association, 
memorandum  of  association  of  a  company  and  incorporation  document  of  a  Limited  Liability 
Partnership; 

(5) “corporate applicant” 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  1[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;  

2[(5A)  “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; 

(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; 

1. Ins. by Act 26 of 2021, s. 3 (w.e.f. 4-4-2021). 
2. Ins. by Act 26 of 2018, s. 3 (w.e.f. 6-6-2018). 

18 

                                                      
(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; 

1[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 2[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; 

1* 

* 

* 

* 

* 

(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; 

(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; 

1. The proviso shall be omitted by Act 1 of 2020, s. 2 (w.e.f. 28-12-2019). 
2. Ins. by Act 26 of 2021, s. 3 (w.e.f. 4-4-2021). 

19 

 
 
 
 
 
 
 
                                                      
(15) “interim finance” means any financial debt raised by the resolution professional during the 
insolvency resolution process period 1[or by the corporate debtor during the pre-packaged insolvency 
resolution process period, as the case may be] 2[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  1[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 3[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; 

1[(23A)  “preliminary  information  memorandum”  means  a  memorandum  submitted  by  the 

corporate debtor under clause (b) of sub-section (1) of section 54G; 

(23B)  “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 54C; 

(23C) “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 54F; 

(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 54J; 

(d)  any  costs  incurred  at  the  expense  of  the  Government  to  facilitate  the  pre-packaged 

insolvency resolution process; and 

(e) any other costs as may be specified; 

1. Ins. by Act 26 of 2021, s. 3 (w.e.f. 4-4-2021). 
2. Ins. by Act 1 of 2020, s. 2 (w.e.f. 28-12-2019). 
3. Subs. by Act 26 of 2018, s. 3, for “repayment” (w.e.f. 6-6-2018). 

20 

                                                      
(23D) “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  54L,  or  sub-section  (1)  of  section  54N,  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)  any  body  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; 

1[(24A) “related party”, in relation to an individual, means—  

1. Ins. by Act 26 of 2018, s. 3 (w.e.f. 6-6-2018).  

21 

                                                      
(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 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, 

22 

 (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;’. 

1[(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] 2[or pursuant to section 54K, as the case may be]; 

(26) “resolution plan” means a plan proposed by 3[resolution applicant] for insolvency resolution 

of the corporate debtor as a going concern in accordance with Part II; 

4[Explanation.—For  the  removal  of  doubts,  it  is  hereby  clarified  that  a  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  2[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. 

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  5[other  financial  creditors,  or  any  other  person  on  behalf  of  the 
financial creditor, as may be notified by the Central Government,] may file an application for initiating 
corporate  insolvency  resolution  process  against  a  corporate  debtor  before  the  Adjudicating  Authority 
when a default has occurred. 

6[Provided  that  for  the  financial  creditors,  referred  to  in  clauses  (a)  and  (b)  of  sub-section  (6A)  of 
section  21,  an  application  for  initiating  corporate  insolvency  resolution  process  against  the  corporate 
debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less 
than ten per cent. of the total number of such creditors in the same class, whichever is less: 

Provided  further  that  for  financial  creditors  who  are  allottees  under  a  real  estate  project,  an 
application  for  initiating  corporate  insolvency  resolution  process  against  the  corporate  debtor  shall  be 
filed jointly by not less than one hundred of such allottees under the same real estate project or not less 

1. Subs. by Act 8 of 2018, s.3 (w.e.f. 23-11-2017). 
2. Ins. by Act 26 of 2021, s. 3 (w.e.f. 4-4-2021). 
3. Subs. by s. 3, ibid., for “any person” (w.e.f.23-11-2017). 
4. Ins. by Act 26 of 2019, s. 2 (w.e.f. 16-08-2019). 
5. Subs. by Act 26 of 2018, s. 4, for “other financial creditors” (w.e.f. 6-6-2018).  
6. Ins. by Act 1 of 2020, s. 3 (w.e.f. 28-12-2019). 

23 

                                                      
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). 

1[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. 

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 

1. Ins. by Act 26 of 2019, s. 3 (w.e.f. 16-08-2019).  

24 

                                                      
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,  1[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 2[payment] of unpaid operational debt— 

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from 

the bank account of the corporate debtor; or 

(ii) by 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  3[payment]  of the operational  debt in  respect of 
which the default has occurred. 

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 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 3[by the corporate debtor, 
if available;] 

4[(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 

 (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. 

(5)  The  Adjudicating  Authority  shall,  within  fourteen  days  of  the  receipt  of  the  application  under    

sub-section (2), by an order— 

1. Subs. by Act 26 of 2018, s. 5, for “if any, and” (w.e.f. 6-6-2018). 
2. Subs. by s. 5, ibid for “repayment” (w.e.f. 6-6-2018). 
3. Subs. by Act 26 of 2018, s. 6, for “by the corporate debtor; and” (w.e.f. 6-6-2018). 
4. Subs. by s. 6, ibid., for “clause (d) such other information as may be specified” (w.e.f. 6-6-2018). 

25 

                                                      
(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 1[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 1[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. 

(6) The  corporate  insolvency  resolution  process  shall  commence  from  the  date  of  admission  of  the 

application under sub-section (5) of this section. 

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 Adjudicating Authority. 

(2) The application under sub-section (1) shall be filed in such form, containing such particulars and 

in such manner and accompanied with such fee as may be prescribed. 

2[(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; 3[and no disciplinary proceeding is pending against the 

proposed resolution professional] or 

(b) reject the application, if it is incomplete:  3[or any disciplinary proceeding is pending against 

the proposed resolution professional] 

1. Subs. by Act 26 of 2018, s. 6, for “repayment” (w.e.f. 6-6-2018). 
2. Subs. by s. 7, ibid., for “section 10 of sub-section (3)” (w.e.f. 6-6-2018). 
3. Ins. by s. 7, ibid. (w.e.f. 6-6-2018). 

26 

                                                      
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. 

(5) The  corporate  insolvency  resolution  process  shall  commence  from  the  date  of  admission  of  the 

application under sub-section (4) of this section. 

1[10A.  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 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.] 

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  2[or a pre-packaged 

insolvency resolution process]; or 

2[(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 

2[(ba)  a  corporate  debtor  in  respect  of  whom  a  resolution  plan  has  been  approved  under       

Chapter III-A, twelve months preceding the date of making of the application; or] 

(c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan 
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. 

3[Explanation I].—For the purposes of this section, a corporate debtor includes a corporate applicant 

in respect of such corporate debtor. 

4[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.] 

5[11A.  Disposal  of  applications  under  section  54C  and  under  section  7  or  section  9  or  section 
10.—(1) Where an application filed under section 54C is pending, the Adjudicating Authority shall pass 
an order to admit or reject such application, before considering any application filed under section 7 or 
section 9 or section 10 during the pendency of such application under section 54C, in respect of the same 
corporate debtor. 

(2) Where an application under section 54C is filed within fourteen days of filing of any application 
under section 7 or section 9 or section 10, which is pending, in respect of the same corporate debtor, then, 
notwithstanding anything contained in sections 7, 9 and 10, the Adjudicating Authority shall first dispose 
of the application under section 54C. 

1. Ins. by Act 17 of 2020, s. 2 (w.e.f. 5-6-2020). 
2. Ins. by Act 26 of 2021, s. 4 (w.e.f. 4-4-2021). 
3. The existing Explanation shall be numbered as Explanation I by Act 1 of 2020, s. 4 (w.e.f. 28-12-2019). 
4. Ins. by Act 1 of 2020, s. 4 (w.e.f. 28-12-2019). 
5. Ins. by Act 26 of 2021, s. 5 (w.e.f. 4-4-2021). 

27 

                                                      
(3) Where an application under section 54C is filed after fourteen days of the filing of any application 
under  section  7  or  section  9  or  section  10,  in  respect  of  the  same  corporate  debtor,  the  Adjudicating 
Authority shall first dispose of the application under section 7or 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  1[sixty-six] per cent. 
of the voting shares. 

(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that 
the subject matter of the case is such that corporate insolvency resolution process cannot be completed 
within  one  hundred  and  eighty  days,  it  may  by  order  extend  the  duration  of  such  process  beyond  one 
hundred and eighty days by such further period as it thinks fit, 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. 

