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Frequently Asked Questions on the Insolvency and Bankruptcy Code, 2016
April, 21st 2017
 Frequently Asked Questions
             on
The Insolvency and Bankruptcy
          Code 2016




 The Institute of Chartered Accountants of India
          (Set up by an Act of Parliament)
                     New Delhi
© The Institute of Chartered Accountants of India

All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means electronic,
mechanical, photocopying, recording or otherwise without prior permission in
writing from the publisher.




First Edition               :   April 2017


Committee/Department        :   Corporate Laws & Corporate Governance
                                Committee


E-mail                      :   clcgc@icai.in


Website                     :   www.icai.org


Price                       :   100/-


ISBN No.                    :   978-81-8441- 865-1


Published by                :   The Publication Department on behalf of the
                                Institute of Chartered Accountants of India.
                                ICAI Bhawan, Post Box No. 7100,
                                Indraprastha Marg, New Delhi ­ 110 002,
                                India.

Printed by                  .   Sahitya Bhawan Publications,          Hospital
                                Road, Agra 282 003
                                April/2017/500
                                                            Foreword
The Insolvency and Bankruptcy Code, 2016 was enacted with a purpose to
consolidate and amend the laws relating to reorganisation and insolvency
resolution of corporate persons, partnership firms and individuals and align
Indian law at par with the best practices being followed Internationally.
The intention is to strike the right balance of interests of all stakeholders of
the business enterprise so that the corporates and other business entities
enjoy availability of credit and at the same time the creditor do not have to
bear the losses on account of default. The Code is now in the implementation
phase.
With a view to improve Ease of doing Business in India, the Code provides
for a time bound process for speedy disposal and also the manner for
maximization of value of assets. It will create a win-win situation not only for
the creditor and debtor companies, but it will also benefit the overall
economy.
The Hon'ble Finance Minister in his Union Budget Speech in February, 2017
also acknowledged the importance of enactment of Insolvency and
Bankruptcy Code by mentioning it one of the major reforms taken place last
year.
As per the Code, the insolvency resolution processes are to be conducted by
the Insolvency Professionals, who are required to be members of an
Insolvency Professional Agency which in turn is to be registered with the
Insolvency and Bankruptcy Board of India.
Taking this Government's initiative ahead, the Institute of Chartered
Accountants of India formed Indian Institute of Insolvency professionals of
ICAI (IIIPI) to enroll and regulate insolvency professionals as its members in
accordance with the Insolvency and Bankruptcy code 2016 and read with
regulations in November, 2016.
I congratulate the Corporate Laws & Corporate Governance Committee of
the Institute of Chartered Accountants of India (ICAI) to take this initiative in
bringing out a comprehensive and a handy book on Frequently Asked
Questions (FAQs) on the Insolvency and Bankruptcy Code, 2016 to provide
guidance to the members of the profession and other stakeholders for clear
interpretation and understanding of the new law.
I extend my sincere appreciation to CA. Sanjay Kumar Agarwal and CA.
Debashis Mitra, the Chairman and Vice-Chairman of the Corporate Laws &
Corporate Governance Committee (CL&CGC) respectively, CA. Dhinal Shah,
Central Council Member, ICAI to conceptualize this project and CA. K.
Sripriya, Convenor of the Insolvency and Bankruptcy Laws Group of
CL&CGC, CA. Ranjeet Kumar Agarwal, Dy-Convenor of the Insolvency and
Bankruptcy Laws Group of CL&CGC, my Council Colleagues, other members
of the Committee to conceptualize and bring out this important publication.
My appreciation to the Secretariat of the Committee comprising of CA. Sarika
Singhal, Ms. S. Rita, CA. Ashita Jain and Ms Nidhi Bansal for their efforts in
preparation and bringing out this publication.
I am confident that this publication would be of great help to the members
especially to insolvency professionals and other stakeholders.


New Delhi                                           CA. Nilesh S. Vikamsey
7th April, 2017                                              President, ICAI




                                      iv
                                                             Preface
The Insolvency and Bankruptcy Code, 2016 is one of the major economic
reform Code initiated by the Government in the year 2015. There were
multiple overlapping laws and adjudicating forums dealing with financial
failure and insolvency of companies and individuals in India.
Also, the existing laws were not aligned with the market realties and had
several problems and were inadequate. As per that legal framework,
provisions relating to insolvency and bankruptcy for companies could be
found in the Sick Industrial Companies (Special Provisions) Act, 1985, the
Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 and the Companies Act, 2013. Resolution and
jurisdiction being with the multiple agencies with overlapping powers were
leading to delays and complexities in the process.
To facilitate easy and time bound closure of business in India and to
overcome these challenges, a strong bankruptcy law was required.
To study the corporate bankruptcy legal framework in India and to suggest
the Government for reforming the system, the Government of India had
formed the Bankruptcy Law Reforms Committee. The Committee suggested
that there was a need for creation of a uniform framework for the matters of
insolvency and bankruptcy of all legal entities and individuals. It evaluated
the working of present arrangements in India, and the difficulties faced with
these present arrangements.
As stated by Mr T. K. Viswanathan, Chairman, Bankruptcy Law
Reforms Committee that "It was a mission to usher in sweeping
changes to the country's bankruptcy law and the New Bankruptcy Law
was Necessary for Reviving Economy".
Accordingly, the Insolvency and Bankruptcy Code, 2015 was introduced in
Lok Sabha in December, 2015 and referred to the Joint Parliamentary
Committee. After due consultation process, the Joint Committee submitted its
Report to the Hon'ble Parliament which was subsequently passed by both
the Houses of Parliament in May 2016 as the Insolvency and Bankruptcy
Code, 2016 which got assent of the President of India on 28th May, 2016.
The Code offers a uniform, comprehensive insolvency legislation
encompassing all companies, partnerships and individuals (other than
financial firms). There is a clear and explicit process to be followed by all
stakeholders. Also, there is shift of control from shareholders and promoters
to creditors.
The IBC provides an institutional set-up comprising of five pillars, i.e.,
Insolvency Professionals Agency, Insolvency Professionals, Information
Utilities, Insolvency and Bankruptcy Board of India and Adjudicating
Authority.
The Implementation of any system does not only depend on the law, but also
on the institutions involved in administration and execution of the same. It
depends on the effective functioning of all the institutions but the Insolvency
Professionals have a vital role to play in the insolvency and bankruptcy
resolution process.
The pace with which this Code is being implemented will also help India in
improving its `Ease of Doing Business' rankings and enhancing India's
ranking as resolving insolvency is a key criteria in the World Bank's survey.
At this backdrop, to facilitate the understanding of the provisions of the
Insolvency and Bankruptcy Code, 2016 and its Regulations, the Corporate
Laws & Corporate Governance Committee decided to bring out a publication
on the Frequently Asked Questions on the Insolvency and Bankruptcy Code,
2016.
The publication has been designed in a question and answer format to assist
our members and other stakeholders to enable them to have clarity on the
provisions of the Insolvency and Bankruptcy Code, 2016 and its Regulation
released upto 31st January, 2017.
In this connection I take this opportunity in thanking the President of ICAI,
CA. Nilesh S. Vikamsey and Vice President CA. Naveen N. D. Gupta for their
moral support and encouragement in bringing out the publication. I place on
record my appreciation to CA. Dhinal Shah for conceptualizing this
publication, CA. Debashis Mitra, Vice Chairman, CL&CGC, CA. K. Sripriya,
Convenor of the Insolvency and Bankruptcy Laws Group of CL&CGC, CA.
Ranjeet Kumar Agarwal, Dy- Convenor of the Insolvency and Bankruptcy
Laws Group of CL&CGC and the other committee members for their help and
guidance in framing and bringing out this publication comprising of the
Frequently Asked Questions on the provisions of the Insolvency and
Bankruptcy Code, 2016.
I would like to thank CA. Sarika Singhal, Ms. S. Rita, CA. Ashita Jain and Ms
Nidhi Bansal who were involved in preparing and putting together the FAQs.
I sincerely believe that the members of the profession, industries and other
stakeholders will find the publication immensely useful.


