Panaji, 4th May, 2017 (Vaisakha 14, 1939)

SERIES I No. 5

Reg. No. G-2/RNP/GOA/32/2015-2017

RNI No. GOAENG/2002/6410

PUBLISHED BY AUTHORITY

GOVERNMENT OF GOA

Department of Co-operation

Office of the Registrar Co-operative Societies

Notification

1-33-2014-15/PLG/RCS

Read:- Notification No. 1-27-2011/PLG/RCS dated 20-6-2012 published in the Official Gazette

Series I No. 13 dated 28-6-2012.

Whereas the Government has notified Scheme to provide financial assistance in the form of

Government Share Capital Contribution, Loan, Subsidy, Managerial Subsidy, grant in aid etc. to

the “Apex Co-operative Bank (Goa State Co-op. Bank Ltd.), Goa State Co-operative Milk Producer’s

Union, Goa State Co-operative Housing Finance & Federation Ltd., Goa State Co-operative Union

Ltd., Goa Co-operative Marketing & Supply Federation Ltd. and Industrial Co-operatives”.

And whereas Government considers it necessary to carry out certain amendments for their

development/smooth functioning of business and other allied activities.

Now, therefore, Government is pleased to amend the scheme and pattern of financial

assistance shown under clause No. 3 at Sr. No. 1 as below:—

Sr. No.

Type of Society

Name of the Scheme

Pattern of Financial Assistance

Apex Co-operative

Government Share

The total limit of Government Investment in the

Bank (Goa State

Capital Contribution

Share Capital of the Apex Co-op. Bank i.e. Goa State

Co-operative

Co-operative Bank Ltd., Panaji shall be to the extent of

Bank Ltd.)

Rs. 2000.00 lakhs inclusive of the Government Share

Capital Contribution already released to the said bank.

The other terms & conditions shall remain unchanged.

This has been issued with the concurrence of Finance (Expenditure) Department vide their

U.O. No. 8993 dated 05-04-2017.

By order and in the name of Governor of Goa.

Gurudas P. Pilarnekar, Registrar & ex officio Joint Secretary (Co-operative Societies).

Panaji, 25th April, 2017.

Suggestions are welcomed on e-mail: dir–[email protected]

There is one Extraordinary issue to the Official Gazette, Series I No. 4 dated 27-4-2017 namely, Extraordinary dated

2-5-2017 from pages 81 to 82 from Department of Power regarding Levy of FPPCA for 4th Quarter of FY-2016-17.

NOTE

INDEX

Department Notification Subject

Pages

1. Co-operation

Not.- 1-33-2014-15/PLG/

Amendment of Government Share Capital

Registrar & ex officio Jt. Secy.

/RCS

Contribution Scheme.

2. Law & Judiciary

Not.- 10/4/2016-LA

The Insolvency and Bankruptcy Code, 2016.

Under Secretary

3. Public Assistance (Provedoria) Not.- 2-15-2011/Prov/

Scheme for Immediate Relief (Fifth Amendment)

187

Secretary

/Part/237

Rules, 2017.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

Department of Law & Judiciary

Legal Affairs Division

—

Notification

10/4/2016-LA

The Insolvency and Bankruptcy Code, 2016

(Central Act No. 31 of 2016), which has been

passed by Parliament and assented to by the

President on 28-05-2016 and published in

the Gazette of India, Extraordinary, Part II,

Section 1, dated 28-05-2016, is hereby

published for the general information of the

public.

Julio Barbosa Noronha, Under Secretary

(Law).

Porvorim, 26th October, 2016.

________

THE INSOLVENCY AND BANKRUPTCY

CODE, 2016

Arrangement of Sections

PART I

Preliminary

Sections

1. Short title, extent and commencement.

2. Application.

3. Definitions.

PART II

Insolvency Resolution and Liquidation for

Corporate Persons

CHAPTER I

Preliminary

4. Application of this Part.

5. Definitions.

CHAPTER II

Corporate Insolvency Resolution Process

6. Persons who may initiate corporate insolvency

resolution process.

7. Initiation of corporate insolvency resolution

process by financial creditor.

8. Insolvency resolution by perational creditor.

9. Application for initiation of corporate

insolvency resolution process by perational

creditor.

Sections

10. Initiation of corporate insolvency resolution

process by corporate applicant.

11. Persons not entitled to make application.

12. Time-limit for completion of insolvency

resolution process.

13. Declaration of moratorium and public

announcement.

14. Moratorium.

15. Public announcement of corporate insolvency

resolution process.

16. Appointment and tenure of interim resolution

professional.

17. Management of affairs of corporate debtor by

interim resolution professional.

18. Duties of interim resolution professional.

19. Personnel to extend 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.

26. Application for avoidance of transactions not

to affect proceedings.

27. Replacement of resolution professional by

committee of creditors.

28. Approval of committee of creditors for certain

actions.

29. Preparation of information memorandum.

30. Submission of resolution plan.

31. Approval of resolution plan.

32. Appeal.

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.

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SERIES I No. 5

4TH MAY, 2017

Sections

39. Verification of claims.

40. Admission or rejection of claims.

41. Determination of valuation of claims.

42. Appeal against the decision of liquidator.

43. Preferential transactions and relevant time.

44. Orders in case of preferential transactions.

45. Avoidance of undervalued transactions.

46. Relevant period for avoidable transactions.

47. Application by creditor in cases of

undervalued transactions.

48. Order in cases of undervalued transactions.

49. Transactions defrauding creditors.

50. Extortionate credit transactions.

51. Orders of Adjudicating Authority in respect of

extorionate credit transactions.

52. Secured creditor in liquidation proceedings.

53. Distribution of assets.

54. Dissolution of corporate debtor.

CHAPTER IV

Fast Track Corporate Insolvency

Resolution Process

55. Fast track corporation insolvency resolution

process.

56. Time period for completion of fast track

corporate insolvency resolution process.

57. Manner of initiating fast track corporate

insolvency resolution process.

58. Applicability of Chapter II to this Chapter.

CHAPTER V

Voluntary Liquidation of Corporate Persons

59. Voluntary liquidation of corporate persons.

CHAPTER VI

Adjudicating Authority for Corporate Persons

60. Adjudicating Authority for corporate persons.

61. Appeals and Appellate Authority.

62. Appeal to Supreme Court.

63. Civil court not to have jurisdiction.

64. Expeditious disposal of applications.

65. Fraudulent or malicious initiation of

proceedings.

66. Fraudulent trading or wrongful trading.

67. Proceedings under section 66.

CHAPTER VII

Offences and Penalties

Sections

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. Punishement for non-disclosure of dispute or

repayment of debt by operational creditor.

77. Punishment for providing false information in

application made by corporate debtor.

PART III

Insolvency Resolution and Bankruptcy for

Individuals and Partnership Firms

CHAPTER I

Preliminary

78.

Application.

79.

Definitions.

CHAPTER II

Fresh Start Process

80. Eligibility for making an application.

81. Application for fresh start order.

82. Appointment of resolution professional.

83. Examination of application by resolution

professional.

84. Admission ore 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.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

Sections

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.

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 relations 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.

Sections

CHAPTER IV

Bankruptcy order for Individuals and

Partnership Firms

121. Application for bankruptcy.

122. Application by debtor.

123. Application by creditor.

124. Effect of application.

125. Appointment of insolvency professional as

bankruptcy trustee.

126. Bankruptcy order.

127. Validity of bankruptcy order.

128. Effect of bankruptcy order.

129. Statement of financial position.

130. Public notice inviting claims from creditors.

131. Registration of claims.

132. Preparation of list of creditors.

133. Summoning of meeting of creditors.

134. Conduct of meeting of creditors.

135. Voting rights of creditors.

136. Administration and distribution of estate of

bankrupt.

137. Completion of administration.

138. Discharge order.

139. Effect of discharge.

140. Disqualification of bankrupt.

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.

CHAPTER V

Administration and Distribution of the Estate of

the Bankrupt

149. Functions of bankruptcy trustee.

150. Duties of bankrupt towards bankruptcy

trustee.

151. Rights of bankruptcy trustee.

152. General powers of bankruptcy trustee.

153. Approval of creditors for certain acts.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

Sections

154. Vesting of estate of bankrupt in bankruptcy

trustee.

155. Estate of bankrupt.

156. Delivery of property and documents to

bankruptcy trustee.

157. Acquisition of control by bankruptcy trustee.

158. Restrictions on disposition of property.

159. After-acquired property of bankrupt.

160. Onerous property of bankrupt.

161. Notice to disclaim onerous property.

162. Disclaimer of leaseholds.

163. Challenge against disclaimed property.

164. Undervalued transactions.

165. Preference transactions.

166. Effect of order.

167. Extortionate credit transactions.

168. Obligations under contracts.

169. Continuance of proceedings on death of

bankrupt.

170. Administration of estate of deceased bankrupt.

171. Proof of debt.

172. Proof of debt by secured creditors.

173. Mutual credit and set-off.

174. Distribution of interim dividend.

175. Distribution of property.

176. Final dividend.

177. Claims of creditors.

178. Priority of payment of debts.

CHAPTER VI

Adjudicating Authority for Individuals and

Partnership Firms

179. Adjudicating Authority for individuals and

partnership firms.

180. Civil court not to have jurisdiction.

181. Appeal to Debt Recovery Appellate Tribunal.

182. Appeal to Supreme Court.

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 Professional,

Agencies and Information Utilities

CHAPTER I

The Insolvency and Bankruptcy Board of India

Sections

188. Establishment and incorporation of Board.

189. Constitution of Board.

190. Removal of member from office.

191. Powers of Chairperson.

192. Meetings of Board.

193. Member not to participate in meetings in

certain cases.

194. Vacancies, etc., not to invalidate proceedings

of Board, Officers and employees of Board.

195. Power to designate financial sector regulator.

CHAPTER II

Powers and Functions of The Board

196. Powers and functions of Board.

197. Constitution of advisory committee, executive

committee or other committee.

198. Condonation of delay.

CHAPTER III

Insolvency Professional Agencies

199. No person to function as insolvency

professional agency without valid certificate

of registration.

200. Principles governing registration of insolvency

professional agency.

201. Registration of insolvency professional agency.

202. Appeal to National Company Law Appellate

Tribunal.

203. Governing Board of insolvency professional

agency.

204. Functions of insolvency professional agencies.

205. Insolvency professional agencies to make

bye-laws.

CHAPTER IV

Insolvency Professionals

206. Enrolled and registered persons to act as

insolvency professionals.

207. Registration of insolvency professionals.

208. Functions and obligations of insolvency

professionals.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

CHAPTER V

Information Utilities

Sections

209. No person to function as information utility

without certificate of registration.

210. Registration of information utility.

211. Appeal to National Company Law Appellate

Tribunal.

212. Governing Board of information utility.

213. Core services, etc., of information utilities.

214. Obligations of information utility.

215. Procedure for submission, etc., of financial

information.

216. Rights and obligations of persons submitting

financial information.

CHAPTER VI

Inspection and Investigation

217. Complaints against insolvency professional

agency or its member or information utility.

218. Investigation of insolvency professional

agency or its member or information utility.

219. Show cause notice to insolvency professional

agency or its member or information utility.

220. Appointment of disciplinary committee.

CHAPTER VII

Finance, Accounts and Audit

221. Grants by Central Government.

222. Board’s Fund.

223. Accounts and audit.

PART V

Miscellaneous

224. Insolvency and Bankruptey 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.

Sections

231. Bar of jurisdiction.

232. Members, officers and employees of Board to

be 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.

236. Trial of offences by Special Court.

237. Appeal and revision.

238. Provisions of this Code to override other laws.

239. Power to make rules.

240. Power to make regulations.

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.

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.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

THE INSOLVENCY AND BANKRUPTCY

CODE, 2016

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:

Provided that Part III of this Code shall not

extend to the State of Jammu and Kashmir.

(3) It shall come into force on such date as

the Central Government may, by notification

in the Official Gazette, appoint:

Provided that different dates may be

appointed for different provisions of this

Code and any reference in any such

provision to the commencement of this Code

shall be construed as a reference to the

commencement of that provision.

2. Application.— The provisions of this Code

shall apply to—

(a) any company incorporated

under the Companies Act, 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;

Partnership incorporated under

the Limited Liability Partnership

Act, 2008;

(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; and

(e) partnership firms and individuals,

in relation to their insolvency, liquidation,

voluntary liquidation or bankruptcy, as the

case may be.

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

18 of 2013.

6 of 2009.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

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, a limited liability

partnership, as defined in clause

(n) of sub-section (1) of section 2

of the Limited Liability Partner-

ship Act, 2008, or any other person

incorporated with limited liability

under any law for the time being

in force but shall not include any

financial service provider;

(8) “corporate debtor” means a corporate

person who owes a debt to any person;

(9) “core services” means services

rendered by an information utility for—

(a) accepting electronic submission of

financial information in such form and

manner as may be specified;

(b) safe and accurate recording of

financial information;

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 repaid 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;

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;

as defined in clause (72) of

section 2 of the Companies Act,

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;

18 of 2013.

6 of 2009.

2 of 1934.