 2[Provided  further  that  the  corporate  insolvency  resolution  process  shall  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.] 

3[12A. 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.]. 

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. 

1. Subs. by Act 26 of 2018, s. 8, for “seventy-five” (w.e.f. 6-6-2018).  
2. Ins. by Act 26 of 2019, s. 4 (w.e.f. 16-08-2019). 
3. Ins. by Act 26 of 2018, s. 9 (w.e.f. 6-6-2018).  

28 

                                                      
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. 

1[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. 

1[(2A)  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;] 

2[(3) The provisions of sub-section (1) shall not apply to— 
3[(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. 

15.  Public  announcement  of  corporate  insolvency  resolution  process.—(1)  The  public 
announcement  of  the  corporate  insolvency  resolution  process  under  the  order  referred  to  in  section  13 
shall contain the following information, namely:— 

1. Ins. by Act 1 of 2020, s. 5 (w.e.f. 28-12-2019). 
2. Subs. by Act 26 of 2018, s. 10, for “sub-section (3)” (w.e.f. 6-6-2018). 
3. Subs. by Act 1 of 2020, s. 5, for clause (a) (w.e.f. 28-12-2019). 

29 

                                                      
(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 1[claims, as may be specified]; 

(d) details of the interim resolution professional who shall be vested with the management of the 

corporate debtor and be responsible for receiving claims; 

(e) penalties for false or misleading claims; and 

(f) the date on which the corporate insolvency resolution process shall close, which shall be the 
one hundred and eightieth day from the date of the admission of the application under sections 7, 9 or 
section 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 2[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 3[shall continue till the date of appointment of the 

resolution professional under section 22]. 

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  the  corporate  debtor  as  may  be 
required by the interim resolution professional; 

1. Subs. by Act 26 of 2018, s. 11, for “claims” (w.e.f. 6-6-2018). 
2. Subs. by Act 1 of 2020, s. 6, for “within fourteen days from the insolvency commencement date” (w.e.f. 28-12-2019). 
3. Subs. by Act 26 of 2018, s. 12, for “shall not exceed thirty days from date of his appointment” (w.e.f. 6-6-2018). 

30 

                                                      
(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 1[may be specified; and]. 

2[(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.—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; 

1. Subs. by Act 26 of 2018, s. 13, for “may be specified” (w.e.f. 6-6-2018). 
2. Ins. by s. 13, ibid., (w.e.f. 6-6-2018).  

31 

                                                      
(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  1[section], the term  “assets” shall not 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 2[financial creditor or the authorised representative of the financial creditor referred to 
in  sub-section  (6)  or  sub-section  (6A)  or  sub-section  (5)  of  section  24,  if  it  is  a  related  party  of  the 

1. Subs. by Act 26 of 2018, s. 14, for “sub-section” (w.e.f. 6-6-2018).  
2. Subs. by s.15, ibid., for “related party to whom a corporate debtor owes a financial debt” (w.e.f. 6-6-2018).  

32 

                                                      
corporate debtor,]  shall not have any right of representation, participation or voting in a meeting of the 
committee of creditors. 

1[Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial 
sector  regulator,  if  it  is  a  related  party  of  the  corporate  debtor  solely  on  account  of  conversion  or 
substitution  of  debt  into  equity  shares  or  instruments  convertible  into  equity  shares  2[or  completion  of 
such transactions as may be prescribed,] prior to the insolvency commencement date.]; 

(3) 3[Subject to sub-sections (6) and (6A), 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  4*** 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. 

5[(6A) 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; 

1. Ins. by Act 26 of 2018, s. 15 (w.e.f. 6-6-2018). 
2. Ins. by Act 1 of 2020, s. 7 (w.e.f. 28-12-2019). 
3. Subs. by Act 26 of 2018, s. 15, for “Where” (w.e.f. 6-6-2018). 
4. The words “or issued as securities” omitted by s.15, ibid. (w.e.f. 6-6-2018).  
5. Ins. by s. 15, ibid., (w.e.f. 6-6-2018). 

33 

                                                      
(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.  

(6B) The remuneration payable to the authorised representative—  

(i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial 

debt or the relevant documentation; and  

(ii)  under  clause  (b)  of  sub-section  (6A)  shall  be  as  specified  which  shall  form  part  of  the 

insolvency resolution process costs]; 

1[(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 (6A).  

(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. 

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  2[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, 3[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  4[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 proposed under 
clause  (b)  of  sub-section  (3)  to  the  Board  for  its  confirmation  and  shall  make  such  appointment  after 
confirmation by the Board. 

1. Subs. by Act 26 of 2018, s. 15, for “sub-sections (7) and (8)” (w.e.f. 6-6-2018). 
2. Subs. by s. 16, ibid., for “seventy-five” (w.e.f. 6-6-2018).  
3. Ins. by s. 16, ibid. (w.e.f. 6-6-2018).  
4. Ins. by Act 26 of 2018, s. 16 (w.e.f. 6-6-2018).  

34 

                                                      
(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.  

1[Provided that the  resolution  professional shall  continue to  manage  the operations  of the  corporate 
debtor after the expiry of the corporate insolvency resolution process period, until an order approving the 
resolution plan under sub-section (1) of section 31 or appointing a liquidator under section 34 is passed by 
the Adjudicating Authority.] 

(2) The resolution professional shall exercise powers and perform duties as are vested or conferred on 

the interim resolution professional under this Chapter. 

(3) In case of any appointment of a resolution professional under sub-section (4) of section 22, the 
interim resolution professional shall provide all the information, 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  2[committee  of  creditors, including  the  authorised representatives  referred to in 

sub-sections (6) and (6A) 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)  3[Subject to sub-sections (6), (6A) and (6B) 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. 

1. Subs. by Act 1 of 2020, s. 8, for the proviso (w.e.f. 28-12-2019). 
2. Subs. by Act 26 of 2018, s. 18, for “Committee of creditors” (w.e.f. 6-6-2018).  
3. Subs. by s.18, ibid., for  “Any creditor” (w.e.f. 6-6-2018). 

35 

                                                      
(7) The resolution professional shall determine the voting share to be assigned to each creditor in the 

manner specified by the Board. 

(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; 

1[(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. 

2[25A. Rights and duties of authorised representative of financial creditors.—(1) The authorised 
representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall 
have the right to participate and vote in meetings of the committee of creditors on behalf of the financial 
creditor he represents in accordance with the prior voting instructions of such creditors obtained through 
physical or electronic means.  

(2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the 

meeting of the committee of creditors to the financial creditor he represents. 

 (3)  The  authorised  representative  shall  not  act  against  the  interest  of  the  financial  creditor  he 

represents and shall always act in accordance with their prior instructions:  

Provided that if the authorised representative represents several financial creditors, then he shall 
cast his vote in respect of each financial creditor in accordance with instructions received from each 
financial creditor, to the extent of his voting share:  

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. 

1. Subs. by Act 8 of 2018, s. 4, for sub-section (2)  (w.e.f. 23-11-2017). 
2. Ins. by Act 26 of 2018, s. 19 (w.e.f. 6-6-2018).  

36 

                                                      
1[(3A)  Notwithstanding  anything  to  the  contrary  contained  in  sub-section  (3),  the  authorised 
representative under sub-section (6A) 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 12A, 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. 

2[(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. 

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; 

(d) record any change in the ownership interest of the corporate debtor; 

1. Ins. by Act 26 of 2019, s. 5 (w.e.f. 16-08-2019). 
2. Subs. by Act 26 of 2018, s. 20, for sub-section (2) (w.e.f. 6-6-2018).  

37 

                                                      
(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 1[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. 

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. 

2[29A. Person 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— 

1. Subs. by Act 26 of 2018, s. 21, for “seventy five” (w.e.f. 6-6-2018). 
2. Ins. by Act 8 of 2018, s. 5 ( w.e.f. 23-11-2017) 

38 

                                                      
(a) is an undischarged insolvent;  
(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under 

the Banking Regulation Act, 1949; 

 (c) 1[at the time of submission of the resolution plan has an account,] or an account of a corporate 
debtor  under  the  management  or  control  of  such  person  or  of  whom  such  person  is  a  promoter, 
classified  as  non-performing  asset  in  accordance  with  the  guidelines  of  the  Reserve  Bank  of  India 
issued  under  the  Banking  Regulation  Act,  1949  (10  1949)  2[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; 

1[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 3[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;] 

 4[(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;  
2[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;  

1. Subs. by Act 26 of 2018, s. 22, for “has an account” (w.e.f. 6-6-2018). 
2. Ins. by s. 22, ibid., (w.e.f. 6-6-2018).  
3. Ins. by Act 1 of 2020, s. 9 (w.e.f. 28-12-2019). 
4. Subs. by Act 26 of 2018, s. 22, for clause (d) (w.e.f. 6-6-2018). 