New Delhi                                    CA. Sanjay Kumar Agarwal
7th April, 2017                                              Chairman
                  Corporate Laws & Corporate Governance Committee, ICAI
                                                                Index
S. No.   Topic                                                  Page No.
1.       Introduction                                              1
2.       Insolvency Resolution and Liquidation of Corporate        5
         Persons
3.       Insolvency Resolution and Bankruptcy for Individuals     37
         and Firms
4.       Regulation of Insolvency Professionals, Agencies and     57
         Information Utilities
5.       Miscellaneous                                            67
         Annexure                                                 70
                                                     Glossary
IBC Code   Insolvency and Bankruptcy Code 2016
IP         Insolvency Professional
IPR        Insolvency Professional Resolution
IPA        Insolvency Professional Agency
IU         Information Utility
AA         Adjudicating Authority
NCLT       National Company Law Tribunal
SARFAESI   Securitisation and Reconstruction of Financial Assets and
           Enforcement of Security Interest Act, 2002
xi
                                                                       Part I

                                                    Introduction
Q.1.   What is the purpose of enactment of the Insolvency and
       Bankruptcy Code, 2016?
A.1    As per Preamble to the Code, the purpose of this Act is as follows:-
       (a)    To consolidate and amend the laws relating to reorganisation
              and insolvency resolution of corporate persons, partnership
              firms and individuals.
       (b)    To fix time periods for execution of the law in a time bound
              manner.
       (c)    To maximize the value of assets of interested persons.
       (d)    To promote entrepreneurship
       (e)    To increase availability of credit.
       (f)    To balance the interests of all the stakeholders including
              alteration in the order of priority of payment of Government
              dues.
       (g)    To establish an Insolvency and Bankruptcy Board of India as
              a regulatory body for insolvency and bankruptcy law.
Q.2.   To whom shall the provisions of the Code apply?
A.2    The Code shall apply for insolvency, liquidation, voluntary liquidation
       or bankruptcy of the following entities:-
       (a)    Any company incorporated under the Companies Act, 2013 or
              under any previous law.
       (b)    Any other company governed by any special act for the time
              being in force, except in so far as the said provision is
              inconsistent with the provisions of such Special Act.
       (c)    Any Limited Liability Partnership under the LLP Act 2008.
       (d)    Any other body incorporated under any law for the time being
              in force, as the Central Government may by notification
              specify in this behalf.
       (e)    Partnership firms and individuals.
FAQs on The Insolvency and Bankruptcy Code 2016

        Exception: The Code shall not apply to Financial Service Providers
        like Banks, Financial Institutions and Insurance companies.
Q.3.    Who shall be termed as Corporate Debtor?
A.3     As per Section 3(8) of the Code, Corporate Debtor means a corporate
        person who owes a debt to any person.
Q.4.    Who is a Corporate Person?
A.4     Corporate Person means
        a)     a company as defined under section 2(20) of the Companies
               Act, 2013;
        b)     a Limited Liability Partnership as defined in 2(1)(n) of Limited
               Liability Act, 2008; or,
        c)     any other person incorporated with limited liability under any
               law for the time being in force but shall not include any
               financial service provider.
Q.5.    Who shall be covered in the definition of a Financial Service
        Provider?
A.5     As per Section 3(17) of the Code, a 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 e.g. banks, financial institutions, insurance
        companies, mutual funds etc.
Q.6.    What shall be included in Financial Information?
A.6    Financial Information includes the following:-
        a)     Records of debt of the person
        b)     Records of liabilities when the person is insolvent
        c)     Records of assets of assets of the person over which security
               interest has been created
        d)     Records, if any, of instances of default by the person against
               any debt
        e)     Records of the balance sheet and cash-flow statements of
               the person; and
        f)     Such other information as may be specified
Q.7.    What shall be treated as Debt under the Code?



                                       2
                                                                    Introduction

A.7    As per Section 3(11) of the Code, 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.
Q.8.    What shall be considered as Claim under the Code?
A.8     As per Section 3(6) of the Code, Claim means a right to payment or
        right to remedy for breach of contract if such breach gives rise to a
        right to payment whether or not such right is reduced to judgment,
        fixed, matured, unmatured, disputed, undisputed, legal, equitable,
        secured or unsecured.
Q.9.    Who are covered in the definition of person?
A.9     As per Section 3(23) of the Code, a person means and includes the
        following:-
        a)     an individual
        b)     a Hindu Undivided Family
        c)     a company
        d)     a trust
        e)     a partnership
        f)     A limited liability partnership and any other entity established
               under a Statute.
        and includes a person resident outside India
Q.10. What do you understand by the term Security Interest?
A.10    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.
Q.11. What is termed as a transaction under the Code?
A.11    A transaction includes an agreement or arrangement in writing for
        transfer of assets, or funds, goods or services, from or to the
        corporate debtor.
Q.12. What shall be included in Transfer as per the Code?
A.12    Transfer includes sale, purchase, exchange, mortgage, pledge, gift,
        loan or any other form of transfer of right, title, possession or lien. In
        case of property- transfer of property means transfer of any property

                                        3
FAQs on The Insolvency and Bankruptcy Code 2016

       and includes a transfer of any interest in the property and creation of
       any charge upon such property.
Q.13. What is a "Charge" under the Code?
A.13   A 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.
Q.14. Who shall be termed as creditor under the Code?
A.14   A 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.
Q.15. What is a Financial Product?
A.15   A 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.
Q.16. What is the definition of property under the Code?
A.16   As per Section 3(27) of the Code, property includes:-
       a)     Money, goods, actionable claims, land and every description
              of property, whether situated in India or outside India and
       b)     Every description of interest including present or future or
              vested or contingent interest arising out of, or incidental to,
              property.