18 of 2013.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

(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;

(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;

(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

India” shall have the meaning as

assigned to such term in

clause (v) of section 2 of the

Foreign Exchange Management

Act, 1999;

(25) “person resident outside India”

means a person other than a person

resident in India;

(26) “prescribed” means prescribed by

rules made by the Central Government;

42 of 1999.

OFFICIAL GAZETTE — GOVT. OF GOA

SERIES I No. 5

4TH MAY, 2017

(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;

(37) words and expressions

used but not defined in this Code

but defined in the Indian Contract

Act, 1872, the Indian Partnership

Act, 1932, the Securities Contact

(Regulation) Act, 1956, the

Securities Exchange Board of India

Act, 1992, the Recovery of Debts

Due to Banks and Financial

Institutions Act, 1993, the Limited

Liability Partnership Act, 2008 and

the Companies Act, 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 one lakh rupees:

Provided that the Central Government may,

by notification specify the minimum amount

of default of higher value which shall not be

more than one crore rupees.

5. Definitions.— In this Part, unless the

context otherwise requires,—

(1) “Adjudicating Authority”,

for the purposes of this Part,

means National Company Law

Tribunal constituted under section

408 of the Companies Act, 2013;

(2)

“auditor”

means

chartered accountant certified to

practice as such by the Institute

of Chartered Accountants of India

under section 6 of the Chartered

Accountants Act, 1949;

14 of 1947.

9 of 1872.

9 of 1932.

42 of 1956.

15 of 1992.

51 of 1993.

6 of 2009.

18 of 2013.

XXXVIII

of 1949.

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(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 under the

constitutional document of the corporate

debtor; or

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;

(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

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

alongwith 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;

note purchase facility or the issue of

bonds, notes, debentures, loan stock or

any similar instrument;

(d) the amount of any liability in

respect of any lease or hire purchase

contract which is deemed as a finance or

capital lease under the Indian Accounting

Standards or such other accounting

standards as may be prescribed;

(e) receivables sold or discounted other

than any receivables sold on non-

-recourse basis;

(j) any amount raised under any other

transaction, including any forward sale

or purchase agreement, having the

commercial effect of a borrowing;

(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;

(12) “insolvency commencement date”

means the date of admission of an

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application for initiating corporate

insolvency resolution process by the

Adjudicating Authority under sections 7, 9

or section 10, as the case may be;

(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;

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;

(15) “interim finance” means any

financial debt raised by the resolution

professional during the insolvency

resolution process period;

(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

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 or a

designated partner as defined in

clause (j) of section 2 of the

Limited Liability Partnership Act,

2008, 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 repayment 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;

(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;

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;

18 of 2013.

6 of 2009.

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(e) a public company in which a

director, partner or manager of the

corporate debtor is a director and holds

along with relatives, more than two per

cent. of its paid-up share capital;

(f) anybody corporate whose board of

directors, managing director or manager,

in the ordinary course of business, acts

on the advice, directions or instructions

of a director, partner or manager of the

corporate debtor;

(g) any limited liability partnership or

a partnership firm whose partners or

employees in the ordinary course of

business, acts on the advice, directions

or instructions of a director, partner or

manager of the corporate debtor;

(h) any person on whose advice,

directions or instructions, a director,

partner or manager of the corporate

debtor is accustomed to act;

(i) a body corporate which is a holding,

subsidiary or an associate company of the

corporate debtor, or a subsidiary of a

holding company to which the corporate

debtor is a subsidiary;

(j) any person who controls more than

twenty per cent. of voting rights in

the corporate debtor on account of

ownership or a voting agreement;

(k) any person in whom the corporate

debtor controls more than twenty per

cent. of voting rights on account of

ownership or a voting agreement;

(l) any person who can control the

composition of the board of directors or

corresponding governing body of the

corporate debtor;

(m) any person who is associated with

the corporate debtor on account of—

(i) participation in policy making

processes of the corporate debtor; or

(ii) having more than two directors

in common between the corporate

debtor and such person; or

(iii) interchange of managerial

personnel between the corporate

debtor and such person; or

(iv) provision of essential technical

information to, or from, the corporate

debtor;

(25) “resolution applicant” means any

person who submits a resolution plan to the

resolution professional;

(26) “resolution plan” means a plan

proposed by any person for insolvency

resolution of the corporate debtor as a going

concern in accordance with Part II;

(27) “resolution professional”, for the

purposes of this Part, means an insolvency

professional appointed to conduct the

corporate insolvency resolution process 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 other financial creditors may file an

application for initiating corporate insolvency

resolution process against a corporate debtor

before the Adjudicating Authority when a

default has occurred.

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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

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).

(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 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, if any, and

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 repayment 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.

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Explanation.— For the purposes of this

section, a “demand notice” means a

notice served by an operational creditor

to the corporate debtor demanding

repayment 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;

financial institutions maintaining accounts

of the operational creditor confirming that

there is no payment of an unpaid

operational debt by the corporate debtor;

and

(d) such other information as may be

specified.

(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—

(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 repayment of the unpaid

operational debt;

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 repayment of the

unpaid operational debt;

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;

(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

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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.

(3) The corporate applicant shall, along

with the application furnish the information

relating to—

(a) its books of account and such other

documents relating to such period as may

be specified; and

(b) the resolution professional proposed

to be appointed as an interim resolution

professional.

(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;

(b) reject the application, if it is

incomplete:

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.

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;

(b) a corporate debtor having completed

corporate insolvency resolution process

twelve months preceding the date of

making of the application; or

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.

Explanation.— For the purposes of this

section, a corporate debtor includes a

corporate applicant in respect of such

corporate debtor.

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 seventy-

-five per cent. of the voting shares.

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(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.

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

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.

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;

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 Enforce-

ment of Security Interest Act,

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.

(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.

(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.

(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:—

(a) name and address of the corporate

debtor under the corporate insolvency

resolution process;

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(b) name of the authority with which

the corporate debtor is incorporated or

registered;

(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 within fourteen days from 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 shall not exceed thirty days from

date of his appointment.

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;

corporate debtor shall report to the interim

resolution professional and provide access

to such documents and records of the

corporate debtor as may be required by

the interim resolution professional;

(d) the financial institutions maintaining

accounts of the corporate debtor shall act

on the instructions of the interim resolution

professional in relation to such accounts

and furnish all information relating to the

corporate debtor available with them to

the interim resolution 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;

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(b) take such actions, in the manner and

subject to such restrictions, as may be

specified by the Board;

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 may be specified.

18. Duties of interim resolution profe-

ssional.— The interim resolution profe-

ssional 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;

(d) monitor the assets of the corporate

debtor and manage its operations until a

resolution professional is appointed by the

committee of creditors;

(e) file information collected with the

information utility, if necessary; and

(f) take control and custody of any asset

over which the corporate debtor has

ownership rights as recorded in the balance

sheet of the corporate debtor, or with

information utility or the depository of

securities or any other registry that records

the ownership of assets including—

(i) assets over which the corporate

debtor has ownership rights which may

be located in a foreign country;

(ii) assets that may or may not be in

possession of the corporate debtor;

(iii) tangible assets, whether movable

or immovable;

(iv) intangible assets including

intellectual property;

(v) securities including shares held in

any subsidiary of the corporate debtor,

financial instruments, insurance policies;

(vi) assets subject to the determination

of ownership by a court or authority;

(g) to perform such other duties as may

be specified by the Board.

Explanation.— For the purposes of this sub-

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

the Central Government in consultation with

any financial sector regulator.

19. Personnel to extend co-operation 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.

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(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;

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 related party to whom a

corporate debtor owes a financial debt shall

not have any right of representation,

participation or voting in a meeting of the

committee of creditors.

(3) Where the corporate debtor owes

financial debts to two or more financial

creditors

part

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.

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(6) Where the terms of the financial debt

extended as part of a consortium arrangement

or syndicated facility or issued as securities

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;

(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.

(7) The Board may specify the manner of

determining the voting share in respect of

financial debts issued as securities under

sub-section (6).

(8) All decisions of the committee of

creditors shall be taken by a vote of not less

than seventy-five per cent. of voting share of

the financial creditors:

Provided that where a corporate debtor does

not have any financial creditors, the committee

of creditors shall be constituted and comprise

of such persons to exercise such functions in

such manner as may be specified by the Board.

(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 profe-

ssional.— (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

seventy-five 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, 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) 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.

(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.

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(2) The resolution professional shall exercise

powers and perform duties as are vested

or conferred on the interim resolution

professional under this Chapter.

(3) In case of any appointment of a resolution

professional under sub-sections (4) of section

22, the interim resolution professional shall

provide all the information, documents and

records pertaining to the corporate debtor in

his possession and knowledge to the resolution

professional.

24. Meeting of committee of creditors.— (1)

The members of the committee of creditors

may meet in person or by such electronic

means as may be specified.

(2) All meetings of the committee of

creditors shall be conducted by the resolution

professional.

(3) The resolution professional shall give

notice of each meeting of the committee of

creditors to—

(a) members of Committee of creditors;

(b) members of the suspended Board of

Directors or the partners of the corporate

persons, as the case may be;

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) Any creditor who is a member of the

committee of creditors may appoint an

insolvency professional other than the

resolution professional to represent such

creditor in a meeting of the committee of

creditors:

Provided that the fees payable to such

insolvency professional representing any

individual creditor will be borne by such

creditor.

(6) Each creditor shall vote in accordance

with the voting share assigned to him based

on the financial debts owed to such creditor.

(7) The resolution professional shall

determine the voting share to be assigned to

each creditor in the manner specified by the

Board.

(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;

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;

(j) convene and attend all meetings of the

committee of creditors:

(g) prepare the information memorandum

in accordance with section 29;

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(h) invite prospective lenders, investors,

and any other persons to put forward

resolution 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.

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) The committee of creditors may, at a

meeting, by a vote of seventy five per cent. of

voting shares, propose to replace the

resolution professional appointed under

section

with

another

resolution

professional.

(3) The committee of creditors shall forward

the name of the insolvency professional

proposed by them to the Adjudicating

Authority.

(4) The Adjudicating Authority shall forward

the name of the proposed resolution

professional to the Board for its confirmation

and a resolution professional shall be

appointed in the same manner as laid down

in section 16.

(5) Where any disciplinary proceedings are

pending against the proposed resolution

professional under sub-section (3), the

resolution professional appointed under

section 22 shall continue till the appointment

of another resolution professional under this

section.

28. Approval of committee of creditors for

certain actions.— (1) Notwithstanding

anything contained in any other law for the

time being in force, the resolution professional,

during the corporate insolvency resolution

process, shall not take any of the following

actions without the prior approval of the

committee of creditors namely:—

(a) raise any interim finance in excess of

the amount as may be decided by the

committee of creditors in their meeting;

(b) create any security interest over the

assets of the corporate debtor;

corporate debtor, including by way of

issuance of additional securities, creating a

new class of securities or buying back or

redemption of issued securities in case the

corporate debtor is a company;

(d) record any change in the ownership

interest of the corporate debtor;

(e) give instructions to financial

institutions maintaining accounts of the

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;

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(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 seventy five 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

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

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.

30. Submission of resolution plan.— (1) A

resolution applicant may submit a resolution

plan 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

repayment of other debts of the corporate

debtor;

(b) provides for the repayment of the

debts of operational creditors in such

manner as may be specified by the Board

which shall not be less than the amount to

be paid to the operational creditors in the

event of a liquidation of the corporate debtor

under section 53;

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.

(3) The resolution professional shall present

to the committee of creditors for its approval

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such resolution plans which confirm the

conditions referred to in sub-section (2).

(4) The committee of creditors may approve

a resolution plan by a vote of not less than

seventy five per cent. of voting share of the

financial creditors.

(5) The resolution applicant may attend the

meeting of the committee of creditors in which

the resolution plan of the applicant is

considered:

Provided that the resolution applicant shall

not have a right to vote at the meeting of the

committee of creditors unless such resolution

applicant is also a financial creditor.

(6) The resolution professional shall submit

the resolution plan as approved by the

committee of creditors to the Adjudicating

Authority.

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, guarantors

and other stakeholders involved in the

resolution plan.

(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.

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.

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 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).

(3) Where the resolution plan approved by

the Adjudicating Authority is contravened by

the concerned corporate debtor, any person

other than the corporate debtor, whose

interests are prejudicially affected by such

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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.

(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 Chapter

II shall 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;

(b)

the

Board

recommends

the

replacement of a resolution professional to

the Adjudicating Authority for reasons to be

recorded in writing.

(5) For the purposes of clause (a) 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 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.

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35. Powers and duties of liquidator.— (1)

Subject to the directions of the Adjudicating

Authority, the liquidator shall have the

following powers and duties, namely:—

(a) to verify claims of all the creditors;

(b) to take into his custody or control all

the assets, property, effects and actionable

claims of the corporate debtor;

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;

(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

(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

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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;

immovable;

(d) intangible assets including but not

limited to intellectual property, securities

(including shares held in a subsidiary of the

corporate debtor) and financial instruments,

insurance policies, contractual rights;

(e) assets subject to the determination of

ownership by the court or authority;

(f) any assets or their value recovered

through proceedings for avoidance of

transactions in accordance with this

Chapter;

(g) any asset of the corporate debtor in

respect of which a secured creditor has

relinquished security interest;

(h) any other property belonging to or

vested in the corporate debtor at the

insolvency commencement date; and

(i) all proceeds of liquidation as and when

they are realised.