39 

                                                      
1[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 2[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 3[and such 
guarantee has been invoked by the creditor and remains unpaid in full or part]; 

 (i)  4[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)  

5[Explanation. 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):  

6[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 7[or completion of such transactions as may be prescribed,] 
prior to the insolvency commencement date;] 

8[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 

1. Ins. by Act 26 of 2018, s. 22 (w.e.f. 6-6-2018). 
2. Subs. by s. 22, ibid., for “an enforceable guarantee” (w.e.f. 6-6-2018).  
3. Ins. by s. 22, ibid., (w.e.f. 6-6-2018). 
4. Subs. by s. 22, ibid., for “has been” (w.e.f. 6-6-2018). 
5. Explanation renumbered as Explanation I by s. 22, ibid. (w.e.f. 6-6-2018).  
6. The proviso subs. by s. 22,  ibid., (w.e.f. 6-6-2018).  
7. Ins. by Act 1 of 2020, s. 9 (w.e.f. 28-12-2019). 
8. Explanation ins. by Act 26 of 2018, s. 22 (w.e.f. 6-6-2018).   

40 

                                                      
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);  

(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.].] 

30. Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan 1[along 
with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on 
the basis of the information memorandum. 

(2) The  resolution  professional  shall  examine  each  resolution  plan received  by  him  to  confirm  that 

each resolution plan— 

(a) provides for the payment of insolvency resolution process costs in a manner specified by the 

Board in priority to the 2[payment] of other debts of the corporate debtor; 

3[(b)  provides  for the payment  of  debts  of  operational  creditors  in  such  manner  as  may  be 

specified by the Board which shall not be less than— 

(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor 

under section 53; or 

(ii) the amount that would have been paid to such creditors, if 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;] 

1. Ins. by Act 26 of 2018, s. 23 (w.e.f. 6-6-2018). 
2. Subs. by s. 23, ibid., for “repayment” (w.e.f. 6-6-2018).  
3. Subs. by Act 26 of 2019, s. 6, for clause (b) (w.e.f. 16-08-2019). 

41 

                                                      
(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. 

1[Explanation.—For  the purposes  of  clause (e), if  any approval  of  shareholders is  required  under 
the Companies Act, 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). 

2[(4) The committee of creditors may approve a resolution plan by a vote of not less than  3[sixty-six] 
per  cent.  of  voting  share  of  the  financial  creditors,  after  considering  its  feasibility  and  viability,  4[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(Ord. 7 of 2017), 
where the resolution applicant is ineligible under section 29A 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  29A, the  resolution  applicant  shall  be  allowed  by  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 29A: 

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.] 

5[Provided  also  that  the  eligibility  criteria  in  section  29A  as  amended  by  the  Insolvency  and 
Bankruptcy  Code  (Amendment)  Ordinance,  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. 

1. Ins. by Act 26 of 2018, s. 23 (w.e.f. 6-6-2018). 
2. Subs. by Act 8 of 2018, s. 6, for sub-section (4) (w.e.f. 23-11-2017). 
3. Subs. by Act 26 of 2018, s., 23, for “seventy-five” (w.e.f. 6-6-2018). 
4. Ins. by Act 26 of 2019, s. 6 (w.e.f. 16-08-2019). 
5. Ins. by Act 26 of 2018, s. 23 (w.e.f. 6-6-2018). 

42 

                                                      
(6)  The  resolution  professional  shall  submit  the  resolution  plan  as  approved  by  the  committee  of 

creditors to the Adjudicating Authority. 

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,  1[including  the  Central 
Government, any State Government or any local authority to whom a debt in respect of the payment of 
dues  arising  under  any  law  for  the  time  being  in  force,  such  as  authorities  to  whom  statutory  dues  are 
owed,] guarantors and other stakeholders involved in the resolution plan. 

2[Provided that the Adjudicating Authority shall, before passing an order for approval of resolution 
plan  under  this  sub-section,  satisfy  that  the  resolution  plan  has  provisions  for  its  effective 
implementation.]  

(2)  Where  the  Adjudicating  Authority  is  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. 

2[(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.] 

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. 

3[32A. 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: 

1. Ins. by Act 26 of 2019, s. 7 (w.e.f. 16-08-2019). 
2. Ins. by Act 26 of 2018, s. 24 (w.e.f. 6-6-2018). 
3. Ins. by Act 1 of 2020, s. 10 (w.e.f. 28-12-2019). 

43 

                                                      
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  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.] 

44 

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 1[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). 

2[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  3[under  section  31  or  under  
sub-section (1) of section 54L,] 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 Adjudicating Authority for a liquidation order as referred to in sub-clauses (i), (ii) and 
(iii) of clause (b) of sub-section (1). 

(4) On receipt of an application under sub-section (3), if the Adjudicating Authority 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. 

1. Ins. by Act 26 of 2018, s. 25 (w.e.f. 6-6-2018).  
2. Ins. by Act 26 of 2019, s. 8 (w.e.f. 16-08-2019). 
3. Ins. by Act 26 of 2021, s. 6 (w.e.f. 4-4-2021). 

45 

                                                      
(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  1[Chapter  II  2[or  for  the  pre-packaged  insolvency 
resolution process under Chapter III-A] shall, subject to submission of a written consent by the resolution 
professional  to  the  Adjudicatory  Authority  in  specified  form,]  act  as  the  liquidator  for  the  purposes  of 
liquidation unless replaced by the Adjudicating Authority under sub-section (4). 

(2)  On the  appointment  of  a  liquidator under  this  section,  all  powers  of the  board  of  directors,  key 
managerial  personnel  and  the  partners  of  the  corporate  debtor,  as  the  case  may  be,  shall  cease  to  have 
effect and shall be vested in the liquidator. 

(3) The personnel of the corporate debtor shall extend all assistance and cooperation to the liquidator 
as may be 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 3[in writing; or] 

4[(c) the resolution professional fails to submit written consent under sub-section (1).] 

(5) For the purposes of 5[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 3[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 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:— 

1. Subs. by Act 26 of 2018, s. 26, for “Chapter II shall” (w.e.f 6-6-2018).  
2. Ins. by Act 26 of 2021, s. 7 (w.e.f. 4-4-2021). 
3. Subs. by Act 26 of 2018, s. 26, for “in writing” (w.e.f. 6-6-2018).  
4. Ins. by s. 26, ibid (w.e.f  6-6-2018).  
5. Subs. by s. 26, ibid, for “clause (a)” (w.e.f. 6-6-2018).   

46 

                                                      
(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; 

1[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  of  the  liquidation  process  in  a 
manner as may be specified by the Board; and 

1. Ins. by Act 8 of 2018, s. 7 (w.e.f. 23-11-2017). 

47 

                                                      
(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  the  corporate 
debtor; 

(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 

48 

(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 multi-lateral 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 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 

set-off 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). 

49 

(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  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 1[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 

1. Ins. by Act 26 of 2018, s. 27 (w.e.f. 6-6-2018). 

50 

                                                      
(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  of  one  year 

preceding the insolvency commencement date. 

44.  Orders  in  case  of  preferential  transactions.—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  the  corporate 

debtor;  

(d)  require  any  person  to  pay  such  sums  in  respect  of  benefits  received  by  him  Adjudicating 

Authority may direct; 

(e)  direct  any  guarantor,  whose  financial  debts  or  operational  debts  owed  to  any  person  were 
released or discharged (in whole or in part) by the giving of the preference, to be under such new or 
revived  financial  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. 

51 

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. 

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)  1***  determines  that  certain  transactions  were  made  during  the  relevant  period  under 
section  46,  which  were  undervalued,  he  shall  make  an  application  to  the  Adjudicating  Authority  to 
declare  such  transactions  as  void  and  reverse  the  effect  of  such  transaction  in  accordance  with  this 
Chapter. 