                                      4
                                                                       Part II

               Insolvency Resolution and
        Liquidation for Corporate Persons
Q.17.    When will the provisions of insolvency and liquidation of
         corporate persons be applicable on a corporate person?
A.17     The provisions relating to the insolvency and liquidation of corporate
         debtors shall be applicable only when the amount of the default is
         one lakh rupees or more. However, the Central Government may, by
         notification, specify the minimum amount of default of higher value
         which shall not be more than one crore rupees.
Q.18.    Who is the Adjudicating Authority for corporate persons?
A.18     The National Company Law Tribunal shall be Adjudicating Authority
         for the insolvency resolution and liquidation process of a corporate
         person.
Q.19.    What is the date of enforcement of Insolvency and Bankruptcy
         (application to Adjudicating Authority) Rules, 2016?
A.19     The Insolvency and Bankruptcy (application to Adjudicating
         Authority) Rules, 2016 have been enforced w.e.f. 1st day of
         December, 2016.
Q.20.    What is included in the Financial Debt?
A.20     As per Section 5(8) of the Code, Financial Debt means a debt along
         with interest, if any, which is disbursed against the consideration for
         the time value of money and includes:-
         a)      Any money borrowed against the payment of interest.
         b)      Any amount raised by acceptance under any acceptance
                 credit facility or its de-materialised equivalent.
         c)      Any amount raised pursuant to any note purchase facility or
                 the issue of bonds, notes, debentures, loan stock or any
                 similar instrument.
         d)      The amount of any liability in respect of any lease or hire
                 purchase contract which is deemed as a finance or capital
                 lease under the Indian Accounting Standards or such other
                 accounting standards.
FAQs on The Insolvency and Bankruptcy Code 2016

        e)      Any receivables sold or discounted other than any
                receivables sold on non-recourse basis.
        f)      Any amount raised under any other transaction, including
                any forward sale or purchase agreement, having the
                commercial effect of a borrowing.
        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
                above clauses.
Q.21.   What is included in Operational Debt?
A.21    As per Section 5(21) of the Code, Operational Debt means a claim
        in respect of
        a)      Provision of goods or
        b)      Provision of services including employment
        c)      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.
Q.22.   Who may initiate corporate insolvency process against a
        corporate person?
A.22    The corporate insolvency process may be initiated against any
        defaulting corporate debtor by
        a)      Financial creditor,
        b)      Operational creditor
        c)      Corporate debtor
Q.23.   What is the Insolvency Resolution Process for financial
        creditors?



                                       6
              Insolvency Resolution and Liquidation for Corporate Persons

A.23    A financial creditor either itself or along with other financial creditors
        may lodge an application before the Adjudicating Authority (National
        Company Law Tribunal) for initiating corporate insolvency resolution
        process against a corporate debtor who commits a default in
        payment of its dues.
        The financial creditor shall along with the application give evidence
        in support of the default committed by the corporate debtor. He shall
        also give the name of the interim resolution professional.
        Where the Adjudicating Authority is satisfied that a default has
        occurred and the application by the financial creditor is complete
        and there is no disciplinary proceedings pending against the
        proposed resolution professional, it may admit such application
        made by the financial creditor. Otherwise, the application may be
        rejected. However, the applicant may rectify the defect within seven
        days of receipt of notice of rejection from the Adjudicating Authority.
Q.24.   Can a financial creditor in respect of whom there is no default
        file an application of resolution?
A.24    Yes, a financial creditor for whom there is no default can still file an
        application against a corporate debtor provided, the corporate
        debtor has a default against some other financial creditor. However,
        in that case, he can only file joint application with the financial
        creditor for whom there is default.
Q.25.   What is the Insolvency Resolution Process for operational
        creditors?
A.25    On the occurrence of default, an operational creditor shall first send
        a demand notice and a copy of invoice to the corporate debtor.
        The corporate debtor shall within a period of ten days of receipt of
        demand notice notify the operational creditor about the existence of
        a dispute, if there is any and record of pendency of any suit or
        arbitration proceedings. He shall also provide the details of
        repayment of unpaid operational debt in case the debt has or is
        being paid.
        After the expiry of ten days, if the operational creditor does not
        receive his payment or the confirmation of a dispute that existed
        even before the demand notice was sent, he may file an application
        before the Adjudicating Authority for initiating a corporate insolvency
        resolution process.



                                       7
FAQs on The Insolvency and Bankruptcy Code 2016

        The Adjudicating Authority shall within fourteen days of receipt of
        the application, admit or reject the application. However, before
        rejecting the application, an opportunity shall be given to the
        applicant to rectify the defect within seven days of receipt of
        rejection.
Q.26.   Can a Demand Notice by an operational creditor be issued in
        any form?
A.26    No, the Demand Notice has to be issued in Form No. 3 as provided
        in the Application to Adjudicating Authority Rules.
Q.27.   What shall be the mode of service of demand notice?
A.27    The demand notice may be delivered to the corporate debtor in any
        of the following modes:
        By hand, registered post or speed post with the acknowledgment
        due delivered at the registered office of the corporate debtor.
        By electronic mail service to a whole time director or designated
        partner or key managerial personnel of the corporate debtor.
Q.28.   What are the forms to be used for Application to be filed before
        National Company Law Tribunal (NCLT) by Financial Creditor,
        Operational Creditor and Financial Debtor?
A.28    The form in which the application is to be preferred is provided in the
        Application to Adjudicating Authority Rules as follows:
        Financial Creditor ­ Form 1
        Operational Creditor ­ Form 5
        Corporate Debtor ­ Form 6
Q.29.   What is a Financial Contract?
A.29    Financial contract is a contract between a corporate debtor and a
        financial creditor which lays down the terms of the financial debt like
        the tenure of the debt, interest payable and date of repayment etc.
Q.30.   Can an assignee of a financial contract make an application
        under corporate insolvency resolution process?
A.30    Yes, as per Regulation 4 of Insolvency and Bankruptcy (Adjudicating
        Authority) Rules, 2016 where an applicant of corporate insolvency
        resolution is an assignee or transferee of a financial contract the
        application shall be accompanied with a copy of the assignment or