(4) The following shall not be included in

the liquidation estate assets and shall not be

used for recovery in the liquidation:—

(a) assets owned by a third party which

are in possession of the corporate debtor,

including—

(i) assets held in trust for any third

party;

(ii) bailment contracts;

(iii) all sums due to any workman or

employee from the provident fund, the

pension fund and the gratuity fund;

(iv) other contractual arrangements

which do not stipulate transfer of title but

only use of the assets; and

(v) such other assets as may be notified

the

Central

Government

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;

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

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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;

(e) any agency of the Central, State

or Local Government including any

registration authorities;

(d) information systems for financial and

non-financial liabilities regulated under any

law for the time being in force;

(e) information systems for securities and

assets posted as security interest regulated

under any law for the time being in force;

(f) any database maintained by the Board;

and

(g) any other source as may be specified

by the Board.

(2) The creditors may require the liquidator

to provide them any financial information

relating to the corporate debtor in such

manner as may be specified.

(3) The liquidator shall provide information

referred to in sub-section (2) to such creditors

who have requested for such information

within a period of seven days from the date of

such request or provide reasons for not

providing such information.

38. Consolidation of claims.— (1) The

liquidator shall receive or collect the claims of

creditors within a period of thirty days from

the date of the commencement of the

liquidation process.

(2) A financial creditor may submit a claim

to the liquidator by providing a record of such

claim with an information utility:

Provided that where the information relating

to the claim is not recorded in the information

utility, the financial creditor may submit the

claim in the same manner as provided for the

submission of claims for the operational

creditor under sub-section (3).

(3) An operational creditor may submit a

claim to the liquidator in such form and in such

manner and along with such supporting

documents required to prove the claim as may

be specified by the Board.

(4) A creditor who is partly a financial

creditor and partly an operational creditor

shall submit claims to the liquidator to the

extent of his financial debt in the manner as

provided in sub-section (2) and to the extent

of his operational debt under sub-section (3).

(5) A creditor may withdraw or vary his

claim under this section within fourteen days

of its submission.

39. Verification of claims.— (1) The liquidator

shall verify the claims submitted under

section 38 within such time as specified by

the Board.

(2) The liquidator may require any creditor

or the corporate debtor or any other person to

produce any other document or evidence

which he thinks necessary for the purpose of

verifying the whole or any part of the claim.

40. Admission or rejection of claims.— (1)

The liquidator may, after verification of 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

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Adjudicating Authority against the decision

of the liquidator rejecting the claims within

fourteen days of the receipt of such decision.

43. Preferential transactions and relevant

time.— (1) Where the liquidator or the

resolution professional, as the case may be, is

of the opinion that the corporate debtor has at

a relevant time given a preference in such

transactions and in such manner as laid down

in sub-section (2) to any persons as referred

to in sub-section (4), he shall apply to the

Adjudicating Authority for avoidance of

preferential transactions and for, one or more

of the orders referred to in section 44.

(2) A corporate debtor shall be deemed to

have given a preference, if—

(a) there is a transfer of property or an

interest thereof of the corporate debtor for

the benefit of a creditor or a surety or a

guarantor for or on account of an antecedent

financial debt or operational debt or other

liabilities owed by the corporate debtor; and

(b) the transfer under clause (a) has the

effect of putting such creditor or a surety or

a guarantor in a beneficial position than it

would have been in the event of a

distribution of assets being made in

accordance with section 53.

(3) For the purposes of sub-section (2), a

preference shall not include the following

transfers—

(a) transfer made in the ordinary course

of the business or financial affairs of the

corporate debtor or the transferee:

(b) any transfer creating a security

interest in property acquired by the

corporate debtor to the extent that—

(i) such security interest secures new

value and was given at the time of or after

the signing of a security agreement that

contains a description of such property

as security interest and was used by

corporate debtor to acquire such

property; and

(ii) such transfer was registered with

an information utility on or before thirty

days after the corporate debtor receives

possession of such property:

Provided that any transfer made in

pursuance of the order of a court shall not,

preclude such transfer to be deemed as giving

of preference by the corporate debtor.

Explanation.— For the purpose of sub-

-section (3) of this section, “new value” means

money or its worth in goods, services, or new

credit, or release by the transferee of property

previously transferred to such transferee in a

transaction that is neither void nor voidable

by the liquidator or the resolution professional

under this Code, including proceeds of such

property, but does not include a financial debt

or operational debt substituted for existing

financial debt or operational debt.

(4) A preference shall be deemed to be given

at a relevant time, if—

(a) it is given to a related party (other than

by reason only of being an employee),

during the period of two years preceding

the insolvency commencement date; or

(b) a preference is given to a person other

than a related party during the period

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;

part) of any security interest created by the

corporate debtor;

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(d) require any person to pay such sums

in respect of benefits received by him from

the corporate debtor, such sums to the

liquidator or the resolution professional, as

the Adjudicating Authority may direct;

(e) direct any guarantor, whose financial

debts or operational debts owed to any

person were released or discharged

(in whole or in part) by the giving of the

preference, to be under such new or revived

financial debts or operational debts to that

person as the Adjudicating Authority deems

appropriate;

(f) direct for providing security or charge

on any property for the discharge of any

financial debt or operational debt under the

order, and such security or charge to have

the same priority as a security or charge

released or discharged wholly or in part by

the giving of the preference; and

(g) direct for providing the extent to

which any person whose property is so

vested in the corporate debtor, or on whom

financial debts or operational debts are

imposed by the order, are to be proved in

the liquidation or the corporate insolvency

resolution process for financial debts or

operational debts which arose from, or were

released or discharged wholly or in part by

the giving of the preference:

Provided that an order under this section

shall not—

(a) affect any interest in property which

was acquired from a person other than the

corporate debtor or any interest derived

from such interest and was acquired in good

faith and for value;

(b) require a person, who received a

benefit from the preferential transaction in

good faith and for value to pay a sum to the

liquidator or the resolution professional.

Explanation I.— For the purpose of this

section, it is clarified that where a person, who

has acquired an interest in property from

another person other than the corporate

debtor, or who has received a benefit from the

preference or such another person to whom

the corporate debtor gave the preference,—

(i) had sufficient information of the

initiation or commencement of insolvency

resolution process of the corporate debtor;

(ii) is a related party,

it shall be presumed that the interest was

acquired or the benefit was received

otherwise than in good faith unless the

contrary is shown.

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 transa-

ctions.— (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)

of section 43 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.

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46.

Relevant

period

for

avoidable

transactions.— (1) In an application for

avoiding a transaction at undervalue, the

liquidator or the resolution professional, as the

case may be, shall demonstrate that—

(i) such transaction was made with any

person within the period of one year

preceding the insolvency commencement

date; or

(ii) such transaction was made with a

related party within the period of two years

preceding the insolvency commencement

date.

(2) The Adjudicating Authority may require

an independent expert to assess evidence

relating to the value of the transactions

mentioned in this section.

47. Application by creditor in cases of

undervalued transactions.— (1) Where an

undervalued transaction has taken place and

the liquidator or the resolution professional as

the case may be, has not reported it to the

Adjudicating Authority, a creditor, member or

a partner of a corporate debtor, as the case

may be, may make an application to the

Adjudicating Authority to declare such

transactions void and reverse their effect in

accordance with this Chapter.

(2) Where the Adjudicating Authority, after

examination of the application made under

sub-section (1), is satisfied that—

(a) undervalued transactions had

occurred; and

(b)

liquidator

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;

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:

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Provided that an order under this

sections—

(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 circum-

stances in which a transactions which shall

be covered under sub-section (1).

Explanation.— For the purpose of this

section, it is clarified that any debt extended

by any person providing financial services

which is in compliance with any law for the

time being in force in relation to such debt

shall in no event be considered as an

extortionate credit transaction.

51. Orders of Adjudicating Authority in

respect of extorionate 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;

(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. Secured creditor in liquidation

proceedings.— (1) A secured creditor in the

liquidation proceedings may—

(a) relinquish its security interest to the

liquidation estate and receive proceeds from

the sale of assets by the liquidator in the

manner specified in section 53: or

(b) realise its security interest in the

manner specified in this section.

(2) Where the secured creditor realises

security interest under clause (b) of sub-

-section (1), he shall inform the liquidator of

such security interest and identify the asset

subject to such security interest to be realised.

(3) Before any security interest is realised

by the secured creditor under this section, the

liquidator shall verify such security interest

and permit the secured creditor to realise only

such security interest, the existence of which

may be proved either—

(a) by the records of such security interest

maintained by an information utility: or

(b) by such other means as may be

specified by the Board.

(4) A secured creditor may enforce, realize,

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.

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(5) If in the course of realising a secured

asset, any secured creditor faces resistance

from the corporate debtor or any person

connected therewith in taking possession of,

selling or otherwise disposing off the security,

the secured creditor may make an application

to the Adjudicating Authority to facilitate the

secured creditor to realise such security

interest in accordance with law for the time

being in force.

(6) The Adjudicating Authority, on the

receipt of an application from a secured

creditor under sub-section (5) may pass such

order as may be necessary to permit a secured

creditor to realise security interest in

accordance with law for the time being in

force.

(7) Where the enforcement of the security

interest under sub-section (4) yields an amount

by way of proceeds which is in excess of the

debts due to the secured creditor, the secured

creditor shall—

(a) account to the liquidator for such

surplus; and

(b) tender to the liquidator any surplus

funds received from the enforcement of such

secured assets.

(8) The amount of insolvency resolution

process costs, due from secured creditors who

realise their security interests in the manner

provided in this section, shall be deducted from

the proceeds of any realisation by such

secured creditors, and they shall transfer such

amounts to the liquidator to be included in the

liquidation estate.

(9) Where the proceeds of the realisation of

the secured assets are not adequate to repay

debts owed to the secured creditor, the unpaid

debts of such secured creditor shall be paid

by the liquidator in the manner specified in

clause (e) of sub-section (1) of section 53.

53.

Distribution

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;

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

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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.

54. Dissolution of corporate debtor.— (1)

Where the assets of the corporate debtor have

been completely liquidated, the liquidator

shall make an application to the Adjudicating

Authority for the dissolution of such corporate

debtor.

(2) The Adjudicating Authority shall on

application filed by the liquidator under sub-

-section (1) order that the corporate debtor

shall be dissolved from the date of that order

and the corporate debtor shall be dissolved

accordingly.

(3) A copy of an order under sub-section (2)

shall within seven days from the date of such

order, be forwarded to the authority with

which the corporate debtor is registered.

CHAPTER IV

Fast Track Corporate Insolvency Resolution

Process

55. Fast track corporation insolvency

resolution process.— (1) A corporate

insolvency resolution process carried out in

accordance with this Chapter shall be called

as fast track corporate insolvency resolution

process.

(2) An application for fast track corporate

insolvency resolution process may be made

in respect of the following corporate debtors,

namely:—

(a) a corporate debtor with assets and

income below a level as may be notified by

the Central Government; or

(b) a corporate debtor with such class of

creditors or such amount of debt as may be

notified by the Central Government; or

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 percent of the voting share.

(3) On receipt of an application under sub-

-section (2), if the Adjudicating Authority is

satisfied that the subject matter of the case is

such that fast track corporate insolvency

resolution process cannot be completed within

a period of ninety days, it may, by order, extend

the duration of such process beyond the said

period of ninety days by such further period,

as it thinks fit, but not 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.

18 of 2013.

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57. Manner of initiating fast track corporate

insolvency

resolution

process.—

application for fast track corporate insolvency

resolution process may be filed by a creditor

or corporate debtor as the case may be,

alongwith—

(a) the proof of the existence of default as

evidenced by records available with an

information utility or such other means as

may be specified by the Board; and

(b) such other information as may be

specified by the Board to establish that the

corporate debtor is eligible for fast track

corporate insolvency resolution process.

Manner of initiating fast track corporate

insolvency resolution process.

58. Applicability of Chapter II to this

Chapter.— The process for conducting a

corporate insolvency resolution process under

Chapter II and the provisions relating to

offences and penalties under Chapter VII shall

apply to this Chapter as the context 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;

under sub-clause (a), there shall be—

(i) a special resolution of the members

of the company in a general meeting

requiring the company to be liquidated

voluntarily and appointing an insolvency

professional to act as the liquidator; or

(ii) a resolution of the members of the

company in a general meeting requiring

the company to be liquidated voluntarily

as a result of expiry of the period of its

duration, if any, fixed by its articles or on

the occurrence of any event in respect of

which the articles provide that the

company shall be dissolved, as the case

may be and appointing an insolvency

professional to act as the liquidator:

Provided that the company owes any debt

to any person, creditors representing two-

thirds in value of the debt of the company

shall approve the resolution passed under

sub-clause (c) within seven days of such

resolution.