(2) A transaction shall be considered undervalued where the corporate debtor— 

(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 

1. The words and figures “of section 43” omitted by Act 26 of 2018, s. 28 (w.e.f. 6-6-2018).  

52 

                                                      
(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.—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 the corporate debtor; 

(b) release or discharge (in whole or in part) any security interest granted by the corporate debtor; 

(c) require  any  person  to  pay  such  sums,  in  respect  of  benefits received  by  such  person,  to the 
liquidator or the resolution professional as the case may be, as the Adjudicating Authority may direct; 
or  

(d)  require  the  payment  of  such  consideration  for  the  transaction  as  may  be  determined  by  an 

independent expert. 

49.  Transactions  defrauding  creditors.—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). 

53 

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. Order 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 resolution professional, as the case may be. 

52.  Second  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 
of 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. 

54 

(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 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). 
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. 

55 

(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. 

1[CHAPTER III-A 

PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS 

54A.  Corporate  debtors  eligible  for  pre-packaged  insolvency  resolution  process.—(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 29A; 

(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); 

1. Ins. by Act 26 of 2021, s. 8 (w.e.f. 4-4-2021). 

56 

                                                      
(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  section  54K,  and 

such other conditions as may be specified; and 

(d) such other information and documents as may be specified. 

54B.  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 54A, namely:— 

(a) prepare a report in such form as may be specified, confirming whether the corporate debtor 
meets  the  requirements  of  section  54A,  and  the  base  resolution  plan  conforms  to  the  requirements 
referred to in clause (c) of sub-section (4) of section 54A; 

(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 54A; 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. 

57 

54C. Application to initiate pre-packaged insolvency resolution process.—(1) Where a corporate 
debtor meets the requirements of section 54A, a corporate applicant thereof may file an application with 
the Adjudicating Authority for initiating pre-packaged insolvency resolution process. 

(2) The application under sub-section (1) shall be filed in such form, containing such particulars, in 

such manner and accompanied with such fee as may be prescribed. 

(3) The corporate applicant shall, along with the application, furnish— 

(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 54A; 

(b)  the  name  and  written  consent,  in  such  form  as  may  be  specified,  of  the  insolvency 
professional  proposed  to  be  appointed  as  resolution  professional,  as  approved  under  clause  (e)  of  
sub-section (2) of section 54A, and his report as referred to in clause (a) of sub-section (1) of section 
54B; 

(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:  

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). 

54D.  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  54K,  within  a  period  of  ninety  days  from  the  pre-
packaged insolvency commencement date. 

(3)  Where  no  resolution  plan  is  approved  by  the  committee  of  creditors  within  the  time  period 
referred to in sub-section (2), the resolution professional shall, on the day after the expiry of such time 
period, file an application with the Adjudicating Authority for termination of the pre-packaged insolvency 
resolution process in such form and manner as may be specified. 

58 

54E.  Declaration  of  moratorium  and  public  announcement  during  prepackaged  insolvency 
insolvency 

resolution  process.—(1)  The  Adjudicating  Authority  shall,  on 
commencement date, along with the order of admission under section 54C— 

the  pre-packaged 

(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. 

54F.    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  54G,  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; 

(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  54G  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; 

59 

(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. 

(7)  The  fees  and  expenses  referred  to  in  sub-section  (6)  shall  be  borne  in  such  manner  as  may  be 

specified. 

54G. 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:— 

60 

(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 77A, 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  54E,  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. 

54H. 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 54F: 

Provided  that  the  composition  of  the  committee  of  creditors  shall  be  altered  on  the  basis  of  the 
updated list of claims, in such manner as may be specified, and any such alteration shall not affect the 
validity of any past decision of the committee of creditors. 

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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”. 

54J.  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 (2A) 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. 

54K.  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  54A,  to  the  resolution 
professional  within  two  days  of  the  pre-packaged  insolvency  commencement  date,  and  the  resolution 
professional shall present it to the committee of creditors. 

(2)  The  committee  of  creditors  may  provide  the  corporate  debtor  an  opportunity  to  revise  the  base 
resolution  plan  prior  to  its  approval  under  sub-section  (4)  or  invitation  of  prospective  resolution 
applicants under sub-section (5), as the case may be. 

62 

(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 

(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: 

63 

 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: 

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 resolution professional. 

54L. 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  54K,  subject  to  the  conditions  provided  therein,  meets  the  requirements  as  referred  to  in  
sub-section (2) of section 30, it shall, within thirty days of the receipt of such resolution plan, by order, 
approve the resolution plan: 

Provided that the Adjudicating Authority shall, before passing an order for approval of a resolution 
plan  under  this  sub-section,  satisfy  itself  that  the  resolution  plan  has  provisions  for  its  effective 
implementation. 

(2) The order of approval under sub-section (1) shall have such effect as provided under sub-sections 

(1), (3) and (4) of section 31, which shall, mutatis mutandis apply, to the proceedings under this Chapter. 

(3)  Where  the  Adjudicating  Authority  is  satisfied  that  the  resolution  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 54N. 

(4)  Notwithstanding  anything  to  the  contrary  contained  in  this  section,  where  the  Adjudicating 
Authority has passed an order under sub-section (2) of section 54J 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 54K, 
does not result in the change in the management or control of the corporate debtor to a person who was 

64 

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 of the corporate debtor. 

54M.  Appeal  against  order  under  section  54L.—Any  appeal  against  an  order  approving  the 
resolution plan under sub-section (1) of section 54L, shall be on the grounds laid down in sub-section (3) 
of section 61. 

54N.  Termination  of  prepackaged  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 54K; or 

(b) under sub-section (3) of section 54D, 

the Adjudicating Authority shall, within thirty days of the date of such application, by 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 67A, if any. 

(2) Where the resolution professional, at any time after the pre-packaged insolvency commencement 
date, but before the approval of resolution plan under sub-section (4) or sub-section (12), as the case may 
be  of  section  54K,  intimates  the  Adjudicating  Authority  of  the  decision  of  the  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  54J  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 of the corporate debtor. 

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 54K, by a vote of not less 
than  sixty-six  per  cent.  of  the  voting  shares,  may  resolve  to  initiate  a  corporate  insolvency  resolution 

65 

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 54E 
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)— 

(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  67A,  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. 

54P.  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, 25A, 26, 27, 28, 29A, 32A, 43 to 51, and the 
provisions  of  Chapters  VI  and  VII  of  this  Part  shall,  mutatis  mutandis  apply,  to  the  pre-packaged 
insolvency resolution process, subject to the following, namely:— 

(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 54J”; 

(b) reference to “clause (j) of sub-section (2) of section 25” under section 26 shall be construed as 

reference to “clause (h) of sub-section (2) of section 54F”; 

66 

(c) reference to “section 16” under section 27 shall be construed as reference to “section 54E”; 

(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 54L”; 

(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 54E”; 

(g)  reference to  “section 31”  in  sub-section (3)  of  section  74  shall  be construed  as  reference to 

“sub-section (1) of section 54L”. 

(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 

55.  Fast  track  corporate  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. 

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. 

67 

(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that 
the  subject  matter  of  the  case  is  such  that  fast  track  corporate  insolvency  resolution  process  cannot  be 
completed within a period of ninety days, it may, by order, extend the duration of such process beyond 
the said period of ninety days by such further period, as it thinks fit, but not 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.  

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 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 

68 

(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. 

(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 1[liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such 
corporate debtor] shall be filed before such National Company Law Tribunal. 

(3)  An  insolvency  resolution  process  or  1[liquidation  or  bankruptcy  proceeding  of  a  corporate 
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 Debt Recovery 

Tribunal as contemplated under Part III of this Code for the purpose of sub-section (2). 

1. Subs. by Act 26 of 2018, s. 29, for “bankruptcy of a personal guarantor of such corporate debtor” (w.e.f. 6-6-2018).  

69 

                                                      
(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. 

61.  Appeals  and  Appellate  Authority.—(1)  Notwithstanding  anything  to  the  contrary  contained 
under  the  Companies  Act  2013  (18  of  2013),  any  person  aggrieved  by  the  order  of  the  Adjudicating 
Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal. 