                                      8
             Insolvency Resolution and Liquidation for Corporate Persons

        transfer agreement and other relevant documents as may be
        required to demonstrate the assignment or transfer.
Q.31.   Can an applicant withdraw its application for insolvency
        process?
A.31    Yes, as per Regulation 8 of Insolvency and Bankruptcy (Adjudicating
        Authority) Rules, 2016 an applicant may withdraw application for
        insolvency process by making a request to the Adjudicating
        Authority. However, such a withdrawal may not be made after the
        application has been admitted by the adjudicating authority.
Q.32.   Does an applicant need any declaration from the proposed
        interim resolution professional?
A.32    Yes, as per Regulation 9 of Insolvency and Bankruptcy (Adjudicating
        Authority) Rules, 2016 an applicant is required to obtain a written
        communication from the proposed interim resolution professional.
        The communication shall be obtained in Form 2 of the regulations.
Q.33.   Is there any provision for relaxation in submission of relevant
        supporting documents to an application for insolvency
        resolution where the supporting documents are very bulky?
A.33    Yes, the proviso to Regulation 10 of Insolvency and Bankruptcy
        (Adjudicating Authority) Rules, 2016 makes provision for submission
        of accompanying documents in electronic form, when such
        documents are bulky in nature. The documents should be scanned
        and be submitted in legible portable format in a data storage device
        such as compact disc or a USB flash drive which is acceptable to
        the Adjudicating Authority.
Q.34.   What are the eligibility criteria for appointment of an Insolvency
        Professional as a Resolution Professional for a corporate
        insolvency resolution process?
A.34    As per Regulation 3 of Insolvency and Bankruptcy (Insolvency
        Resolution) Regulation, 2016, an insolvency professional shall be
        eligible for appointment as a resolution professional for a corporate
        insolvency resolution process if he and all partners and directors of
        the insolvency professional entity of which he is partner or director
        are independent of the corporate debtor i.e.,
        a)      He is eligible to be appointed as an independent director on
                the board of the corporate debtor u/s 149 of the Companies
                Act, 2013, where the corporate debtor is a company.


                                     9
FAQs on The Insolvency and Bankruptcy Code 2016

        b)      He is not a related party of the corporate debtor.
        c)      He is not an employee or proprietor or a partner of a firm of
                auditors or company secretaries in practice or cost auditors
                of the corporate debtor in the last three financial years.
        d)      He is not an employee or proprietor or a partner of a legal
                or consulting firm that has or had any transaction with the
                corporate debtor amounting to ten per cent or more of the
                gross turnover of such firm in the last three financial years.
Q.35.   What is meant by a Demand Notice?
A.35    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.
        As per Rule 5(2) of Insolvency and Bankruptcy (Application to
        Adjudicating Authority) Rules, 2016, the demand notice or a copy of
        invoice shall be sent to corporate debtor by post, by hand or email
        and the copy of demand notice shall be forwarded to information
        utility. Demand notice shall be given in Form 3.
Q.36.   What will be the consequence if demand is disputed?
A.36    If demand is disputed and such dispute has been raised before the
        issuance of the notice, application shall not be admitted as the
        Adjudicating Authority is not empowered to go into the dispute.
        Thus, application can be admitted only if the demand of debt is
        undisputed.
Q.37.   What is the procedure of Insolvency Resolution Process for a
        Corporate Applicant?
A.37    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.
        The corporate applicant shall furnish the information relating to
        books of account and other documents and a                 resolution
        professional shall be appointed as interim resolution professional.
        The Adjudicating Authority may either accept or reject the
        application within fourteen days of receipt of application. However,
        applicant should be allowed to rectify the defect within seven days of
        receipt of notice of such rejection.
Q.38.   When will the insolvency resolution process commence?


                                     10
             Insolvency Resolution and Liquidation for Corporate Persons

A.38    The insolvency resolution process shall commence from the date of
        admission of application by the Adjudicating Authority. It is referred
        to as the Corporate Insolvency Resolution Date.
Q.39.   What is the Corporate Insolvency Process initiation date?
A.39    The date of filing of the application before the National Company
        Law Tribunal (NCLT) is referred to as the Initiation date.
Q.40.   Can an application for insolvency process be withdrawn?
A.40    A per Rule 8 of Insolvency and Bankruptcy (Application to
        Adjudicating Authority) Rules, 2016, application for insolvency
        process may be withdrawn any time before admission of application,
        with the permission of Adjudicating Authority.
Q.41.   Who is not entitled to make application to initiate a corporate
        insolvency process?
A.41    As per Section 11 of the Code the following persons shall not be
        entitled to initiate the corporate insolvency process:-
        a)      A corporate debtor already undergoing an insolvency
                resolution process; or
        b)      A corporate debtor having completed corporate insolvency
                resolution process 12(twelve) months preceding the date of
                making of the application; or
        c)      A corporate debtor or a financial creditor who has violated
                any of the terms of resolution plan which was approved 12
                (twelve) months before the date of making of an application;
        d)      A corporate debtor in respect of whom a liquidation order
                has been made.
Q.42.   Is there any time limit for completion of the Insolvency
        Resolution Process?
A.42    Section 12 of the Code states that any 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
        the process.
        However the National Company Law Tribunal (NCLT) may on an
        application made by the resolution professional, under a resolution
        passed by the Committee of Creditors, by a vote of 75% of voting
        shares, after consideration provide one extension which shall not
        extend more than 90 days.

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FAQs on The Insolvency and Bankruptcy Code 2016

Q.43.   What is the significance of the Corporate Insolvency Resolution
        Commencement Date?
A.43    The commencement date of the corporate insolvency resolution is
        the beginning of moratorium or a calm period for 180 days during
        which all suits and legal proceedings etc. against the Corporate
        Debtor are held in abeyance to give time to the entity to resolve its
        status.
Q.44.   What is the effect of order of moratorium?
A.44    Moratorium has been explained in Section 14 of the Code, during
        the moratorium period the following acts shall be prohibited:
        a)      The institution of suits or continuation of any pending suits
                or proceedings against the corporate debtor including
                execution of any judgment, decree or order in any court of
                law, tribunal, arbitration panel or other authority;
        b)      Transferring, encumbering, alienating or disposing of by the
                corporate debtor any of its assets or any legal right or
                beneficial interest therein;
        c)      Any action to foreclose, recover or enforce any security
                interest created by the corporate debtor in respect of its
                property including any action under the SARFAESI 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.
Q.45.   What shall be included in the Public Announcement made by an
        Adjudicating Authority?
A.45    As per Section 15 of the Code, the Public Announcement shall
        include the following:-
        a)      Name & Address of Corporate Debtor under the Corporate
                Insolvency Resolution Process.
        b)      Name of the authority with which the corporate debtor is
                incorporated or registered.
        c)      Details of interim resolution Professional who shall be
                vested with the management of the Corporate Debtor and
                be responsible for receiving claims.
        d)      Penalties for false or misleading Claims.