(4) The company shall notify the Registrar

of Companies and the Board about the

resolution under sub-section (3) to liquidate

the company within seven days of such

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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 bankruptcy of a personal

guarantor of such corporate debtor shall be

filed before such National Company Law

Tribunal.

(3) An insolvency resolution process or

bankruptcy proceeding of a personal

guarantor 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).

(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

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 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.

36 of 1963.

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61. Appeals and Appellate

Authority.— (1) Notwithstanding

anything to the contrary contained

under the Companies Act 2013, any

person aggrieved by the order of the

Adjudicating Authority under this

part may prefer an appeal to the

National Company Law Appellate

Tribunal.

(2) Every appeal under sub-section (1) shall

be filed within thirty days before the National

Company Law Appellate Tribunal:

Provided that the National Company Law

Appellate Tribunal may allow an appeal to be

filed after the expiry of the said period of thirty

days if it is satisfied that there was sufficient

cause for not filing the appeal but such period

shall not exceed fifteen days.

(3) An appeal against an order approving a

resolution plan under section 31 may be filed

on the following grounds, namely:—

(i) the approved resolution plan is in

contravention of the provisions of any law

for the time being in force;

(ii) there has been material irregularity

in exercise of the powers by the resolution

professional

during

the

corporate

insolvency resolution period;

(iii) the debts owed to operational

creditors of the corporate debtor have not

been provided for in the resolution plan in

the manner specified by the Board;

(iv) the insolvency resolution process

costs have not been provided for repayment

in priority to all other debts; or

(v) the resolution plan does not comply

with any other criteria specified by the

Board.

(4) An appeal against a liquidation order

passed under section 33 may be filed on

grounds of material irregularity or fraud

committed in relation to such a liquidation

order.

62. Appeal to Supreme Court.— (1) Any

person aggrieved by an order of the National

Company Law Appellate Tribunal may file an

appeal to the Supreme Court on a question of

law arising out of such order under this Code

within forty-five days from the date of receipt

of such order.

(2) The Supreme Court may, if it is satisfied

that a person was prevented by sufficient

cause from filing an appeal within forty-five

days, allow the appeal to be filed within a

further period not exceeding fifteen days.

63. Civil court not to have jurisdiction.— No

civil court or authority shall have jurisdiction

to entertain any suit or proceedings in respect

of any matter on which National Company

Law Tribunal or the National Company Law

Appellate Tribunal has jurisdiction under this

Code, Civil court not to have jurisdiction.

64. Expeditious disposal of applications.—

(1) Where an application is not disposed of or

an order is not passed within the period

specified in this Code, the National Company

Law Tribunal or the National Company Law

Appellate Tribunal, as the case may be, shall

record the reasons for not doing so within the

period so specified; and the President of the

National Company Law Tribunal or the

Chairperson of the National Company Law

Appellate Tribunal, as the case may be, may,

after taking into account the reasons so

recorded, extend the period specified in the

Act but not exceeding ten days.

(2) No injunction shall be granted by any

court, tribunal or authority in respect of any

action taken, or to be taken, in pursuance of

any power conferred on the National Company

Law Tribunal or the National Company Law

Appellate Tribunal under this Code.

65. Fraudulent or malicious initiation of

proceedings.— (1) If, any person initiates the

insolvency resolution process or liquidation

proceedings fraudulently or with malicious

intent for any purpose other than for the

resolution of insolvency, or liquidation, as the

case may be, the Adjudicating Authority may

impose upon such person a penalty which

shall not be less than one lakh rupees, but may

extend to one crore rupees.

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(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.

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 debtor, as the case

may be, shall be liable to make such

contribution to the assets of the corporate

debtor as it may deem fit, if—

(a) before the insolvency commencement

date, such director or partner knew or

ought to have known that the there was no

reasonable prospect of avoiding the

commencement of a corporate insolvency

resolution process in respect of such

corporate debtor; and

(b) such director or partner did not

exercise due diligence in minimising the

potential loss to the creditors of the

corporate debtor.

Explanation.— For the purposes of this

section a director or partner of the corporate

debtor, as the case may be, shall be

deemed to have exercised due diligence if

such diligence was reasonably expected of a

person carrying out the same functions as are

carried out by such director or partner, as the

case may be, in relation to the corporate

debtor.

67. Proceedings under section 66.— (1)

Where the Adjudicating Authority has passed

an order under sub-section (1) or sub-section

(2) of section 66, as the case may be, it may

give such further directions as it may deem

appropriate for giving effect to the order, and

in particular, the Adjudicating Authority

may—

(a) provide for the liability of any person

under the order to be a charge on any debt

or obligation due from the corporate debtor

to him, or on any mortgage or charge or any

interest in a mortgage or charge on assets

of the corporate debtor held by or vested in

him, or any person on his behalf, or any

person claiming as assignee from or

through the person liable or any person

acting on his behalf; and

(b) from time to time, make such further

directions as may be necessary for

enforcing any charge imposed under this

section.

Explanation.— For the purposes of this

section, “assignee” includes a person to whom

or in whose favour, by the directions of the

person held liable under clause (a) the debt,

obligation, mortgage or charge was created,

issued or transferred or the interest created,

but does not include an assignee for valuable

consideration given in good faith and without

notice of any of the grounds on which the

directions have been made.

(2) Where the Adjudicating Authority has

passed an order under sub-section (1) or sub-

-section (2) of section 66, as the case may be,

in relation to a person who is a creditor of the

corporate debtor, it may, by an order, direct

that the whole or any part of any debt owed

by the corporate debtor to that person and any

interest thereon shall rank in the order of

priority of payment under section 53 after all

other debts owed by the corporate debtor.

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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

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);

(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.— On or after the insolvency

commencement date, if an officer of the

corporate debtor or the corporate debtor—

(a) has made or caused to be made any

gift or transfer of, or charge on, or has

caused or connived in the execution of a

decree or order against, the property of the

corporate debtor;

(b) has concealed or removed any part of

the property of the corporate debtor within

two months before the date of any

unsatisfied judgment, decree or order for

payment of money obtained against the

corporate debtor,

such officer of the corporate debtor or the

corporate debtor, as the case may be, shall be

punishable with imprisonment for a term

which shall not be less than one year, but

which may extend to five years, or with fine,

which shall not be less than one lakh rupees,

but may extend to one crore rupees, or with

both:

Provided that a person shall not be

punishable under this section if the acts

mentioned in clause (a) were committed more

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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

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 the 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 commence-

ment date, makes a false representation or

commits any fraud for the purpose of

obtaining the consent of the creditors of the

corporate debtor or any of them to an

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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 commence-

ment

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 repayment 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 repayment of the unpaid

operational debt; or

(b) any person who knowingly and

wilfully authorised or permitted such

concealment under clause (a),

such operational creditor or person, as the

case may be, shall be punishable with

imprisonment for a term which shall not be

less than one year but may extend to five years

or with fine which shall not be less than one

lakh rupees but may extend to one crore

rupees, or with both.

77. Punishment for providing false

information in application made by corporate

debtor.— Where—

(a) a corporate debtor provides

information in the application under section

10 which is false in material particulars,

knowing it to be false and omits any

material fact, knowing it to be material; or

(b) any person who knowingly and

wilfully authorised or permitted the

furnishing of such information under sub-

-clause (a),

such corporate debtor or person, as the

case may be, shall be punishable with

imprisonment for a term which shall not be

less than three years, but which may extend

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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 and 76, an application

shall be deemed to be false in material

particulars in case the facts mentioned or

omitted in the application, if true, or not

omitted from the application as the case may

be, would have been sufficient to determine

the existence of a default under this Code.

PART III

Insolvency Resolution and Bankruptcy for

Individuals and Partnership Firms

CHAPTER I

Preliminary

78. Application.— This Part shall apply to

matters relating to fresh start, insolvency and

bankruptcy of individuals and partnership

firms where the amount of the default is not

less than one thousand rupees:

Provided that the Central Government may,

by notification, specify the minimum amount

of default of higher value which shall not be

more than one lakh rupees.

79. Definitions.— In this Part, unless the

context otherwise requires,—

(1) “Adjudicating Authority”

means the Debt Recovery Tribunal

constituted under sub-section (1)

of section 3 of the Recovery of

Debts Due to Banks and Financial

Institutions Act, 1993;

(2) “associate” of the debtor means—

(a) a person who belongs to the

immediate family of the debtor;

(b) a person who is a relative of the

debtor or a relative of the spouse of the

debtor;

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 sub-

-section, “relative”, with reference to any

person, means anyone who is related to

another, if—

(i) they are members of a Hindu Undivided

Family;

(ii) one person is related to the other in

such manner as may be prescribed;

(3) “bankrupt” means—

(a) a debtor who has been adjudged

as bankrupt by a bankruptcy order under

section 126;

(b) each of the partners of a firm, where

a bankruptcy order under section 126 has

been made against a firm; or

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

51 of 1993.

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date but before his discharge by reason

of any transaction entered into before the

bankruptcy commencement date; and

debt under section 171;

(6) “bankruptcy commencement date”

means the date on which a bankruptcy

order is passed by the Adjudicating

Authority under section 126;

(7) “bankruptcy order” means an order

passed by an Adjudicating Authority under

section 126;

(8) “bankruptcy process” means a

process against a debtor under Chapters IV

and V of this Part;

(9) “bankruptcy trustee” means the

insolvency professional appointed as a

trustee for the estate of the bankrupt under

section 125;

(10) “Chapter” means a chapter under

this Part;

(11) “committee of creditors” means a

committee constituted under section 134;

(12) “debtor” includes a judgment-

-debtor;

(13) “discharge order” means an order

passed by the Adjudicating Authority

discharging the debtor under sections 92,

119 and section 138, as the case may be;

(14) “excluded assets” for the purposes

of this part includes—

(a) unencumbered tools, books,

vehicles and other equipment as are

necessary to the debtor or bankrupt for

his personal use or for the purpose of his

employment, business or vocation,

(b)

unencumbered

furniture,

household equipment and provisions as

are necessary for satisfying the basic

domestic needs of the bankrupt and his

immediate family;

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;

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;

(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

9 to 1932.

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three months prior to the date of the

application for fresh start process;

(20) “repayment plan” means a plan

prepared by the debtor in consultation with

the resolution professional under section

105 containing a proposal to the committee

of creditors for restructuring of his debts or

affairs;

(21) “resolution professional” means an

insolvency professional appointed under

this part as a resolution professional for

conducting the fresh start process or

insolvency resolution process;

(22) “undischarged bankrupt” means a

bankrupt who has not received a discharge

order under section 138.

CHAPTER II

Fresh Start Process

80. Eligibility for making an application.—

(1) A debtor, who is unable to pay his debt

and fulfils the conditions specified in sub-

-section (2), shall be entitled to make an

application for a fresh start for discharge of

his qualifying debt under this Chapter.

(2) A debtor may apply, either personally or

through a resolution professional, for a fresh

start under this Chapter in respect of his

qualifying debts to the Adjudicating Authority

if—

(a) the gross annual income of the debtor

does not exceed sixty thousand rupees;

(b) the aggregate value of the assets of

the debtor does not exceed twenty thousand

rupees;

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;

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;

(j) the reasons for making the application;

(g) the particulars of any legal

proceedings which, to the debtor’s

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knowledge has been commenced against

him;

(h) the confirmation that no previous fresh

start order under this Chapter has been

made in respect of the qualifying debts of

the debtor in the preceding twelve months

of the date of the application.

82. Appointment of resolution profe-

ssional.— (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—

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(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

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;

is undergoing a fresh start process;

(d) be required to inform prior to entering

into any financial or commercial transaction

of such value as may be notified by the

Central Government, either individually or

jointly, that he is undergoing a fresh start

process;

(e) disclose the name under which he

enters into business transactions, if it is

different from the name in the application

admitted under section 84;

(f) not travel outside India except with the

permission of the Adjudicating Authority.

(4) The moratorium ceases to have effect at

the end of the period of one hundred and

eighty days beginning with the date of

admission unless the order admitting the

application is revoked under sub-section (2)

of section 91.

86. Objections by creditor and their

examination by resolution professional.— (1)

Any creditor mentioned in the order of the

Adjudicating Authority under section 84 to

whom a qualifying debt is owed may, within

a period of ten days from the date of receipt of

the order under section 84, object only on the

following grounds, namely:—

(a) inclusion of a debt as a qualifying debt;

(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.

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(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

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

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

(ii) any change in financial circum-

stances after the date of application,

where such change has an impact on the

fresh start process.

89. Replacement of resolution profe-

ssional.— (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.

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(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

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.

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

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.

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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;

process; or

(d) undergoing a bankruptcy process.

(5) A debtor shall not be eligible to apply

under sub-section (1) if an application under

this Chapter has been admitted in respect of

the debtor during the period of twelve months

preceding the date of submission of the

application under this section.

(6) The application referred to in sub-

-section (1) shall be in such form and manner

and accompanied with such fee as may be

prescribed.

95. Application by creditor to initiate

insolvency resolution process.— (1) A creditor

may apply either by himself, or jointly with

other creditors, or through a resolution

professional to the Adjudicating Authority for

initiating an insolvency resolution process

under this section by submitting an

application.