(2) Every appeal under sub-section (1) shall be filed within thirty days before the National Company 

Law Appellate Tribunal: 

Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the 
expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the 
appeal but such period shall not exceed fifteen days. 

(3)  An  appeal  against  an  order  approving  a  resolution  plan  under  section  31  may  be  filed  on  the 

following grounds, namely:— 

(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. 

1[(4) An appeal against a liquidation order passed under section 33, or sub-section (4) of section 54L, 
or sub-section (4) of section 54N, 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.] 

1. Subs. by Act 26 of 2021, s. 9, for sub-section (4) (w.e.f. 4-4-2021). 

70 

                                                      
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. 

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. 

1[(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  director  or  partner  of  the  corporate 

1. Ins. by Act 26 of 2021, s. 10 (w.e.f. 4-4-2021). 

71 

                                                      
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  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. 

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. 

1[(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 10A.] 

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. 

2[67A. 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.] 

1. Ins. by Act 17 of 2020, s. 3 (w.e.f. 5-6-2020). 
2. Ins. by Act 26 of 2021, s. 11 (w.e.f. 4-4-2021). 

72 

 
                                                      
CHAPTER VII 

OFFENCES AND PENALTIES 

68. Punishment for concealment of property.—Where any officer of the corporate 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-clause (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.—1[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:  

1. Subs. by Act 26 of 2018, s. 30, for “On or after the insolvency commencement date, if” (w.e.f. 6-6-2018).  

73 

                                                      
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 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 rupees, but may extend to one crore rupees, or with both. 

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 

74 

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 representation, or committed 

any fraud, for that purpose, 

he  shall  be  punishable  with  imprisonment  for  a  term  which  shall  not  be  less than  three  years,  but  may 
extend to five years or with fine which shall not be less than one lakh rupees, but may extend to one crore 
rupees, or with both. 

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  1[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 1[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),  

1. Subs. by Act 26 of 2018, s. 31, for “repayment” (w.e.f. 6-6-2018).  

75 

                                                      
such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term 
which shall not be less than three years, but which may extend to five years or with fine which shall not 
be less than one lakh rupees, but which may extend to one crore rupees, or with both. 

1* 

* 

* 

* 

* 

2[77A.  Punishment  for  offences  related  to  prepackaged  insolvency  resolution  process.—(1) 

Where— 

(a)  a  corporate  debtor  provides  any  information  in  the  application  under  section  54C  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 54G which is false in material 
particulars, knowing it to be false or omits any material fact, knowing it to be material; or 

(c)  any  person  who  knowingly  and  wilfully  authorised  or  permitted  the  furnishing  of  such 

information under sub-clauses (a) and (b),  

such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term 
which shall not be less than three years, but which may extend to five years or with fine which shall not 
be less than one lakh rupees, but 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.] 

INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS 

PART III 

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  Debt  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); 

1. The Explanation omitted by Act 26 of 2021, s. 12 (w.e.f. 4-4-2021). 
2. Ins. by Act 26 of 2021, s. 13 (w.e.f. 4-4-2021). 

76 

 
 
 
 
                                                      
(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 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  clause,  “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; 

77 

(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— 

(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 of 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.  

78 

 
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  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; 

79 

(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. 

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. 

(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— 

80 

(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. 

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. 

81 

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  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.—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 

82 

(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 resolution professional. 

(2)  The  Adjudicating  Authority  shall  within  seven  days  of  the  receipt  of  the  application  under        

sub-section (1) make a reference to the Board for replacement of the resolution professional. 

(3)  The  Board  shall,  within  ten  days  of  the  receipt  of  a  reference  from  the  Adjudicating  Authority 
under sub-section (2), recommend the name of an insolvency professional to the Adjudicating Authority 
against whom no disciplinary proceedings are pending. 

(4) The Adjudicating Authority shall appoint another resolution professional for the purposes of the 

fresh start process on the basis of the recommendation by the Board. 

(5)  The  Adjudicating  Authority  may  give  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 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. 

(2) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-

section (1), may by order admit or reject the application. 

(3) On passing of the order admitting the application referred to in sub-section (1), the moratorium 

and the fresh start process shall cease to have effect. 

(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. 

83 

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. 

(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. 

84 

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.  

(6) The application referred to in sub-section (1) shall be in such form and manner 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. 

(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. 

85 

(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 such resolution professional. 

(2)  The  Adjudicating  Authority  shall  within  seven  days  of  the  receipt  of  the  application  under        

sub-section (1) make a reference to the Board for replacement of the resolution professional. 

(3)  The  Board  shall,  within  ten  days  of  the  receipt  of  a  reference  from  the  Adjudicating  Authority 
under sub-section (2), recommend the name of the resolution professional to the Adjudicating Authority 
against whom no disciplinary proceedings are pending. 

(4) Without prejudice  to the provisions contained in sub-section (1), the creditors may apply to the 
Adjudicating  Authority  for  replacement  of  the  resolution  professional  where  it  has  been  decided  in  the 
meeting  of  the  creditors,  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  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. 

86 

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 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. 

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(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  notified  by  the 

Central Government in consultation with any financial sector regulator. 

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. 

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(2) The resolution professional shall prepare the list mentioned in sub-section (1) 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. 

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(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 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. 

(2) The resolution professional shall determine the voting share to be assigned to each creditor in the 

manner specified by the Board. 

(3) A creditor shall not be entitled to vote in respect of a debt for an unliquidated amount. 

(4) A creditor shall not be entitled to vote in a meeting of the creditors if he— 

(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.  

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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. 

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. 

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  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. 

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. 

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. 

(3) A copy of the order passed by the Adjudicating Authority under sub-section (2) shall be provided 

to the Board, for the purpose of recording an entry in the register referred to in section 196. 

91 

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 

(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. 

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(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 FIRM 

 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 

(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. 

(3) The application referred to in sub-section (1) shall be in such form and manner and accompanied 

by such fee as may be prescribed. 

(4)  An  application  for  bankruptcy  by  the  debtor  shall  not  be  withdrawn  without  the  leave  of  the 

Adjudicating Authority. 

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 

93 

(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 permission of 

the Adjudicating Authority. 

124. Effect of application.—(1) When an application is filed under section 122 or section 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  notified  by  the 

Central Government in consultation with any financial sector regulator. 

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 

94 

(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. 

(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. 

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 notified by the 

Central Government in consultation with any financial sector regulator. 

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  such  form  and  manner  as  may  be 

prescribed. 

95 

(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 

(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. 

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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. 

(2) The resolution professional shall determine the voting share to be assigned to each creditor in the 

manner specified by the Board. 

(3) A creditor shall not be entitled to vote in respect of a debt for an unliquidated amount. 

(4) The following creditors shall not be entitled to vote under this section, namely:— 

(a) creditors who are not mentioned in the list of creditors under section 132 and 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). 

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(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. 

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 Adjudicating Authority. 

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(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. 

(3) A copy of the order passed by the Adjudicating Authority under sub-section (1) shall be provided 

to the Board, for the purpose of recording an entry in the register referred to in section 191. 

(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 order.—(1) A bankruptcy trustee appointed for conducting the bankruptcy 
process shall charge such fees as may be specified in proportion to the value of the estate of the bankrupt. 

(2) The fees for the conduct of the bankruptcy process shall be paid to the bankruptcy trustee from the 

distribution of the estate of the bankrupt in the manner provided in section 178. 

145. Replacement of bankruptcy order.—(1) Where Committee of creditors is of the opinion that at 
any time during the bankruptcy process, a bankruptcy trustee appointed under section 125 is required to 
be  replaced,  it  may  replace  him  with  another  bankruptcy  trustee  in  the  manner  provided  under  this 
section. 

(2) The Committee of creditors may, at a meeting, by a vote of seventy-five per cent. of voting share, 

propose to replace the bankruptcy trustee appointed under section 125 with another bankruptcy trustee.  

(3) The Committee of creditors may apply to the Adjudicating Authority for the replacement of the 

bankruptcy trustee. 

(4) The Adjudicating Authority shall within seven days of the receipt of the application under sub-

section (3) direct the Board to recommend for replacement of bankruptcy trustee. 

(5) The Board shall, within ten days of the direction of the Adjudicating Authority under sub-section 
(4),  recommend  a  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. 