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             Insolvency Resolution and Liquidation for Corporate Persons

        e)      The last date for the submission of the claims.
        f)      The date on which the Corporate Insolvency Resolution
                Process ends.
Q.46.   Who shall bear the expenses of public announcement?
A.46    As per Regulation 6 of the Insolvency and Bankruptcy (Insolvency
        Resolution) Regulations, 2016 the expenses of public
        announcement shall be borne by the applicant which may be
        reimbursed by the Committee of Creditors, to the extent it ratifies
        them.
Q.47.   What is the remedy if a Creditor fails to submit proof of claim
        within the time stipulated in the public announcement?
A.47    As per Regulation 12 of the Insolvency and Bankruptcy (Insolvency
        Resolution) Regulations, 2016 a Creditor who failed to submit proof
        of claim within stipulated time may submit such proof to Interim
        Resolution Professional before the is approved by the Committee
        of Creditors.
Q.48.   Is there any time limit for verification of claims by the resolution
        professional?
A.48    Yes, as per Regulation 13 of the Insolvency and Bankruptcy
        (Insolvency Resolution) Regulations all the claims must be verified
        by the resolution professional within seven days from the last date of
        receipt of claims.
Q.49.   Can list of creditors prepared by resolution professional be
        inspected?
A.49    Yes, as per Regulation 13 of the Insolvency and Bankruptcy
        (Insolvency Resolution) Regulations, 2016 the list of creditors shall
        be available for inspection by the persons who submitted proofs of
        claims and also by the members, partners, directors and guarantors
        of the corporate debtors.
        Further, the list shall also be displayed on the website of the
        corporate debtor.
Q.50.   Who cannot participate in the Meeting of the Committee of
        Creditors?
A.50    As defined u/s 5(24) of the Code, a Related Party to whom a
        Corporate Debtor owes a financial debt shall not have any right of



                                     13
FAQs on The Insolvency and Bankruptcy Code 2016

        Representation, Participation or Voting in a meeting of the
        Committee of Creditors.
Q.51.   Who will conduct the meeting of creditors?
A.51    The resolution professional shall conduct all the meetings of the
        Committee of Creditors.
Q.52.   How is the voting share of a creditor in the committee of
        creditors determined?
A.52    The voting share is determined based on the value of the debt of the
        creditor in proportion to the total debt.
Q.53.   What is the compliance with Adjudicating Authority post
        constitution of committee of creditors?
A.53    After the constitution of committee of creditors, the interim resolution
        professional is required to file a report certifying the constitution of
        the committee of creditors to the Adjudicating Authority. The report
        shall be filed on or before the expiry of thirty days from the date of
        appointment of the interim resolution professional.
Q.54.   What is the quorum required for convening of the meeting of
        committee of creditors?
A.54    A meeting of committee of creditors shall quorate if members of the
        committee of creditors representing at least thirty three percent of
        the voting rights are present either in person or by video/audio
        means.
Q.55.   Can a member attend the meeting of committee of creditors by
        video conferencing?
A.55    Yes, as per Regulation 22 of the Insolvency and Bankruptcy
        (Insolvency Resolution) Regulations, 2016 a member of committee
        of creditors may attend the meeting by video conferencing or other
        audio and visual means.
Q.56.   What shall be the consequence if the quorum is not fulfilled?
A.56     If the requisite quorum for committee of creditors is not fulfilled the
        meeting cannot be held and the meeting shall automatically stand
        adjourned at the same time and place on the next day. The
        adjourned meeting shall quorate with the members of the committee
        attending the meeting.
Q.57.   If there is no financial creditor, how will the committee of
        creditors be constituted?

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              Insolvency Resolution and Liquidation for Corporate Persons

A.57    As per Regulation 16 of the Insolvency and Bankruptcy (Insolvency
        Resolution) Regulations, 2016, where the corporate debtor has no
        financial debt or where all financial creditors are related parties of
        the corporate debtor, the committee shall be formed comprising of
        following members:-
        a)      18 largest operational creditors by value.
        b)      1 representative elected by all workmen
        c)      1 representative elected by all employees.
        Where the number of operational creditors is less than 18, the
        committee shall include all such operational creditors.
Q.58.   Do Operational Creditors have right to vote in the meeting of
        Committee of Creditors?
A.58    No, the Operational Creditors do not have right to vote in the
        meeting of Committee of Creditors, however, the directors, partners
        and one representative of operational creditors may attend the
        meetings of Committee of Creditors.
Q.59.   What is the tenure of an interim resolution professional?
A.59    The tenure of the Interim resolution professional is 30 days from the
        date of his / her appointment.
Q.60.   Where the Resolution professional is proposed by the Board, is
        it mandatory on the board to confirm the Appointment of
        Resolution Professional proposed by Adjudicating Authority?
A.60    No, as per Section 22(3) of the Code, if 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 direct the interim resolution professional
        to continue as the resolution professional until such time as the
        Board confirms the Appointment of the proposed resolution
        professional.
Q.61.   What are the key roles of an Interim Resolution Professional?
A.61    The key roles of an Interim Resolution Professional are:-
        a)      Issuance of public notice of the Corporate Insolvency
                Resolution process
        b)      Collation of claims received
        c)      Constitution of the Committee of Creditors


                                     15
FAQs on The Insolvency and Bankruptcy Code 2016

        d)      Conduct of the first meeting of the Committee of Creditors
Q.62.   Can an interim resolution professional have access to the
        books of the corporate debtor?
A.62    Yes, the interim resolution professional may access the books of
        accounts, records and other relevant documents and information so
        far as it is necessary for discharging his duties under the Code.
Q.63.   What is the protocol for issuance of public notice?
A.63    The public notice shall be published in following:-
                One English newspaper
                One vernacular newspaper
                Website of the Company
                Website of the Insolvency and Bankruptcy Board of India
Q.64.   What will be the effect of filing of an avoidance application on
        insolvency resolution process?
A.64    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.
Q.65.   What is the procedure for replacement of insolvency resolution
        professional
A.65    As per Section 27 of the Code, the Committee of Creditors may at a
        meeting, by a vote of 75% of voting shares propose to replace the
        insolvency resolution professional with another resolution
        professional.
        The Committee of Creditors shall forward the name of the insolvency
        professional proposed by them to the Adjudicating Authority and
        after the confirmation of the proposed insolvency resolution
        professional by the Board he shall be appointed in the same manner
        as laid down in Section 16.
        Where any disciplinary proceedings are pending against the
        proposed resolution professional then the resolution professional
        appointed under section 22 shall continue till the appointment of
        another resolution professional under this section.
Q.66.   What are the key tasks to be performed by a Resolution
        Professional?