(2) A creditor may apply under sub-section

(1) in relation to any partnership debt owed

to him for initiating an insolvency resolution

process against—

(a) any one or more partners of the firm;

(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

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)

interim-moratorium

shall

commence on the date of the application in

relation to all the debts and shall cease to

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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

resolution

professional.— (1) If the application under

section 94 or 95 is filed through a resolution

professional, the Adjudicating Authority shall

direct the Board within seven days of the date

of the application to confirm that there are no

disciplinary proceedings pending against

resolution professional.

(2) The Board shall within seven days of

receipt of directions under sub-section (1)

communicate to the Adjudicating Authority in

writing either—

(a) confirming the appointment of the

resolution professional; or

(b) rejecting the appointment of the

resolution professional and nominating

another resolution professional for the

insolvency resolution process.

(3) Where an application under section 94

or 95 is filed by the debtor or the creditor

himself, as the case may be and not through

the resolution professional, the Adjudicating

Authority shall direct the Board, within seven

days of the filing of such application, to

nominate a resolution professional for the

insolvency resolution process.

(4) The Board shall, nominate a resolution

professional within ten days of receiving the

direction issued by the Adjudicating Authority

under sub-section (3).

(5) The Adjudicating Authority shall by

order appoint the resolution professional

recommended under sub-section (2) or as

nominated by the Board under sub-section (4).

(6) A resolution professional appointed by

the Adjudicating Authority under sub-section

(5) shall be provided a copy of the application

for insolvency resolution process.

98.

Replacement

resolution

professional.— (1) Where the debtor or the

creditor is of the opinion that the resolution

professional appointed under section 97 is

required to be replaced, he may apply to the

Adjudicating Authority for the replacement of

the such resolution professional.

(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

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.

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(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.

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

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 repo 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

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fourteen days from the date of submission of

the report under section 99 pass an order

either admitting or rejecting the application

referred to in section 94 or 95, as the case may

be.

(2) Where the Adjudicating Authority

admits an application under sub-section (1),

it may, on the request of the resolution

professional, issue instructions for the purpose

of conducting negotiations between the debtor

and creditors and for arriving at a repayment

plan.

(3) The Adjudicating Authority shall provide

a copy of the order passed under sub-section

(1) along with the report of the resolution

professional and the application referred to in

section 94 or 95, as the case may be, to the

creditors within seven days from the date of

the said order.

(4) If the application referred to in section

94 or 95, as the case may be, is rejected by

the Adjudicating Authority on the 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

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

(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

Adjudicating Authority.

103. Resistering of claims by creditors.— (1)

The creditors shall register claims with the

resolution professional by sending details of

the claims by way of electronic communica-

tions or through courier, speed post or

registered letter.

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(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.

(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

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;

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

being

approved

and

implemented; and

meeting of the creditors, if required, to

consider the repayment plan:

Provided that where the resolution

professional recommends that a meeting of the

creditors is not required to be summoned,

reasons for the same shall be provided.

(3) The report referred to in sub-section (2)

shall also specify the date on which, and the

time and place at which, the meeting should

be held if he is of the opinion that a meeting of

the creditors should be summoned.

(4) For the purposes of sub-section (3)—

(a) the date on which the meeting is to

be held shall be not less than fourteen days

and not more than twenty eight days from

the date of submission of report under

sub-section (1);

(b) the resolution professional shall

consider the convenience of creditors in

fixing the date and venue of the meeting of

the creditors.

107. Summoning of meeting of creditors.—

(1) The resolution professional shall issue a

notice calling the meeting of the creditors at

least fourteen days before the date fixed for

such meeting.

(2) The resolution professional shall send the

notice of the meeting to the list of creditors

prepared under section 104.

(3) The notice sent under sub-section (1)

shall state the address of the Adjudicating

Authority to which the repayment plan and

report of the resolution professional on the

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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;

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.

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.

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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;

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

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.

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

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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

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 implementa-

tion of the repayment plan.

(3) The discharge order shall be forwarded

to the Board, for the purpose of recording

entries in the register referred to in section

196.

(4) The discharge order under sub-section

(3) shall not discharge any other person from

any liability in respect of his debt.

120. Standard of conduct.— The resolution

professional shall perform his functions and

duties in compliance with the code of conduct

provided under section 208.

CHAPTER IV

Bankruptcy Order for Individuals and

Partnership Firms

121. Application for bankruptcy.— (1) An

application for bankruptcy of a debtor may

be made, by a creditor individually or jointly

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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

by an Adjudicating Authority under

sub-section 3 of section 118.

(2) All 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

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;

debtor to the creditor as on the date of the

application for bankruptcy; and

(d) such other information as may be

prescribed.

(2) An application under sub-section (1)

made in respect of a debt which is secured,

shall be accompanied with—

(a) a statement by the creditor having the

right to enforce the security that he shall,

in the event of a bankruptcy order being

made, give up his security for the benefit of

all the creditors of the bankrupt; or

(b) a statement by the creditor stating—

(i) that the application for bankruptcy

is only in respect of the unsecured part

of the debt; and

(ii) an estimated value of the unsecured

part of the debt.

(3) If a secured creditor makes an

application for bankruptcy and submits a

statement under clause (b) of sub-section (2),

the secured and unsecured parts of the debt

shall be treated as separate debts.

(4) The creditor may propose an insolvency

professional as the bankruptcy trustee in the

application for bankruptcy.

(5) An application for bankruptcy under

sub-section (1), in case of a deceased

debtor, may be filed against his legal

representatives.

(6) The application for bankruptcy shall be

in such form and manner and accompanied

by such fee as may be prescribed.

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(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 sections 122 or 123,—

(a)

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 commence-

ment 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

(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,—

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(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;

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 the such form and manner as

may be prescribed.

(3) Where the bankrupt is a firm, its partners

on the date of the order shall submit a joint

statement of financial position of the firm, and

each partner of the firm shall submit a

statement of his financial position.

(4) The bankruptcy trustee may require the

bankrupt or any other person to submit in

writing further information explaining or

modifying any matter contained in the

statement of financial position.

130. Public notice inviting claims from

creditors.— (1) The Adjudicating Authority

shall—

(a) send notices within ten days of the

bankruptcy commencement date, to the

creditors mentioned in—

(i) the statement of affairs submitted by

the bankrupt under section 129; or

(ii) the application for bankruptcy

submitted by the bankrupt under section

122.

(b) issue a public notice inviting claims

from creditors.

(2) The public notice under clause (b) of

sub-section (1) shall include the last date up

to which the claims shall be submitted and

such other matters and details as may be

prescribed and shall be—

(a) published in leading newspapers, one

in English and another in vernacular having

sufficient circulation where the bankrupt

resides;

(b) affixed on the premises of the

Adjudicating Authority; and

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.

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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;

the proxy voting may take place.

(3) The proxy voting, including electronic

proxy voting shall take place in such manner

and form as may be specified.

134. Conduct of meeting of creditors.— (1)

The bankruptcy trustee shall be the convener

of the meeting of the creditors summoned

under section 133.

(2) The bankruptcy trustee shall decide the

quorum for the meeting of the creditors, and

conduct the meeting only if the quorum is

present.

(3) The following business shall be

conducted in the meeting of the creditors in

which regard a resolution may be passed,

namely:—

(a) the establishment of a committee of

creditors;

(b) any other business that the

bankruptcy trustee thinks fit to be

transacted.

(4) The bankruptcy trustee shall cause the

minutes of the meeting of the creditors to be

recorded, signed and retained as a part of the

records of the bankruptcy process.

(5) The bankruptcy trustee shall not adjourn

the meeting of the creditors for any purpose

for more than seven days at a time.

135. Voting rights of creditors.— (1) Every

creditor mentioned in the list under section

132 or his proxy shall be entitled to vote in

respect of the resolutions in the meeting of the

creditors in accordance with the voting share

assigned to him.

(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.

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136. Administration and distribution of

estate of bankrupt.— The bankruptcy trustee

shall conduct the administration and

distribution of the estate of the bankrupt in

accordance with the provisions of Chapter V.

137. Completion of administration.— (1) The

bankruptcy trustee shall convene a meeting

of the committee of creditors on completion of

the administration and distribution of the

estate of the bankrupt in accordance with the

provisions of Chapter V.

(2) The bankruptcy trustee shall provide the

committee of creditors with a report of the

administration of the estate of the bankrupt in

the meeting of the said committee.

(3) The committee of creditors shall approve

the report submitted by the bankruptcy

trustee under sub-section (2) within seven

days of the receipt of the report and determine

whether the bankruptcy trustee should be

released under section 148.

(4) The bankruptcy trustee shall retain

sufficient sums from the estate of the bankrupt

to meet the expenses of convening and

conducting the meeting required under

this section during the administration of the

estate.

138. Discharge order.— (1) The bankruptcy

trustee shall apply to the Adjudicating

Authority for a discharge order—

(a) on the expiry of one year from the

bankruptcy commencement date; or

(b) within seven days of the approval of

the committee of creditors of the completion

of administration of the estates of the

bankrupt under section 137, where such

approval is obtained prior to the period

mentioned in clause (a).

(2) The Adjudicating Authority shall pass a

discharge order on an application by the

bankruptcy trustee under sub-section (1).

(3) A copy of the discharge order shall be

provided to the Board for the purpose of

recording an entry in the register referred to

in section 196.

139. Effect of discharge.— The discharge

order under sub-section (2) of section 138 shall

release the bankrupt from all the bankruptcy

debt:

Provided that discharge shall not—

(a) affect the functions of the bankruptcy

trustee; or

(b) affect the operation of the provisions

of Chapters IV and V of Part III; or

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;

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.

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141. Restrictions on bankrupt.— (1) A

bankrupt, from the bankruptcy commence-

ment 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;

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.

(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 trustee.— (1) A

bankruptcy trustee appointed for conducting

the bankruptcy process shall charge such fees

as may be specified in proportion to the value

of the estate of the bankrupt.

(2) The fees for the conduct of the

bankruptcy process shall be paid to the

bankruptcy trustee from the distribution of the

estate of the bankrupt in the manner provided

in section 178.

145. Replacement of bankruptcy trustee.—

(1) Where Committee of creditors is of the

opinion that at any time during the

bankruptcy process, a bankruptcy trustee

appointed under section 125 is required to be

replaced, it may replace him with another

bankruptcy trustee in the manner provided

under this section.

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(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.

(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 practicing 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

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of the bankruptcy trustee for any reason other

than his replacement or resignation, the

vacancy shall be filled in accordance with the

provisions of this section.

(2) In the event of the occurrence of vacancy

referred to in sub-section (1), the Adjudicating

Authority shall direct the Board for

replacement of a bankruptcy trustee.

(3) The Board shall, within ten days of the

direction of the Adjudicating Authority under

sub-section (2), recommend a bankruptcy

trustee as a replacement.

(4) The Adjudicating Authority shall appoint

the bankruptcy trustee recommended by the

Board under sub-section (3) within fourteen

days of receiving the recommendation.

(5) The earlier bankruptcy trustee shall

deliver possession of the estate of the bankrupt

to the bankruptcy trustee appointed under

sub-section (4), on the date of his appointment.

(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

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;

of any of the following events which have

occurred after the bankruptcy commence-

ment date,—

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(i) acquisition of any property by the

bankrupt;

(ii) devolution of any property upon the

bankrupt;

(iii) increase in the income of the

bankrupt;

(d) doing all other things as may be

prescribed.

(2) The bankrupt shall give notice of the

increase in income or acquisition or devolution

of property under clause (c) of sub-section (1)

within seven days of such increase,

acquisition or devolution.

(3) The bankrupt shall continue to

discharge the duties under sub-section (1)

other than the duties under clause (c) 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;

(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;

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;

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;

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(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

other

arrangement as may be considered

expedient, with the creditors;

(h)

make

compromise

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;

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 commence-

ment 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 commence-

ment date or before the date of the discharge

order passed under section 138; and

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;

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.

(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 commence-

ment date in—

(a) good faith;

(b) for value; and

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application for bankruptcy.

(3) For the purposes of this section, the term

“property” means all the property of the

debtor, whether or not it is comprised in the

estate of the bankrupt, but shall not include

property held by the debtor in trust for any

other person.

159. After-acquired property of bankrupt.—

(1) The bankruptcy trustee shall be entitled to

claim for the estate of the bankrupt, any after-

-acquired property by giving a notice to the

bankrupt.

(2) A notice under sub-section (1) shall not

be served in respect of—

(a) excluded assets; or

(b) any property which is acquired by

or devolves upon the bankrupt after a

discharge order is passed under section 138.

(3) The notice under sub-section (2) shall

be given within fifteen days from the day on

which the acquisition or devolution of the

after-acquired property comes to the

knowledge of the bankruptcy trustee.

(4) For the purposes of sub-section (3)—

(a) anything which comes to the

knowledge of the bankruptcy trustee shall

be deemed to have come to the knowledge

of the successor of the bankruptcy trustee

at the same time; and

(b) anything which comes to the

knowledge of a person before he is

appointed as a bankruptcy trustee shall be

deemed to have come to his knowledge on

the date of his appointment as bankruptcy

trustee.