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(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. 

(3)  The  Board  shall,  within  ten  days  of  the  direction  of  the  Adjudicating  Authority  under               

sub-section (2) recommend another bankruptcy trustee as a replacement. 

(4)  The  Adjudicating  Authority  shall  appoint  the  bankruptcy  trustee  recommended  by  the  Board 

under sub-section (3) within fourteen days of receiving the recommendation. 

(5)  The  replaced  bankruptcy  trustee  shall  deliver  possession  of  the  estate  of  the  bankrupt  to  the 

bankruptcy trustee appointed under sub-section (4), on the date of his appointment. 

(6) The Adjudicating Authority may give directions to the bankruptcy trustee who has resigned— 

(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. 

(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. 

(3)  The  Board  shall,  within  ten  days  of  the  direction  of  the  Adjudicating  Authority  under               

sub-section (2), recommend a bankruptcy trustee as a replacement. 

(4)  The  Adjudicating  Authority  shall  appoint  the  bankruptcy  trustee  recommended  by  the  Board 

under sub-section (3) within fourteen days of receiving the recommendation. 

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(5)  The  earlier  bankruptcy  trustee  shall  deliver  possession  of  the  estate  of  the  bankrupt  to  the 

bankruptcy trustee appointed under sub-section (4), on the date of his appointment. 

(6)  The  Adjudicating  Authority  may  give  directions  to  the  bankruptcy  trustee  who  has  vacated  the 

office— 

(a) to share all information with the new bankruptcy trustee in respect of the bankruptcy; 

(b) to co-operate with the new bankruptcy trustee in such matters as may be 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.—The  bankruptcy  trustee  shall  perform  the  following 

functions in accordance with the provisions of this Chapter— 

(a) investigate the affairs of the bankrupt; 

(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. 

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(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) even after 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 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; 

102 

(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. 

(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. 

103 

(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; 

104 

(b) discharge the bankruptcy trustee from all personal liability in respect of the onerous property 

as from the date of appointment of the bankruptcy trustee. 

(4) A notice of disclaimer under sub-section (1) shall not be given in respect of the 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). 

105 

(3)  The  Adjudicating  Authority  shall  not  make  an  order  in  favour  of  a  person  who  has  made  an 
application under clause (b) of sub-section (1) except where it appears to the Adjudicating 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. 

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(3)  Any  transaction  giving  preference  not  covered  under  sub-section  (2)  should  have  been  entered 
into by the bankrupt during the period of six months ending on the date of the application for bankruptcy.  

(4)  The  transaction  giving  preference  under  sub-section  (2)  or  under  sub-section  (3)  should  have 

caused the bankruptcy process to be triggered. 

(5)  On  the  application  of  the  bankruptcy  trustee  under  sub-section  (1),  the  Adjudicating  Authority 

may— 

(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. 

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(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. 

(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.  Obligation  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. 

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(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  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 in so far 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 

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(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. 

(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 

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(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  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 Final dividend. 

(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. 

111 

(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 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 Debt Recovery Tribunal having territorial jurisdiction over the place where the individual debtor 
actually and voluntarily resides or carries on business or personally works for gain and can entertain an 
application under this Code regarding such person. 

(2) The Debt Recovery Tribunal shall, notwithstanding anything contained in any other law for the 

time being in force, have jurisdiction to entertain or dispose of— 

(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  Debt  Recovery  Tribunal  or  the 
Debt Recovery Appellate Tribunal has jurisdiction under this Code. 

(2) No injunction shall be granted by any court, tribunal or authority in respect of any action taken, or 
to be taken, in pursuance of any power conferred on the Debt Recovery Tribunal or the Debt Recovery 
Appellate Tribunal by or under this Code. 

181.  Appeal  to  Debt  Recovery  Appellate  Tribunal.—(1)  An  appeal  from  an  order  of  the  Debt 
Recovery Tribunal under this Code shall be filed within thirty days before the Debt Recovery Appellate 
Tribunal. 

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(2)  The  Debt  Recovery  Appellate  Tribunal  may,  if  it  is  satisfied  that  a  person  was  prevented  by 
sufficient  cause  from  filing  an  appeal  within  thirty  days,  allow  the  appeal  to  be  filed  within  a  further 
period not exceeding fifteen days. 

182.  Appeal  to  Supreme  Court.—(1)  An  appeal  from  an  order  of  the  Debt  Recovery  Appellate 
Tribunal on a question of law under this Code shall be filed within forty-five days before the Supreme 
Court. 

(2) The  Supreme  Court  may,  if  it  is  satisfied  that  a person  was  prevented  by  sufficient cause  from 
filing an appeal within forty-five days, allow the appeal to be filed within a further period not exceeding 
fifteen days. 

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  Debt  Recovery  Tribunal  or  the  Debt  Recovery 
Appellate  Tribunal,  as  the  case  may  be,  shall  record  the  reasons  for  not  doing  so  within  the  period  so 
specified;  and  the  Chairperson  of  the  Debt  Recovery  Appellate  Tribunal,  after  taking  into  account  the 
reasons so recorded, extend the period specified in this Code, but not exceeding ten days. 

CHAPTER VII 

OFFENCES AND PENALTIES 

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 
lakhs 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; 

113 

(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  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 absconds 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.—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. 

REGULATION OF INSOLVENCY PROFESSIONALS, AGENCIES AND INFORMATION UTILITIES 

PART IV 

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. 

114 

(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. 

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; 

115 

(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  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; 

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1[(aa)  promote  the  development  of,  and  regulate,  the  working  and  practices  of,  insolvency 
professionals,  insolvency  professional  agencies  and  information  utilities  and  other  institutions,  in 
furtherance of the purposes of this Code;] 

(b)  specify  the  minimum  eligibility  requirements  for  registration  of  insolvency  professional 

agencies, insolvency professionals and information utilities; 

(c)  levy  fee  or  other  charges  2[for  carrying  out  the  purposes  of  this  Code,  including  fee  for 
registration  and  renewal]  of  insolvency  professional  agencies,  insolvency  professionals  and 
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,  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; 

1. Ins. by Act 26 of 2018, s 32 (w.e.f. 6-6-2018)    
2. Subs by s 32, ibid, for “for the registration” (w.e.f. 6-6-2018)  

117 

                                                      
(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  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;  

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(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 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: 

119 

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 regulations made 

thereunder; 

(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.  

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 byelaws 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; 

120 

(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; 

1[(ca) pre-packaged insolvency resolution process under Chapter III-A of Part II;] 

(d) individual bankruptcy process under Chapter IV of Part III; and 

(e) liquidation of a corporate debtor firm under Chapter III of Part II. 

1[(1A)  Where  the  name  of  the  insolvency  professional  proposed  to  be  appointed  as  a  resolution 
professional,  is  approved  under  clause  (e)  of  sub-section  (2)  of  section  54A,  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; 

1. Ins. by Act 26 of 2021, s. 14 (w.e.f. 4-4-2021). 

121 

                                                      
(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 regulations made 

thereunder; 

(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  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. 

122 

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. Obligation 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. 

123 

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 (2 of 1974), 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. 

124 

(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— 

(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. 

125 

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 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 

126 

the provisions of this Code and as a result of such noncompliance 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 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 1[contained in this Code] or any other law for the time being in force, the Central 
Government  may,  if  it  considers  necessary,  in  consultation  with  the  appropriate  financial  sector 
regulators, notify financial service providers or categories of financial service providers for the purpose of 
their insolvency and liquidation proceedings, which may be conducted under this Code, in such manner as 
may be prescribed. 

2[Explanation.—For the removal of doubts, it is hereby clarified that the insolvency and liquidation 
proceedings for financial service providers or categories of financial service providers may be conducted 
with such modifications and in such manner as may be prescribed.] 

228. Budget.—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. 

1. Subs. by Act 1 of 2020, s. 11, for “examined in this Code” (w.e.f. 28-12-2019). 
2. Ins. by Act 1 of 2020, s. 11 (w.e.f.28-12-2019). 

127 

 
                                                      
231. Bar of jurisdiction.—No civil court shall have jurisdiction in respect of any matter in which the 
1[Adjudicating  Authority  or  Board]  is  empowered  by,  or  under,  this  Code  to  pass  any  order  and  no 
injunction shall be granted by any court or other authority in respect of any action taken or to be taken in 
pursuance of any order passed by such 2[Adjudicating Authority or Board] under this Code. 