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             Insolvency Resolution and Liquidation for Corporate Persons

A.66    The following are the key tasks to be performed by a resolution
        professional:-
        a)      Obtaining Valuation of the entity
        b)      Preparation of Information Memorandum
        c)      Preparation of Resolution plan
        d)      Obtaining consent of the Committee of Creditors for the
                Resolution plan
        e)      Periodic reporting to the Board
Q.67.   Does resolution professional require approval of Committee of
        Creditors for performance of his duties?
A.67    As per Section 28 of the Code, the resolution professional shall
        require prior approval of the Committee of Creditors by a vote of
        seventy five per cent for following actions:-
        a)      To raise any interim finance in excess of the amount as may
                be decided by the Committee of Creditors in their meeting.
        b)      To create any security interest over the assets of the
                corporate debtor.
        c)      To change the capital structure of the corporate debtor,
                including by way of issuance of additional securities,
                creating a new class of securities or buying back or
                redemption of issued securities in case the corporate debtor
                is a company.
        d)      To record any change in the ownership interest of the
                corporate debtor.
        e)      To 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)      To undertake any related party transaction.
        g)      To amend any constitutional documents of the corporate
                debtor.
        h)      To delegate its authority to any other person.
        i)      To dispose of or permit the disposal of shares of any
                shareholder of the corporate debtor or their nominees to
                third parties.






                                    17
FAQs on The Insolvency and Bankruptcy Code 2016

        j)      To make any change in the management of the corporate
                debtor or its subsidiary.
        k)      To transfer rights or financial debts or operational debts
                under material contracts otherwise than in the ordinary
                course of business.
        l)      To make changes in the Appointment or terms of contract of
                such personnel as specified by the Committee of Creditors.
        m)      To make changes in the Appointment or terms of contract of
                statutory auditors or internal auditors of the corporate
                debtor.
Q.68.   What is a Resolution plan?
A.68    A resolution plan is a proposal agreed to by the Debtors and
        Creditors of an entity in a collective mechanism to propose a time
        bound solution to resolve the situation of insolvency.
        As per Section 30, the Insolvency Resolution Professional (IRP)
        within the prescribed time i.e. 180 days or in case of extension 270
        days, where Fast Track Resolution within 90 days or in case of
        extension 135 days, is required to submit his Resolution Plan to
        Adjudicating Authority (NCLT) prepared by him on the basis of
        information memorandum.
        The Resolution Plan should provide for:
         (i)    payment of insolvency resolution costs;
        (ii)    repayment of the debts to operational creditors;
        (iii)   management of affairs of the Company after approval of the
                resolution plan;
        (iv)    implementation and supervision of the resolution plan;
        (v)     does not contravene provisions of the law for the time being
                in force; and
        (vi)    conforms to such other requirement as may be specified by
                the Board.
Q.69.   Is the resolution professional required to provide access to
        information of the information memorandum to the resolution
        applicant?
A.69    As per Section 29 of the Code, the resolution professional shall
        provide all the access of the information memorandum to the


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             Insolvency Resolution and Liquidation for Corporate Persons

        resolution applicant and furnish all the relevant information in
        physical and electronic form. However, the resolution professional
        will be required to obtain the following undertaking:-
        a)      They will comply with the provisions of the law for the time
                being in force relating to the confidentiality and Insider
                Trading;
        b)       They will protect any Intellectual property of the corporate
                debtor it may have access; and
        c)      They will not to share the relevant information to the third
                party.
Q.70.   When shall the resolution plan be considered as approved by
        Committee of Creditors?
A.70    The resolution plan shall be approved by the Committee of Creditors
        by a vote of not less than seventy five percent of voting share of the
        financial creditors.
Q.71.   What remedy is available to a Resolution Professional with
        whom the Corporate debtor personnel do not cooperate?
A.71    The Resolution Professional may apply to the Board seeking support
        to resolve the situation and for orders thereof.
        Where any personnel of the corporate debtor, its promoter or any
        other person, required to, assist or co-operate 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.
        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.
Q.72.   Does the National Company Law Tribunal (NCLT) have powers
        to reject Resolution plans?
A.72    Yes, the National Company Law Tribunal (NCLT) has powers to
        reject Resolution plans proposed by the Committee of Creditors.
Q.73.   What happens when the Resolution Plan is not filed within 180
        days of the Commencement date or such other extended
        period?


                                     19
FAQs on The Insolvency and Bankruptcy Code 2016

A.73     National Company Law Tribunal (NCLT) may pass orders for the
         liquidation of the Corporate debtor if the Resolution Plan is not filed
         within 180 days of the Commencement date or such other extended
         period.
         The NCLT shall do the following
        (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.
Q.74.    What are Insolvency Resolution Process Costs? What is the
         significance of these costs?
A.74     As per Section 5(13) of the Code, "Insolvency Resolution Process
         Costs" means the following costs:-
         a)      The amount of any interim finance and the costs incurred in
                 raising such finance.
         b)      The fees payable to any person acting as a resolution
                 professional.
         c)      Any costs incurred by the resolution professional in running
                 the business of the corporate debtor as a going concern.
         d)      Any costs incurred at the expense of the Government to
                 facilitate the insolvency resolution process.
         e)      Any other costs as may be specified by the Board.
         These costs have priority over other costs in the event of winding up
         of the corporate debtor.
Q.75.    In which cases the Adjudicating Authority can order for the
         liquidation of the Corporate Debtor?
A.75     As per Section 33 of the Code, the Adjudicating Authority may order
         for the liquidation of the Corporate Debtor in the following cases:-
         a)      Where before the expiry of the Insolvency Resolution
                 Process or within 180 days of the initiation Insolvency
                 Resolution, if the Adjudicating Authority does not receive
                 the Resolution Plan.



                                      20
              Insolvency Resolution and Liquidation for Corporate Persons

        b)       If the Committee of Creditors before the expiry of the
                 resolution process intimates the Adjudicating Authority, of
                 the decision of the Committee of Creditors that they have
                 passed an order for the liquidation of Corporate Debtor.
c)      Where the Resolution Plan is in contravention with the interest of
        any person, whose interest is prejudicially affected by the
        contravention, may make an application to the Adjudicating Authority
        to pass the liquidation order.
Q.76.   What shall be the contents of order of liquidation?
A.76    The order of liquidator shall contain the following:-
        a)       An order requiring the corporate debtor to be liquidated in
                 the manner as laid down in Chapter III Part II of the Code.
        b)       An order for issuing a Public Announcement stating that the
                 corporate debtor is in liquidation.
        c)       It shall also require such order to be sent to the authority
                 with which the corporate debtor is registered.
Q.77.   What will be the effect of order of liquidation?
A.77    As per Section 33 of the Code, the following shall be the effect of
        passing of an order of liquidation by the Adjudicating Authority:-
        a)       No suit or other legal proceeding shall be instituted by or
                 against the corporate debtor. However, the liquidator may
                 institute a suit or other legal proceeding on behalf of the
                 corporate debtor with the prior approval of the Adjudicating
                 Authority.
        b)       The legal proceedings in relation to such transactions as
                 may be notified by the Central Government in consultation
                 with any financial sector regulator shall not be affected.
        c)       The order for liquidation shall be deemed to be a notice of
                 discharge to the officers, employees and workmen of the
                 corporate debtor, except in the case where the business of
                 the corporate debtor is continued during the liquidation
                 process by the liquidator.
Q.78.   What shall be the fees that liquidator may charge for
        conducting liquidation proceeding?
A.78    The liquidator shall charge fee for the conduct of the liquidation
        proceedings in proportion to the value of the liquidation estate