(5) The bankruptcy trustee shall not be

entitled, by virtue of this section, to claim from

any person who has acquired any right over

after-acquired property, in good faith, for value

and without notice of the bankruptcy.

(6) A notice may be served after the expiry

of the period under sub-section (3) only with

the approval of the Adjudicating Authority.

Explanation.— For the purposes of this

section, the term “after-acquired property”

means any property which has been acquired

by or has devolved upon the bankrupt after

the bankruptcy commencement date.

160. Onerous property of bankrupt.— (1)

The bankruptcy trustee may, by giving notice

to the bankrupt or any person interested in

the onerous property, disclaim any onerous

property which forms a part of the estate of

the bankrupt.

(2) The bankruptcy trustee may give the

notice under sub-section (1) notwithstanding

that he has taken possession of the onerous

property, endeavoured to sell it or has

exercised rights of ownership in relation to it.

(3) A notice of disclaimer under sub-section

(1) shall—

(a) determine, as from the date of such

notice, the rights, interests and liabilities of

the bankrupt in respect of the onerous

property disclaimed;

(b) discharge the bankruptcy trustee from

all personal liability in respect of the 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.

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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

dwelling house, any person who on the

date of application for bankruptcy was

in occupation of or entitled to occupy that

dwelling house.

(2) The Adjudicating Authority may on an

application under sub-section (1) make an

order for the vesting of the disclaimed property

in, or for its delivery to any of the persons

mentioned in sub-section (1).

(3) The Adjudicating Authority shall not

make an order in favour of a person who has

made an application under clause (b) of sub-

-section (1) except where it appears to the

Adjudicating 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

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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

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;

(d) it is for a consideration, the value of

which in money or money’s worth is

significantly less than the value in money

or money’s worth of the consideration

provided by the bankrupt.

165. Preference transactions.— (1) The

bankruptcy trustee may apply to the

Adjudicating Authority for an order under this

section if a bankrupt has given a preference

to any person.

(2) The transaction giving preference to an

associate of the bankrupt under sub-section

(1) should have been entered into by the

bankrupt with the associate during the period

of two years ending on the date of the

application for bankruptcy.

(3) Any transaction giving preference not

covered under sub-section (2) should have

been entered into by the bankrupt during the

period of six months ending on the date of the

application for bankruptcy.

(4) The transaction giving preference under

sub-section (2) or under sub-section (3) should

have caused the bankruptcy process to be

triggered.

(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

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

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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;

entered into the transaction at an

undervalue or for giving preference;

(d) without notice that the bankrupt has

filed an application for bankruptcy or a

bankruptcy order has been passed; and

(e) by any person who at the time of

acquiring the interest or receiving the

benefit was not an associate of the

bankrupt.

(3) Any sum required to be paid to the

bankruptcy trustee under sub-section (1) shall

be included in the estate of the bankrupt.

167. Extortionate credit transactions.— (1)

Subject to sub-section (6), on an application

by the bankruptcy trustee, the Adjudicating

Authority may make an order under this

section in respect of extortionate credit

transactions to which the bankrupt is or has

been a party.

(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;

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

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(b) which is unconscionable under the

principles of law relating to contracts.

(6) Any debt extended by a person

regulated for the provision of financial services

in compliance with the law in force in relation

to such debt, shall not be considered as an

extortionate credit transaction under this

section.

168. Obligations under contracts.— (1) This

section shall apply where a contract has

been entered into by the bankrupt with a

person before the bankruptcy commencement

date.

(2) Any party to a contract, other than the

bankrupt under sub-section (1), may apply to

the Adjudicating Authority for—

(a) an order discharging the obligations

of the applicant or the bankrupt under the

contract; and

(b) payment of damages by the party or

the bankrupt, for non-performance of the

contract or otherwise.

(3) Any damages payable by the bankrupt

by virtue of an order under clause (b) of sub-

-section (2) shall be provable as bankruptcy

debt.

(4) When a bankrupt is a party to the

contract under this section jointly with another

person, that person may sue or be sued in

respect of the contract without joinder of the

bankrupt.

169. Continuance of proceedings on death

of bankrupt.— If a bankrupt dies, the

bankruptcy proceedings shall, continue as if

he were alive.

170. Administration of estate of deceased

bankrupt.— (1) All the provisions of Chapter

V relating to the administration and

distribution of the estate of the bankrupt shall,

so far as the same are applicable, apply to the

administration of the estate of a deceased

bankrupt.

(2) While administering the estate of a

deceased bankrupt, the bankruptcy trustee

shall have regard to the claims by the legal

representatives of the deceased bankrupt

to payment of the proper funeral and

testamentary expenses incurred by them.

(3) The claims under sub-section (2) shall

rank equally to the secured creditors in the

priority provided under section 178.

(4) If, on the administration of the estate of

a deceased bankrupt, any surplus remains in

the hands of the bankruptcy trustee after

payment in full of all the debts due from the

deceased bankrupt, together with the costs

of the administration and interest as provided

under section 178, such surplus shall be paid

to the legal 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;

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.

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(6) The value assigned by the bankruptcy

trustee under sub-section (5) shall be the

amount provable by the concerned creditor.

(7) A creditor may prove for a debt where

payment would have become due at a date

later than the bankruptcy commencement

date as if it were owed presently and may

receive dividends in a manner as may be

prescribed.

(8) Where the bankruptcy trustee serves a

notice under sub-section (1) and the person

on whom the notice is served does not file a

proof of security within thirty days after the

date of service of the notice, the bankruptcy

trustee may, with leave of the Adjudicating

Authority, sell or dispose of any property that

was subject to the security, free of that security.

172. Proof of debt by secured creditors.—

(1) Where a secured creditor realises his

security, he may produce proof of the balance

due to him.

(2) Where a secured creditor surrenders his

security to the bankruptcy trustee for the

general benefit of the creditors, he may

produce proof of his whole claim.

173. Mutual credit and set-off.— (1) Where

before the bankruptcy commencement date,

there have been mutual dealings between the

bankrupt and any creditor, the bankruptcy

trustee shall—

(a) take an account of what is due from

each party to the other in respect of the

mutual dealings and the sums due from one

party shall be set-off against the sums due

from the other; and

(b) only the balance shall be provable as

a bankruptcy debt or as the amount payable

to the bankruptcy trustee as part of the

estate of the bankrupt.

(2) Sums due from the bankrupt to another

party shall not be included in the account

taken by the bankruptcy trustee under

sub-section (1), if that other party had notice

at the time they became due that an

application for bankruptcy relating to the

bankrupt was pending.

174. Distribution of interim dividend.— (1)

Whenever the bankruptcy trustee has

sufficient funds in his hand, he may declare

and distribute interim dividend among the

creditors in respect of the bankruptcy debts

which they have respectively proved.

(2) Where the bankruptcy trustee has

declared any interim dividend, he shall give

notice of such dividend and the manner in

which it is proposed to be distributed.

(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;

(d) expenses necessary for the adminis-

tration 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

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committee of creditors, the committee may,

for the purpose of enabling him to meet his

expenses out of the estate of the bankrupt,

ratify the act of the bankruptcy trustee.

(4) The committee of the creditors shall not

ratify the act of the bankruptcy trustee under

sub-section (3) unless it is satisfied that the

bankruptcy trustee acted in a case of urgency

and has sought its ratification without undue

delay.

176. Final dividend.— (1) Where the

bankruptcy trustee has realised the entire

estate of the bankrupt or so much of it as could

be realised in the opinion of the bankruptcy

trustee, he shall give notice—

(a) of his intention to declare a final

dividend; or

(b) that no dividend or further dividend

shall be declared.

(2) The notice under sub-section (1) shall

contain such particulars as may be prescribed

and shall require all claims against the estate

of the bankrupt to be established by a final

date specified in the notice.

(3) The Adjudicating Authority may, on the

application of any person interested in the

administration of the estate of the bankrupt,

postpone the final date referred to in

sub-section (2).

(4) After the final date referred to in sub-

-section (2), the bankruptcy trustee shall—

(a) defray any outstanding expenses of

the bankruptcy out of the estate of the

bankrupt; and

(b) if he intends to declare a final dividend,

declare and distribute that dividend among

the creditors who have proved their debts,

without regard to the claims of any other

persons.

(5) If a surplus remains after payment in full

with interest to all the creditors of the bankrupt

and the payment of the expenses of the

bankruptcy, the bankrupt shall be entitled to

the surplus.

(6) Where a bankruptcy order has been

passed in respect of one partner in a firm, a

creditor to whom the bankrupt is indebted

jointly with the other partners in the firm or

any of them shall not receive any dividend out

of the separate property of the bankrupt until

all the separate creditors have received the

full amount of their respective debts.

177. Claims of creditors.— (1) A creditor

who has not proved his debt before the

declaration of any dividend is not entitled to

disturb, by reason that he has not participated

in it, the distribution of that dividend or any

other dividend declared before his debt was

proved, but—

(a) when he has proved the debt, he shall

be entitled to be paid any dividend or

dividends which he has failed to receive,

out of any money for the time being available

for the payment of any further dividend;

and

(b) any dividend or dividends payable to

him shall be paid before that money is

applied to the payment of any such further

dividend.

(2) No action shall lie against the bankruptcy

trustee for a dividend, but if the bankruptcy

trustee refuses to pay a dividend payable

under sub-section (1), the Adjudicating

Authority may order him to—

(a) pay the dividend; and

(b) pay, out of his own money—

(i) interest on the dividend; and

(ii) the costs of the proceedings in

which the order to pay has been made.

178. Priority of payment of debts.— (1)

Notwithstanding anything to the contrary

contained in any law enacted by the

Parliament or the State Legislature for the time

being in force, in the distribution of the final

dividend, the following debts shall be paid in

priority to all other debts—

(a) firstly, the costs and expenses incurred

by the bankruptcy trustee for the

bankruptcy process in full;

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(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;

owed to employees, other than workmen,

of the bankrupt for the period of twelve

months

preceding

the

bankruptcy

commencement date;

(d) fourthly, any amount due to the

Central Government and the State

Government including the amount to be

received on account of Consolidated Fund

of India and the Consolidated Fund of a

State, if any, in respect of the whole or any

part of the period of two years preceding

the bankruptcy commencement date;

(e) lastly, all other debts and dues owed

by the bankrupt including unsecured debts.

(2) The debts in each class specified in sub-

-section (1) shall rank in the order mentioned

in that sub-section but debts of the same class

shall rank equally amongst themselves, and

shall be paid in full, unless the estate of the

bankrupt is insufficient to meet them, in which

case they shall abate in equal proportions

between themselves.

(3) Where any creditor has given any

indemnity or has made any payment of

moneys by virtue of which any asset of the

bankrupt has been recovered, protected or

preserved, the Adjudicating Authority may

make such order as it thinks just with respect

to the distribution of such asset with a view to

giving that creditor an advantage over other

creditors in consideration of the risks taken

by him in so doing.

(4) Unsecured creditors shall rank equally

amongst themselves unless contractually

agreed to the contrary by such creditors.

(5) Any surplus remaining after the payment

of the debts under sub-section (1) shall be

applied in paying interest on those debts in

respect of the periods during which they have

been outstanding since the bankruptcy

commencement date.

(6) Interest payments under sub-section (5)

shall rank equally irrespective of the 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;

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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 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.

(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 or 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

14 of 1963.

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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

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;

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 commence-

ment 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:

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Provided further that the bankruptcy trustee

shall not be liable under this section if he seizes

or disposes of any property which is not

comprised in the estate of the bankrupt and

at that time had reasonable grounds to believe

that he is entitled to seize or dispose that

property.

PART IV

Regulation of Insolvency Professionals, Agencies

and Information Utilities

CHAPTER I

The Insolvency and Bankruptcy Board of India

188. Establishment and incorporation of

Board.— (1) With effect from such date as the

Central Government may, by notification,

appoint, there shall be established, for the

purposes of this Code, a Board by the name of

the Insolvency and Bankruptcy Board of

India.

(2) The Board shall be a body corporate by

the name aforesaid, having perpetual

succession and a common seal, with power,

subject to the provisions of this Code, to

acquire, hold and dispose of property, both

movable and immovable, and to contract, and

shall, by the said name, sue or be sued.

(3) The head office of the Board shall be at

such place in the National Capital Region, as

the Central Government may, by notification,

specify.

Explanation.— For the purposes of

this section, the expression “National

Capital Region” shall have the same

meaning as assigned to it in clause

(f) of section 2 of the National Capital

Region Planning Board Act, 1985.

(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;

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;

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,

2 of 1985.

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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;

which in the opinion of the Central

Government involves moral turpitude;

(d) has, so abused his position as to

render his continuation in office detrimental

to the public interest:

Provided that no member shall be

removed under clause (d) unless he has

been given a reasonable opportunity of

being heard in the matter.

191. Powers of Chairperson.— Save as

otherwise determined by regulations, the

Chairperson shall have powers of general

superintendence and direction of the affairs

of the Board and may also exercise such other

powers as may be delegated to him by the

Board.

192. Meetings of Board.— (1) The Board

shall meet at such times and places, and

observe such rules of procedure in regard to

the transaction of business at its meetings

(including quorum at such meetings) as may

be determined by regulations.