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). 

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. 

2[235A.  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  this  Code  shall  be  tried  by  the  Special  Court  established 
under Chapter XXVIII of the Companies Act, 2013 (18 of 2013). 

(2)  No  Court  shall  take  cognizance  of  any  offence  punishable  under  this  Act,  save  on  a  complaint 
made  by  the  Board  or the Central  Government  or  any  person  authorised by  the  Central  Government  in 
this behalf. 

(3)  The  provisions  of  the  Code  of  Criminal  Procedure,  1973  (2  of  1974)  shall  apply  to  the 
proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be 

1. Subs. by Act 26 of 2018, s. 33, for “Adjudicating Authority” (w.e.f. 6-6-2018).  
2. Ins. by Act 8 of 2018, s. 8 (w.e.f. 23-11-2017). 

128 

                                                      
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 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. 

1[238A. Limitation.—The provisions of the Limitation Act, 1963 shall, as far as may be, apply to the 
proceedings  or  appeals  before  the  Adjudicating  Authority,  the  National  Company  Law  Appellate 
Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be.] 

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 Adjudicating Authority for 
initiating  corporate  insolvency  resolution  process  by  operational  creditor  under  sub-section  (2)  of 
section 9; 

2[(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 Adjudicating Authority for 
initiating  corporate  insolvency  resolution  process  by  corporate  applicant  under  sub-section  (2)  of 
section 10; 

3[(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 29A;  

(fc) the transactions under the second proviso to clause (j) of section 29A;] 

1. Ins. by Act 26 of 2018, s. 34 (w.e.f. 6-6-2018).   
2. Ins. by Act 26 of 2018, s. 35 (w.e.f. 6-6-2018).  
3. Ins. by Act 1 of 2020, s. 12 (w.e.f. 28-12-2019).  

129 

                                                      
1[(fd)  the  form,  particulars,  manner  and  fee  for  making  application  before  the  Adjudicating 

Authority under sub-section (2) of section 54C;  

(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 54H;] 

(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-section  (14)  of      

section 79; 

(j)  the  form,  the  manner  and  the  fee  for  making  application  for  fresh  start  order  under              

sub-section (3) of section 81; 

(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; 

(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  under                

sub-section (2) of section 103; 

(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-section  (3)  of 

section 122; 

(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 under sub-section (6) 

of section 123; 

(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-section  (1)  of             

section 141;  

1. Ins. by Act 26 of 2021, s. 15 (w.e.f. 4-4-2021). 

130 

                                                      
(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 sub-section (2) of 

section 222; 

(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 under sub-section (3) 

of section 224; 

(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; 

(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. 

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; 

1[(ea) the other costs under sub-clause (e) of clause (23C) 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; 

1. Ins. by Act 26 of 2021, s. 16 (w.e.f. 4-4-2021). 

131 

                                                      
1*              

    *                      

  *             

             *    

                      * 

(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-section  (2)  of 

section 14; 

2[(ia) circumstances in which supply of critical goods or services may be terminated, suspended 

or interrupted during the period of moratorium under sub-section (2A) of section 14;] 

(j) the manner of making public announcement under sub-section (2) of section 15; 
3[(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 sub-section (2) of 

section 17; 

(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; 

3[(na) the number of creditors within a class of creditors under clause (b) of sub-section (6A) of 

section 21; 

(nb)  the  remuneration  payable  to  authorised  representative  under  clause  (ii)  of  the  proviso  to           

sub-section (6B) 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 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 sub-section (8) of 

section 24; 

(s)  the  manner  of  appointing  accountants,  lawyers  and  other  advisors  under  clause  (d)  of             

sub-section (2) of section 25; 

4[(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 sub-section (2) of 

section 29; 

1. Clause (g) omitted by Act 26 of 2018, s. 36 (w.e.f. 6-6-2018).  
2. Ins. by Act 1 of 2020, s. 13 (w.e.f. 28-12-2019). 
3. Ins.by Act 26 of 2018, s. 36 (w.e.f. 6-6-2018).  
4. Ins. by Act 8 of 2018, s. 9 (w.e.f 23-11-2017). 

132 

 
                                                      
(w) the manner of making  payment of insolvency resolution process costs under clause (a), the 
manner of 1[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; 
2[(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-section  (2)  of 

section 35; 

(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 sub-section (9) of 

section 52; 

(zk)  the  period  and  the  manner  of  distribution  of  proceeds  of  sale  under  sub-section  (1)  of            

section 53; 

3[(zka)  such  number  of  financial  creditors  and  the  manner  of  proposing  the  insolvency 
professional, and the form for approving such insolvency 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 54A; 

(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 54A; 

1. Subs. by Act 26 of 2019, s. 9, for “repayment of debts of operational creditors” (w.e.f. 16-08-2019). 
2. Ins. by Act 8 of 2018, s. 9 (w.e.f. 23-11-2017). 
3. Ins. by Act 26 of 2021, s. 16 (w.e.f. 4-4-2021). 

133 

                                                      
(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 54A; 

(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 54B; 

(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 54C; 

(zkf) the form and manner for making application for termination of the pre-packaged insolvency 

resolution process under sub-section (3) of section 54D; 

(zkg) the form and manner of making public announcement under clause (c) of sub-section (1) of 

section 54E; 

(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 54F; 

(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 54F; 

(zkj)  the  manner  of  determination  of  fees  and  expenses  as  may  be  incurred  by  the  resolution 

professional under sub-section (6) of section 54F; 

(zkk) the manner of bearing fees and expenses under sub-section (7) of section 54F; 

(zkl)  the  form  and  manner  of  list  of  claims  and  preliminary  information  memorandum  under  

sub-section (1) of section 54G; 

(zkm) the conditions under clause (a) of section 54H; 

(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 54J; 

(zkp)  the  manner  of  inviting  prospective  resolution  applicants  under  sub-section  (5)  of  

section 54K; 

(zkq) the other conditions under sub-section (6) of section 54K; 

(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 54K; 

(zks) the conditions under the proviso to sub-section (10) of section 54K; 

(zkt) the manner and conditions under sub-section (11) of section 54K; 

(zku)  the  form  and  manner  of  filing  application  under  the  proviso  to  sub-section  (12)  of  

section 54K; 

134 

(zkv) the other requirements under sub-section (13) of section 54K; 

(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,  under            

sub-section (4) of section 201; 

(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; 

135 

(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  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 under sub-section 

(1) of section 215; 

(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-section  (2)  of 

section 218; 

(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. 

1[240A. 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 29A shall 
not  apply  to  the  resolution  applicant  in  respect  of  corporate  insolvency  resolution  process  2[or  pre-
packaged insolvency resolution process] of any micro, small and medium enterprises. 

1. Ins. by Act 26 of 2018, s. 37 (w.e.f. 6-6-2018).  
2. Ins. by Act 26 of 2021, s. 17 (w.e.f. 4-4-2021). 

136 

                                                      
(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 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.] 

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 (3 of 1909), and the Provincial Insolvency Act 1920 (5 of 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; 

137 

(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  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. 

138 

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 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.  

139 

THE FIRST SCHEDULE 

(See section 245) 

AMENDMENT TO THE INDIAN PARTNERSHIP ACT, 1932 

( 9 OF 1932) 

1. In section 41, clause (a) shall be omitted. 

140 

THE SECOND SCHEDULE 

(See section 246) 

AMENDMENT TO THE CENTRAL EXCISE ACT, 1944 

(1 OF 1944) 

1. In section 11E, for the words, figures and brackets  “and the Securitisation and Reconstruction of 
Financial Assets and the Enforcement of Security  Interest Act, 2002 (54 of 2002)  “, the words, figures 
and brackets “the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security 
Interest Act, 2002 (54 of 2002) and the Insolvency and Bankruptcy Code, 2016” shall be substituted.  

141 

THE THIRD SCHEDULE 

(See section 247) 

AMENDMENT TO THE INCOME-TAX ACT, 1961 

(43 OF 1961) 

In sub-section (6) of section 178, after the words “for the time being in force”, the words and figures 

“except the provisions of the Insolvency and Bankruptcy Code, 2016” shall be inserted. 