                                      21
FAQs on The Insolvency and Bankruptcy Code 2016

        assets, as may be specified by the Board under Section 34(8) of the
        Code.
Q.79.   Under what circumstances transactions will be referred to as
        preferential transactions?
A.79    A corporate debtor shall be deemed to have given a preference in
        the following circumstances:-
        a)      If 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.
        b)      If 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 of the
                Code.
Q.80.   Under what circumstances transactions will not be referred to
        as preferential transactions?
A.80    As per Section 43(3) of the Code, following transfers shall not be
        referred to as a preference transaction:-
        a)      The 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.
        Further, 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.




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             Insolvency Resolution and Liquidation for Corporate Persons

Q.81.   When shall a transaction entered by any corporate debtor be
        deemed as Undervalued?
A.81    As per Section 45 of the Code, 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 of the assets for a consideration
                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.
Q.82.   When can a liquidator apply for avoidance of preferential
        transaction?
A.82    Where the liquidator is of the opinion that the corporate debtor has
        at a relevant time given a preference in transactions to any of the
        following persons:-
        a)      A related party (other than by reason only of being an
                employee), during the period of two years preceding the
                insolvency commencement date.
        b)      A person other than a related party during the period of one
                year preceding the insolvency commencement date.
        c)      The liquidator shall apply to Adjudicating Authority for
                avoidance of such preferential transactions.
Q.83.   What is the relevant period for avoiding any undervalued
        transaction?
A.83    As per Section 46 of the Code, if in an application, the liquidator or
        resolution professional demonstrates
        a)      That the transaction was entered within the period of one
                year preceding the insolvency commencement date; or
        b)      That the transaction was made with a related party within a
                period of two years preceding the insolvency
                commencement date.
Q.84.   Can a creditor make an application to the Adjudicating
        Authority for avoidance of any undervalued transactions in
        case of a corporate debtor?


                                     23
FAQs on The Insolvency and Bankruptcy Code 2016

A.84    Yes, as empowered by Section 47 of the Code, where an
        undervalued transaction has taken place and the liquidator or the
        resolution professional has not reported it to the Adjudicating
        Authority, a creditor, member or a partner of a corporate debtor may
        make an application to the Adjudicating Authority to declare such
        transactions void and reverse their effect.
Q.85.   What is the procedure for enforcement of security interest by
        secured creditor?
A.85    As per Section 52(4) of the Code, the secured creditor may enforce,
        realize, settle, compromise or deal with the secured assets after
        completion of verification by liquidator in accordance with such law
        as applicable to the security interest and apply the proceeds to
        recover the debts due to it.
The secured creditor may apply to Adjudicating Authority under Section 52(5)
       of the Code to facilitate the secured creditor to realize such security
       interest.
Q.86.   Can the liquidator consult stakeholders? Is such consultation
        binding on the liquidator?
A.86    Yes, as per Section 53 of the Code, a liquidator has the power to
        consult any of the stakeholders entitled to distribution of proceeds
        under Section 53 of the Code. However, such consultation shall not
        be binding on the liquidator.
Q.87.   Which assets shall not be used for recovery in liquidation?
A.87    The following assets shall not be used for recovery in the
        liquidation:--
        Any assets owned by a third party, which are in possession of a
        corporate debtor, and which include-
        a)       Assets held in trust for any third party;
        b)       Bailment contracts;
        c)       All sums due to any workman or employee from the
                 provident fund, the pension fund and the gratuity fund;
        d)       Other contractual arrangements which do not stipulate
                 transfer of title but only use of the assets; and
        e)       Such other assets as may be notified by the Central
                 Government in consultation with any financial sector
                 regulator.

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             Insolvency Resolution and Liquidation for Corporate Persons

        f)      Assets in security collateral held by financial services
                providers and are subject to netting and set-off in multi-
                lateral trading or clearing transactions;
        g)      Personal assets of any shareholder or partner of a
                corporate debtor as the case may be provided such assets
                are not held on account of avoidance transactions that may
                be avoided under this Chapter;
        h)      Assets of any Indian or foreign subsidiary of the corporate
                debtor; or
        i)      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.
Q.88.   Is a liquidator bound to provide information to creditors?
A.88    The creditors may require the liquidator to provide them any
        financial information relating to the corporate debtor. The liquidator
        shall provide information to the creditors who have requested for
        such information within a period of seven days from the date of such
        request or he may provide reasons for not providing such
        information.
Q.89.   Is there any time limit for receipt of claim of creditors?
A.89    Yes, 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.
Q.90.   Can a creditor withdraw or vary his claim?
A.90    Yes, a creditor may withdraw or vary his claim within fourteen days
        of its submission.
Q.91.   How does the liquidator verify his claim?
A.91    The liquidator shall verify the claims submitted to him within such
        time as be specified by the Board. Further, he may require any
        creditor or the corporate debtor or any other person to produce
        documents or evidences which he thinks necessary for the purpose
        of verification of whole or any part of the claim.
Q.92.   What is the remedy available to the creditors if the liquidator
        rejects his claims?



                                     25
FAQs on The Insolvency and Bankruptcy Code 2016

A.92    A creditor, within fourteen days of the receipt of decision wherein his
        claim has been rejected may appeal to the Adjudicating Authority
        against the decision of the liquidator.
Q.93.   Can an application be filed to avoid extortionate credit
        transactions in case of a corporate debtor?
A.93    Yes, as per Section 50 of the Code, 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 in that case the
        liquidator or the resolution professional as 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.
Q.94.   What are the powers of an Adjudicating Authority where a
        corporate debtor enters into exorbitant transactions?
A.94    As per Section 51 of the Code, if an Adjudicating Authority after
        examining the application is satisfied that the terms of a credit
        transaction required exorbitant payments to be made by the
        corporate debtor, it shall, by an order:-
        a)      Restore the position as it existed prior to such transaction;
        b)      Set aside the whole or part of the debt created on account
                of the extortionate credit transaction;
        c)      Modify the terms of the transaction;
        d)      Require any person who is, or was, a party to the
                transaction to repay any amount received by such person;
                or
        e)      Require any security interest that was created as part of the
                extortionate credit transaction to be relinquished in favour of
                the liquidator or the resolution professional, as the case
                may be.
Q.95.   In what order shall a liquidator distribute the assets?
A.95    As per Section 53 of the Code, the proceeds from the sale of the
        liquidation assets shall be distributed in the following order of
        priority:
        a)      Any insolvency resolution process costs and the liquidation
                costs to be paid in full.