(2) The Chairperson, or if, for any reason,

the Chairperson is unable to attend any

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

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:—

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(a) register insolvency professional

agencies, insolvency professionals and

information utilities and renew, withdraw,

suspend or cancel such registrations;

(b) specify the minimum eligibility

requirements for registration of insolvency

professional agencies, insolvency

professionals and information utilities;

registration 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 under-

standing with any other statutory

authorities;

(p) issue necessary guidelines to

the insolvency professional agencies,

insolvency professionals and information

utilities;

(q) specify mechanism for redressal of

grievances against insolvency professionals,

insolvency professional agencies and

information utilities and pass orders relating

to complaints filed against the aforesaid for

compliance of the provisions of this Code

and the regulations issued hereunder;

(r) conduct periodic study, research and

audit the functioning and performance of to

the insolvency professional agencies,

insolvency professionals and information

utilities at such intervals as may be

specified by the Board;

(s) specify mechanisms for issuing

regulations, including the conduct of public

consultation processes before notification

of any regulations;

(t) make regulations and guidelines

on matters relating to insolvency and

bankruptcy as may be required under this

Code, including mechanism for time bound

disposal of the assets of the corporate debtor

or debtor; and

(u) perform such other functions as may

be prescribed.

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(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;

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;

(f) the procedure for enrolment of persons

as members of insolvency professional

agency;

(m)

the

manner

conducting

examination for enrolment of insolvency

professionals;

(n) the manner of monitoring and

reviewing the working of insolvency

professional who are members;

(o) the duties and other activities to be

performed by members;

(p) the manner of conducting disciplinary

proceedings against its members and

imposing penalties;

(q) the manner of utilising the amount

received as penalty imposed against any

insolvency professional.

(3) Notwithstanding anything

contained in any other law for the

time being in force, while exercising

the powers under this Code, the

Board shall have the same powers

as are vested in a civil court under

the Code of Civil Procedure, 1908,

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

5 of 1908.

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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.— Notwith-

standing 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;

ethical conduct amongst insolvency

professionals;

(d) to protect the interests of debtors,

creditors and such other persons as may be

specified;

(e) to promote the growth of insolvency

professional agencies for the effective

resolution of insolvency and bankruptcy

processes under this Code.

201. Registration of insolvency professional

agency.— (1) Every application for registration

shall be made to the Board in such form and

manner, containing such particulars, and

accompanied by such fee, as may be specified

by regulations:

Provided that every application received by

the Board shall be acknowledged within seven

days of its receipt.

(2) On receipt of the application under sub-

-section (1), the Board may, on being satisfied

that the application conforms with all

requirements specified under sub-section (1),

grant a certificate of registration to the

applicant or else, reject, by order, such

application:

Provided that no order rejecting the

application shall be made without giving an

opportunity of being heard to the applicant:

Provided further that every order so made

shall be communicated to the applicant within

a period of fifteen days.

(3) The Board may issue a certificate of

registration to the applicant in such form and

manner and subject to such terms and

conditions as may be specified.

(4) The Board may renew the certificate of

registration from time to time in such manner

and on payment of such fee as may be

specified.

(5) The Board may, by order, suspend or

cancel the certificate of registration granted

to an insolvency professional agency on any

of the following grounds, namely:—

(a) that it has obtained registration by

making a false statement or misrepre-

sentation 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;

provisions of the Act or the rules or the

regulations made thereunder;

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(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

professionals being its members who shall

be on the governing board of the insolvency

professional agency.

204. Functions of insolvency professional

agencies.— An insolvency professional agency

shall perform the following functions,

namely:—

(a) grant membership to persons who

fulfil all requirements set out in its bye-laws

on payment of membership fee;

(b) lay down standards of professional

conduct for its members;

members;

(d) safeguard the rights, privileges and

interests of insolvency professionals who

are its members;

(e) suspend or cancel the membership of

insolvency professionals who are its

members on the grounds set out in its bye-

laws;

(f) redress the grievances of consumers

against insolvency professionals who are its

members; and

(g) publish information about its

functions, list of its members, performance

of its members and such other information

as may be specified by regulations.

205. Insolvency professional agencies to

make bye-laws.— Subject to the provisions of

this Code and any rules or regulations made

thereunder and after obtaining the approval

of the Board, every insolvency professional

agency shall make bye-laws consistent with

the model bye-laws specified by the Board

under sub-section (2) of section 196.

CHAPTER IV

Insolvency Professionals

206. Enrolled and registered persons to act

as insolvency professionals.— No person shall

render his services as insolvency professional

under this Code without being enrolled as a

member of an insolvency professional agency

and registered with the Board.

207. Registration of insolvency profe-

ssionals.— (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:—

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(a) a fresh start order process under

Chapter II of Part III;

(b) individual insolvency resolution

process under Chapter III of Part III;

process under Chapter II 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.

(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;

agency to inspect his records;

(d) to submit a copy of the records of

every proceeding before the Adjudicating

Authority to the Board as well as to the

insolvency professional agency of which he

is a member; and

(e) to perform his functions in such

manner and subject to such conditions as

may be specified.

CHAPTER V

Information Utilities

209. No person to function as information

utility without certificate of registration.—

Save as otherwise provided in this Code, no

person shall carry on its business as

information utility under this Code without a

certificate of registration issued in that behalf

by the Board.

210. Registration of information utility.—

(1) Every application for registration shall be

made to the Board in such form and manner,

containing such particulars, and accompanied

by such fee, as may be specified by

regulations:

Provided that every application received

by the Board shall be acknowledged within

seven days of its receipt.

(2) On receipt of the application under

sub-section (1), the Board may, on being

satisfied that the application conforms to all

requirements specified under sub-section (1),

grant a certificate of registration to the

applicant or else, reject, by order, such

application.

(3) The Board may issue a certificate of

registration to the applicant in such form and

manner and subject to such terms and

conditions as may be specified.

(4) The Board may renew the certificate of

registration from time to time in such manner

and on payment of such fee as may be

specified by regulations.

(5) The Board may, by order, suspend or

cancel the certificate of registration granted

to an information utility on any of the following

grounds, namely:—

(a) that it has obtained registration by

making a false statement or misrepresen-

tation or any other unlawful means;

(b) that it has failed to comply with the

requirements of the regulations made by

the Board;

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

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Tribunal in such form, within such period, and

in such manner, as may be specified by

regulations.

212. Governing Board of information

utility.— The Board may, for ensuring that an

information utility takes into account the

objectives sought to be achieved under this

Code, require every information utility to set

up a governing board, with such number of

independent members; as may be specified

by regulations.

213. Core services, etc. of information

utilities.— An information utility shall provide

such services as may be specified including

core services to any person if such person

complies with the terms and conditions as may

be specified by regulations.

214. Obligations of information utility.— For

the purposes of providing core services to any

person, every information utility shall—

(a) create and store financial information

in a universally accessible format;

(b) accept electronic submissions of

financial information from persons who are

under obligations to submit financial

information under sub-section (1) of section

215, in such form and manner as may be

specified by regulations;

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 circum-

stances, 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.

218. Investigation of insolvency professional

agency or its member or information utility.—

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(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 there-

from, subject to the provisions of section 100

of the Code of Criminal Procedure, 1973,

insofar as they may be applicable.

(5) The Investigating Authority shall keep

in its custody the books, registers, other

documents and records seized under this

section for such period not later than the

conclusion of the investigation as it considers

necessary and thereafter shall return the same

to the concerned person from whose custody

or power they were seized:

Provided that the Investigating Authority

may, before returning such books, registers,

other documents and record as aforesaid,

place identification marks on them or any part

thereof.

(6) A detailed report of inspection or

investigation shall be submitted to the Board

by the Investigating Authority.

219. Show cause notice to insolvency

professional agency or its member or

information utility.— The Board may, upon

completion of an inspection or investigation

under section 218, issue a show cause notice

to such insolvency professional agency or

insolvency professional or information utility,

and carry out inspection of such insolvency

professional agency or insolvency professional

or information utility in such manner, giving

such time for giving reply, as may be specified

by regulations.

220.

Appointment

disciplinary

committee.— (1) The Board shall constitute a

disciplinary committee to consider the reports

of the investigating Authority submitted under

sub-section (6) of section 218:

Provided that the members of the

disciplinary committee shall consist of whole-

time members of the Board only.

(2) On the examination of the report of the

Investigating Authority, if the disciplinary

committee is satisfied that sufficient cause

exists, it may impose penalty as specified in

sub-section (3) or suspend or cancel the

registration of the insolvency professional or,

suspend or cancel the registration of

insolvency professional agency or information

utility as the case may be.

(3) Where any insolvency professional

agency or insolvency professional or an

information utility has contravened any

provision of this Code or rules or regulations

made thereunder, the disciplinary committee

may impose penalty which shall be—

(i) three times the amount of the loss

caused, or likely to have been caused, to

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persons concerned on account of such

contravention; or

(ii) three times the amount of the unlawful

gain made on account of such contra-

vention,

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

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;

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;

purposes authorised by this Code;

(d) such other purposes as may be

prescribed.

223. Accounts and audit.— (1) The Board

shall maintain proper accounts and other

relevant records and prepare an annual

statement of accounts in such form as may be-

prescribed by the Central Government in

consultation with the Comptroller and

Auditor-General of India.

(2) The accounts of the Board shall be

audited by the Comptroller and Auditor-

General of India at such intervals as may be

specified by him and any expenditure

incurred in connection with such audit shall

be payable by the Board to the Comptroller

and Auditor-General of India.

(3) The Comptroller and Auditor-General of

India and any other person appointed by him

in connection with the audit of the accounts

of the Board shall have the same rights and

privileges and authority in connection with

such audit as the Comptroller and Auditor-

General generally has in connection with the

audit of the Government 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.

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(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;

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

Adjudicating Authority, make an application

to such Adjudicating Authority for withdrawal

of funds not exceeding the amount

contributed by it, for making payments to

workmen, protecting the assets of such

persons, meeting the incidental costs during

the proceedings or such other purposes as

may be prescribed.

(4) The Central Government shall, by

notification, appoint an administrator to

administer the fund in such manner as may

be prescribed.

225. Power of Central Government to issue

directions.— (1) Without prejudice to the

foregoing provisions of this Code, the Board

shall, in exercise of its powers or the

performance of its functions under this Code,

be bound by such directions on questions of

policy as the Central Government may give in

writing to it from time to time:

Provided that the Board shall, as far as

practicable, be given an opportunity to

express its views before any direction is given

under this sub-section.

(2) The decision of the Central Government

as to whether a question is one of policy or

not shall be final.

226. Power of Central Government to

supersede Board.— (1) If at any time the

Central Government is of opinion—

(a) that on account of grave emergency,

the Board is unable to discharge the

functions and duties imposed on it by or

under the provisions of this Code; or

(b) that the Board has persistently not

complied with any direction issued by the

Central Government under this Code or in

the discharge of the functions and duties

imposed on it by or under the provisions of

this Code and as a result of such non-

-compliance the financial position of the

Board or the administration of the Board has

deteriorated; or

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

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reconstituted under sub-section (3), be

exercised and discharged by such person or

persons as the Central Government may

direct; and

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.— Notwith-

standing anything to the contrary examined

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.

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.

231. Bar of jurisdiction.— No civil court shall

have jurisdiction in respect of any matter

in which the Adjudicating Authority 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 Adjudicating

Authority 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.

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.

45 of 1860.

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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 arrange-

ments 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.

236. Trial of offences by Special

Court.—

(1)

Notwithstanding

anything in the Code of Criminal

Procedure, 1973, offences under

this Code shall be tried by the

Special Court established under

Chapter XXVIII of the Companies

Act, 2013.

(2) No Court shall take cognizance of

any offence punishable under this Act, save

on a complaint made by the Board or

the Central Government or any person

authorised by the Central Government in this

behalf.

(3) The provisions of the Code of Criminal

Procedure, 1973 shall apply to the

proceedings before a Special Court and for the

purposes of the said provisions, the Special

Court shall be deemed to be a Court of Session

and the person conducting a prosecution

before a Special Court shall be deemed to be

a Public Prosecutor.

(4) Notwithstanding anything contained in

the Code of Criminal Procedure, 1973, in case

of a complaint under sub-section (2), the

presence of the person authorised by the

Central Government or the Board before the

Court trying the offences shall not be

necessary unless the Court requires his

personal attendance at the trial.

237. Appeal and revision.— The

High Court may exercise, so far as

may be applicable, all the powers

conferred by Chapters XXIX and

XXX of the Code of Criminal

Procedure, 1973 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.

239. Power to make rules.— (1) The Central

Government may, by notification, make

rules for carrying out the provisions of this

Code.

2 of 1974.

18 of 2013.