142 

 
THE FOURTH SCHEDULE 

(See section 248) 

AMENDMENT TO THE CUSTOMS ACT, 1962 

(52 OF 1962) 

In  section  142A,  for  the  words,  figures  and  brackets  “and  the  Securitisation  and  Reconstruction  of 
Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002)”, the words, and figures 
and brackets “ the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security 
Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016” shall be substituted. 

143 

THE FIFTH SCHEDULE 

(See section 249) 

AMENDMENTS TO THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 

(51 OF 1993) 

1.  In  the  long  title,  after  the  words  “financial  institutions”,  the  words  “,  insolvency  resolution  and 

bankruptcy of individuals and partnership firms” shall be inserted, namely:—. 

2. In section 1,— 

(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:— 

“(1A)  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:— 

“(1A)  The  Central  Government  shall,  by  notification,  establish  such  number  of  Debt  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:— 

“(1A) 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:— 

“(2A) 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:— 

“19A. 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. 

144 

THE SIXTH SCHEDULE 

(See section 250) 

AMENDMENT TO THE FINANCE ACT, 1994 

(32 OF 1994) 

In  section  88,  for  the  words,  figures  and  brackets  “and  the  Securitisation  and  Reconstruction  of 
Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002)”, the words and figures 
“the  Securitisation  and  Reconstruction  of  Financial  Assets  and  the  Enforcement  of  Security  Interest  
Act, 2002 and the Insolvency and Bankruptcy Code, 2016” shall be substituted. 

145 

THE SEVENTH SCHEDULE 

(See section 251) 

AMENDMENT TO THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND 
ENFORCEMENT OF SECURITY INTEREST ACT, 2002 

(54 OF 2002) 

In section 13, in sub-section (9), for the words “In the case of”, the words and figures “Subject to the 

provisions of the Insolvency and Bankruptcy Code, 2016, in the case of” shall be substituted. 

146 

THE EIGHTH SCHEDULE 

(See section 252) 

AMENDMENT TO THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) REPEAL ACT, 2003 

(1 OF 2004) 

In section 4, for sub-clause (b), the following sub-clause shall be substituted, namely— 

“(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. 

1[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.]” 

1. Ins. by Notification No. S.O. 1683(E) dated 24th May 2017.  

147 

                                                      
THE NINTH SCHEDULE 

(See section 253) 

AMENDMENTS TO THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007 

(51 OF 2007) 

1. In section 23, in sub-sections (4), (5) and (6), after the words, figures and brackets “the Banking 
Regulation Act, 1949 (10 of 1949)” “the Companies Act, 2013 (18 of 2013)”, the words and figures “or 
the Insolvency and Bankruptcy Code, 2016” shall be inserted. 

2.  In  section  23A,  in  sub-section  (3),  after  the  words,  figures  and  brackets  “the  Companies  Act, 

2013”, the words and figures “or the Insolvency and Bankruptcy Code, 2016” shall be inserted. 

148 

THE TENTH SCHEDULE 

(See section 254) 

AMENDMENT TO THE LIMITED LIABILITY PARTNERSHIP ACT, 2008 

In section 64, clause (c) shall be omitted. 

(6 OF 2009) 

149 

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:— 

“(94A)  “winding  up”  means  winding  up  under  this  Act  or liquidation  under  the  Insolvency 

and Bankruptcy Code, 2016, as applicable.”. 

2. In section 8, in sub-section (9), for the words and figures “the Rehabilitation and Insolvency Fund 
formed  under  section  269”,  the  words  and  figures  “Insolvency  and  Bankruptcy  Fund  formed  under 
section 224 of the Insolvency and Bankruptcy Code, 2016” shall be substituted. 

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. 

7. In section 230,— 

(a) in sub-section (1), after the word “liquidator”, the words and figures “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 words “on the liquidator”, the words and figures “appointed under 

this Act or under the Insolvency and Bankruptcy Code, 2016, as the case may be,” shall be inserted; 

8.  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.”. 

9. Sections 253 to 269 shall be omitted. 

10. For section 270, the following section shall be substituted, namely:— 

150 

“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.”. 

11. 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;  

(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.”.  

12. For section 272, the following section shall be substituted, namely:— 

“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. 

151 

(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.”. 

13. In section 275,— 

(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 
appointed  by  the  Tribunal  from  amongst  the  insolvency  professionals  registered  under  the 
Insolvency and Bankruptcy Code, 2016;”; 

(b) sub-section (4) shall be omitted. 

14. For section 280, the following section shall be substituted, namely:— 

“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. 

16. The heading “Part II.—Voluntary winding up” shall be omitted. 

17. Sections 304 to 323 shall be omitted. 

18. Section 325 shall be omitted. 

19. For section 326, the following section shall be substituted, namely:— 

“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 

152 

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 piece work 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 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.”. 

20. In section 327,— 

(a) after sub-section (6), the following sub-section shall be inserted, namely:— 

153 

“(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;”. 

21. For section 329, the following section shall be substituted, namely:— 

“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.”. 

22. For section 334, the following section shall be substituted, namely:— 

“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, unless the Tribunal otherwise orders, be void.”. 

23.  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. 

24. In section 337, for the words  “or which subsequently passes a resolution for voluntary winding 

up,”, the words “under this Act”, shall be substituted. 

25. In section 342, sub-sections (2), (3) and (4) shall be omitted. 

26. In section 343, for sub-section (1), the following sub-section shall be substituted, namely—  

“(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.”. 

27. In section 347, for sub-section (1), the following sub-section shall be substituted, namely— 

154 

“(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.”. 

28. In section 348, for sub-section (1), the following sub-section shall be substituted, namely— 

“(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;”. 

29. For section 357, the following section shall be substituted, namely:— 

“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.”. 

30.  In  section  370,  in the proviso,  after  the  words  “obtained for the  winding  up  the  company”,  the 
words  and  figures  “in  accordance  with  the  provisions  of  this  Act  or  of  the  Insolvency  and  Bankruptcy 
Code, 2016” shall be inserted. 

31.  In  section  372,  after  the  words  “The  provisions  of  this  Act”,  the  words  and  figures  “or  of  the 

Insolvency and Bankruptcy Code, 2016, as the case may be,” shall be inserted. 

32. In section 419, for sub-section (4), the following sub-section shall be substituted, namely:— 

“(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.”.  

33. In section 424,— 

(i) in sub-section (1), after the words, “other provisions of this Act”, the words and figures “or of 

the Insolvency and Bankruptcy Code, 2016” shall be inserted; 

(ii)  in  sub-section  (2),  after  the  words,  “under  this  Act”,  the  words  and  figures  “or  under  the 

Insolvency and Bankruptcy Code, 2016” shall be inserted. 

34. In section 429, for sub-section (1), the following sub-section shall be substituted, namely:— 

“(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,— 

155 

(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.”. 

35. For section 434, the following section shall be substituted, namely:— 

“434. (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 10E 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. 

(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.”. 

 36. In section 468, for sub-section (2), the following sub-section shall be 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; 

156 

(viii) the making of calls; and 

(ix) the fixing of a time within which debts and claims shall be proved.”. 

37. 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.”. 

157 

1[THE TWELFTH SCHEDULE 

[See clause (d) of section 29A] 

ACTS FOR THE PURPOSES OF CLAUSE (d) OF SECTION 29A 

(1) The Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922); 

(2) The Reserve Bank of India Act, 1934 (2 of 1934); 

(3) The Central Excise Act, 1944 (1 of 1944); 

(4) The Prevention of Food Adulteration Act, 1954 (37 of 1954); 

(5) The Essential Commodities Act, 1955 (10 of 1955); 

(6) The Securities Contracts (Regulation) Act, 1956 (42 of 1956); 

(7) The Income-tax Act, 1961 (43 of 1961); 

(8) The Customs Act, 1962 (52 of 1962); 

(9) The Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974); 

(10)  The  Conservation  of  Foreign  Exchange  and  Prevention  of  Smuggling  Activities  Act,  1974        

(52 of 1974); 

(11) The Air (Prevention and Control of Pollution) Act, 1981 (14 of 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. Ins. by Act 26 of 2018, s. 38 (w.e.f. 6-6-2018).   

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