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(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;

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;

(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;

(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 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;

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(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 (e) 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;

(zi) 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;

(zf) 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

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;

(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;

(f) the other record or evidence of default

under clause (a), and any other information

under clause (c), of sub-section (3) of

section 7;

(g) the other information under clause (d)

of sub-section (3) of section 9;

(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;

(j) the manner of making public

announcement under sub-section (2) of

section 15;

(k) the manner of taking action and the

restrictions thereof under clause (b) of

sub-section (2) of section 17;

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(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;

(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;

(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;

(w) the manner of making payment of

insolvency resolution process costs under

clause (a), the manner of repayment of debts

of operational creditors 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;

(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;

(zd) 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;

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(zk) the period and the manner of

distribution of proceeds of sale under

sub-section (1) of section 53;

(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 pro-

fessionals 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;

(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;

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(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 filling 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.

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.

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(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 and the

Provincial Insolvency Act, 1920 are

hereby repealed.

(2) Notwithstanding the repeal under

sub-sections (1),—

(i) all proceedings pending under and

relating to the Presidency Towns Insolvency

Act 1909, and the Provincial Insolvency Act

1920 immediately before the commence-

ment of this Code shall continue to be

governed under the aforementioned Acts

and be heard and disposed of by the

concerned courts or tribunals, as if the

aforementioned Acts have not been

repealed;

(ii) any order, rule, notification,

regulation, appointment, conveyance,

mortgage, deed, document or agreement

made, fee directed, resolution passed,

direction given, proceeding taken,

instrument executed or issued, or thing

done under or in pursuance of any repealed

enactment shall, if in force at the

commencement of this Code, continue to

be in force, and shall have effect as if the

aforementioned Acts have not been

repealed;

(iii) anything done or any action taken or

purported to have been done or taken,

including any rule, notification, inspection,

order or notice made or issued or any

appointment or declaration made or any

operation undertaken or any 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, notwith-

standing 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 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

3 of 1909.

5 of 1920.

10 of 1897.

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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

resolution process, insolvency resolution

process, liquidation process, fresh start

process and bankruptcy process under

this Code.

245. Amendments of Act 9 of 1932.— The

Indian Partnership Act, 1932 shall be amended

in the manner specified in the First Schedule.

246. Amendments of Act 1 of 1944.—

The Central Excise Act, 1944 shall be amended

in the manner specified in the Second

Schedule.

247. Amendments of Act 43 of 1961.— The

Income tax Act, 1961 shall be amended in the

manner specified in the Third Schedule.

248. Amendments of Act 52 of 1962.— The

Customs Act, 1962 shall be amended in the

manner specified in the Fourth Schedule.

249. Amendments of Act 51 of 1993.— The

Recovery of Debts due to Banks and Financial

Institutions Act, 1993 shall be amended in the

manner specified in the Fifth Schedule.

250. Amendments of Act 32 of 1994.— The

Finance Act, 1994 shall be amended in the

manner specified in the Sixth Schedule.

251. Amendments of Act 54 of 2002.— The

Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest

Act, 2002 shall be amended in 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.

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.

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.

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.

THE FOURTH SCHEDULE

(See section 248)

Amendment to The Customs Act, 1962

(52 of 1962)

In section 142A, for the words and figures

“and the Securitisation and Reconstruction of

Financial Assets and the Enforcement of Security

Interest Act, 2002 (54 of 2002)”, the words and

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figures” the Securitisation and Reconstruction

of Financial Assets and the Enforcement of

Security Interest Act, 2002 and the Insolvency

and Bankruptcy Code, 2016” shall be substituted.

THE FIFTH SCHEDULE

(See section 249)

Amendment to The Recovery of Debts Due to Banks

and Financial 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.

THE SIXTH SCHEDULE

(See section 250 )

Amendment to the Finance Act, 1994

(32 of 1994)

In section 88, for the words and figures “and the

Securitisation and Reconstruction of Financial

Assets and the Enforcement of Security Interest

Act, 2002 (54 of 2002)”, the words and figures “the

Securitisation and Reconstruction of Financial

Assets and the Enforcement of Security Interest

Act, 2002 and the Insolvency and Bankruptcy

Code, 2016” shall be substituted.

THE SEVENTH SCHEDULE

(See section 251)

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.

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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.”.

THE NINTH SCHEDULE

(See section 253)

Amendment to The Payment and Settlement

Systems Act, 2007

(51 of 2007)

1. In section 23, in sub-sections (4), (5) and (6),

after the words and figures “the Banking Regulation

Act, 1949 (10 of 1949)” “the Companies Act, 2013

(18 of 2013)”, the words and figures “or the

Insolvency and Bankruptcy Code, 2016” shall be

inserted.

2. In section 23A, in sub-section (3), after the words

and figures “the Companies Act, 2013”, the words

and figures “or the Insolvency and Bankruptcy Code,

2016” shall be inserted.

THE TENTH SCHEDULE

(See section 254)

Amendment to The Limited Liability

Partnership Act, 2008

(6 of 2009)

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

THE ELEVENTH SCHEDULE

(See section 255)

Amendments to The Companies Act, 2013

(18 of 2013)

1. In section 2,—

(a) for clause (23), the following clause shall be

substituted, namely:—

“(23) “Company Liquidator” means a person

appointed by the Tribunal as the Company

Liquidator in accordance with the provisions

of section 275 for the winding up of a company

under this Act;”;

(b) after clause (94), the following clause shall

be inserted, namely:—

“(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

“the Rehabilitation and Insolvency Fund formed

under section 269”, the words “Insolvency and

Bankruptcy Fund formed under section 224 of the

Insolvency and Bankruptcy Code, 2016” shall be

substituted.

3. In section 66, in sub-section (8), for the words,

brackets and figures” is unable, within the meaning

of sub-section (2) of section 271, to pay the amount

of his debt or claim,”, the words and figures “commits

a default, within the meaning of section 6 of

the Insolvency and Bankruptcy Code, 2016, in

respect of the amount of his debt or claim,” shall

be substituted.

4. In sections 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.

6A. In section 230,—

(a) in sub-section (1), after the word

“liquidator”, the words “appointed under this Act

or under the Insolvency and Bankruptcy Code,

2016, as the case may be,” shall be inserted;

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(b) in sub-section (6), after the word “on the

liquidator”, the words “appointed under this Act

or under the Insolvency and Bankruptcy Code,

2016, as the case may be,” shall be inserted;

7. In section 249, in sub-section (1), for clause (e),

the following clause shall be substituted,

namely:—

“(e) is being wound up under Chapter XX of

this Act or under the Insolvency and Bankruptcy

Code, 2016.”.

8. Sections 253 to 269 shall be omitted.

9. For section 270, the following section shall be

substituted, namely:—

“270. Winding up by Tribunal.— The provisions

of Part I shall apply to the Winding up of a

company by the Tribunal under this Act.”.

10. For section 271, the following section shall be

substituted, namely:—

“271. Circumstances in which company may be

wound up by Tribunal.— A company may, on a

petition under section 27, 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;

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;

(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;

clauses (a) and (b);

(d) the Registrar;

(e) any person authorised by the Central

Government in that behalf; or

(f) in a case falling under clause (b) of

section 271, by the Central Government or a

State Government.

(2) A contributory shall be entitled to present

a petition for the winding up of a company,

notwithstanding that he may be the holder of fully

paid-up shares, or that the company may have no

assets at all or may have no surplus assets left for

distribution among the shareholders after the

satisfaction of its liabilities, and shares in respect

of which he is a contributory or some of them were

either originally allotted to him or have been held

by him, and registered in his name, for at least six

months during the eighteen months immediately

before the commencement of the winding up or

have devolved on him through the death of a

former holder.

(3) The Registrar shall be entitled to present

a petition for winding up under section 271,

except on the grounds specified in clause (a) or

clause (e) of that sub-section:

Provided that the Registrar shall obtain the

previous sanction of the Central Government

to the presentation of a petition:

Provided further that the Central Government

shall not accord its sanction unless the

company has been given a reasonable

opportunity of making representations.

(4) A petition presented by the company for

winding up before the Tribunal shall be admitted

only if accompanied by a statement of affairs

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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 or 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;

(e) 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.

15A. The heading “Part II.— Voluntary winding

up” shall be omitted.

16. Sections 304 to 323 shall be omitted.

17. Section 325 shall be omitted.

18. 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 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

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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;

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.”.

19. In section 327,—

(a) after sub-section (6), the following

sub-section shall be inserted, namely:—

“(7) Sections 326 and 327 shall not be

applicable in the event of liquidation under

the Insolvency and Bankruptcy Code, 2016.”;

(b) in the Explanation, for clause (c), the

following clause shall be substituted, namely:—

“(c) the expression “relevant date” means

in the case of a company being wound up by

the Tribunal, the date of appointment or first

appointment of a provisional liquidator, or if

no such appointment was made, the date of

the winding up order, unless, in either case,

the company had commenced to be wound up

voluntarily before that date under the

Insolvency and Bankruptcy Code, 2016;”.

20. 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.”.

21. 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.”.

22. In section 336, in sub-section (1), in the

opening paragraph, for the words “whether by the

Tribunal or voluntarily, or which is subsequently

ordered to be wound up by the Tribunal or which

subsequently passes a resolution for voluntary

winding up”, the words “by the Tribunal under this

Act or which is subsequently ordered to be wound

up by the Tribunal under this Act” shall be

substituted.

23. In section 337, for the words “or which

subsequently passes a resolution for voluntary

winding up,”, the words “under this Act”, shall

be substituted.

24. In section 342, sub-sections (2), (3) and (4)

shall be omitted.

25. In section 343, for sub-section (1), the following

sub-section shall be 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

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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.”.

26. In section 347, for sub-section (1), the following

sub-section shall be substituted, namely—

“(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.”.

27. 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 commence-

ment, 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;”.

28. 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.”.

29. In section 370, in the proviso, after the words

“obtained for the winding up the company”, the

words “in accordance with the provisions of

this Act or of the Insolvency and Bankruptcy

Code, 2016” shall be inserted.

30. In section 372, after the words “The provisions

of this Act”, the words “or of the Insolvency and

Bankruptcy Code, 2016, as the case may be,”

shall be inserted.

31. 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.”.

32. In section 424,—

(i) in sub-section (1), after the words, “other

provisions of this Act”, the words “or of the

Insolvency and Bankruptcy Code, 2016” shall

be inserted;

(ii) in sub-section (2), after the words,

“under this Act”, the words “or under the

Insolvency and Bankruptcy Code, 2016” shall

be inserted.

33. 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,—

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(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.”.

34. For section 434, the following section shall

be substituted, namely:—

“434. Transfer of certain pending proceedings.—

(1) On such date as may be notified by the

Central Government in this behalf,—

(a) all matters, proceedings or cases pending

before the Board of Company Law

Administration (herein in this section referred

to as the Company Law Board) constituted

under sub-section (1) of section 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

Act, 1956 (1 of 1956), including proceedings

relating to arbitration, compromise, arrange-

ments 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.”.

35. 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;

(viii) the making of calls; and

(ix) the fixing of a time within which debts

and claims shall be proved.”.

36. In Schedule V, in Part II, in section III, for

clause (b), the following clause shall be substituted,

namely:—

“(b) where the company—

(i) is a newly incorporated company, for a

period of seven years from the date of its

incorporation, or

(ii) is a sick company, for whom a scheme

of revival or rehabilitation has been ordered

by the Board for Industrial and Financial

Reconstruction for a period of five years

from the date of sanction of scheme of

revival, or

(iii) is a company in relation to which a

resolution plan has been approved by the

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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.”.

The above Bill has been passed by the Houses

of Parliament.

———!!!———

Department of Public Assistance

(Provedoria)

Institute of Public Assistance (Provedoria)

—

Notification

2-15-2011/Prov/Part/237

In exercise of the powers conferred by

article 15 of the Legislative Diploma No. 1984,

dated 14-4-1960, the Government of Goa is

hereby pleased to make the following rules so

as to further amend the Goa Scheme for

Immediate Relief Rules, 1997, namely:—

1. Short title and commencement.— (1)

These Rules may be called the Goa Scheme

for Immediate Relief (Fifth Amendment) Rules,

2017.

(2) They shall come into force at once.

(2) Amendment of rule 9.— In rule 9 of the

Goa Scheme for Immediate Relief Rules, 1997,

for the letters and figures “Rs. 25,000/-”,

wherever they occur, the letters and figures

“Rs. 50,000/-” shall be substituted.

Note: The principal Notification No. 6-1-97-IPA/1597

dated 11th August, 1997, was published in

the Official Gazette, Series I No. 24, dated

11-9-1997 and subsequently amended vide

the following Notifications, namely:—

(1) Government Notification No. 6-1-99-IPA/3628

dated 10th February, 2000, published in the Official

Gazette, Series I No. 49 dated 2nd March, 2000.

(2) Government Notification No. 6-1-2000-IPA/

/2865 dated 16th February, 2004, published in the

Official Gazette, Series I No. 49 dated 4th March, 2004.

(3) Government Notification No. 2-15-2011-12-

-Prov./899 dated 16th June, 2011, published in the

Official Gazette, Series I No. 13 dated 30th June, 2011.

(4) Government Notification No. 2-15-2011-12-

-Prov./Part dated 8th April, 2013, published in the

Official Gazette, Series I No. 3 dated 18th April, 2013.

By order and in the name of the Governor

of Goa.

Daulat A. Hawaldar, Secretary (Provedoria).

Panaji, 27th April, 2017.

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