                                     26
               Insolvency Resolution and Liquidation for Corporate Persons

        b)       Debts which shall rank equally between and among the
                 following -:
        Any workmen dues outstanding for a period of twenty-four months
        preceding the liquidation commencement date.
        (i)      Debts which are owed to a secured creditor where such
                 secured creditor has relinquished security.
        c)       Wages and any unpaid dues owed to employees other than
                 the workmen for a period of twelve months preceding the
                 liquidation commencement date.
        d)       Financial debts owed to unsecured creditors.
        e)       Also the following dues shall rank equally between and
                 among the following:--
        (i)      Any amount which is due to the Central Government and
                 the State Government including any 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)     All 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
        h)       Equity shareholders or partners
        Any contractual arrangements if disrupting the order of priority under
        that sub-section shall be disregarded by the liquidator.
Q.96.   How shall the fees payable to liquidator be paid?
A.96    The fees for the conduct of the liquidation proceedings shall be paid
        to the liquidator from the proceeds of the liquidation estate under
        Section 53 of the Code. The fees payable to liquidator shall have
        priority over other payments during liquidation.
Q.97.   What is fast track insolvency resolution process?
A.97    A fast track insolvency resolution, as the name suggests, is a
        process wherein the insolvency resolution process shall be
        completed with 90(ninety) days from the insolvency commencement
        date.


                                     27
FAQs on The Insolvency and Bankruptcy Code 2016

              An application under this category can be made by corporate debtor
              falling under any of the below mentioned category:
              a)       A corporate debtor with assets and income below a level as
                       may be notified by the Central Government; or
              b)       A corporate debtor with such class of creditors or such
                       amount of debt as may be notified by the Central
                       Government; or
              c)       Such other category of corporate persons as may be
                       notified by the Central Government.
Q.98.         Can the time period for fast track corporate insolvency
              resolution process be extended?
A.98          Yes, the Adjudicating Authority may extend time period for fast track
              corporate insolvency resolution process. The aggrieved may make
              an application to the Adjudicating Authority and it is satisfied that the
              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 to a further period which shall not be
              exceeding forty-five days.
Q.99.         When can a corporate person initiate voluntary liquidation
              process?
A.99          Section 59 of the Code empowers a corporate person intending to
              liquidate itself voluntarily if it has not committed any default to
              initiate voluntary liquidation proceedings under the provisions of this
              Code.
              Any corporate person registered as a company shall meet the
              following conditions to initiate a voluntary liquidation process:-
              a)       A declaration from majority of the directors of the company
                       verified by an affidavit stating
        i.             That they have made a full inquiry into the affairs of the
                       company and have formed an opinion that either the
                       company has no debts 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.            That the company is not being liquidated to defraud any
                       person.




                                            28
              Insolvency Resolution and Liquidation for Corporate Persons

        b)      The declaration shall be accompanied with the following
                documents, namely:
        i.      Audited financial statements and a record of business
                operations of the company for the previous two years or for
                the period since its incorporation, whichever is later;
        ii.     A report of the valuation of the assets of the company, if
                any, prepared by a registered valuer.
        c)      After making the declaration the corporate debtor shall
                within four weeks
        i.      Pass a special resolution at a general meeting stating that
                the company should be liquidated voluntarily and insolvency
                professional to act as the liquidator may be appointed.
        ii.     Pass a resolution at a general meeting stating that the
                company be liquidated voluntarily as a result of expiry of the
                period of its duration (fixed by its articles or on the
                occurrence of any event in respect of which the articles
                provide that the company shall be dissolved, if any) and
                appointing an insolvency professional to act as the
                liquidator.
Q.100. When does a corporate person require approval of creditors for
       voluntary liquidation process?
A.100   As per the proviso to Section 53(3) of the Code, if the company
        owes any debt to any person, then creditors representing two-thirds
        in value of the debt to the company shall approve the resolution to
        be passed at the general meeting, within seven days of such
        resolution.
Q.101. Can a liquidator make application for dissolution of the
       company?
A.101   Yes, after the affairs of the corporate person have been completely
        wound up and its assets are completely liquidated, the liquidator
        shall make an application to the Adjudicating Authority for the
        dissolution of the company.
Q.102. Who shall be the Adjudicating Authority for a corporate
       person?
A.102   In case of a corporate person including corporate debtors and
        personal guarantors the Adjudicating Authority shall be National


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FAQs on The Insolvency and Bankruptcy Code 2016

        Company Law Tribunal (NCLT) having territorial jurisdiction over the
        place where the registered office of the corporate person is situated.
Q.103. What are the jurisdictional powers of Adjudicating Authority?
A.103   As per Section 60 of the Code, the Adjudicating Authority i.e.,
        National Company Law Tribunal shall have jurisdiction to entertain
        or dispose of the following:-
        a)      Any application or proceedings by or against the Corporate
                Debtor / Corporate person.
        b)      Any Claim made against the Corporate Debtor/ Corporate
                Person including the subsidiaries situated in India.
        c)      Any question of priority, question of law or fact under this
                Code.
Q.104. Is the period of moratorium excluded for the purpose of
       limitation?
A.104   Yes, as per Section 60(6) of the Code, the period during which
        moratorium is in place shall be excluded 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.
Q.105. Whether an appeal can be filed against the order of the National
       Company Law Tribunal?
A.105   Yes, as per Section 61 of the Code, any person aggrieved by the
        order of the National Company Law Tribunal may prefer an appeal to
        National Company Law Appellate Tribunal within thirty (30) days
        from the date of order of the National Company Law Tribunal
        (NCLT).
Q.106. On what grounds can an appellant appeal against an order of
       National Company Law Tribunal for approving the resolution
       plan?
A.106   As per Section 61(3) of the Code, an appeal against an order of
        National Company Law Tribunal (NCLT) for approving the resolution
        plan may be filed on the following grounds:-
        a)      The approved resolution plan is in contravention of the
                provisions of any law for the time being in force.
        b)      There has been material irregularity in exercise of the
                powers by the resolution professional during the corporate
                insolvency resolution period.

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             Insolvency Resolution and Liquidation for Corporate Persons

        c)      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.
        d)      The insolvency resolution process costs have not been
                provided for repayment in priority to all other debts.
        e)      The resolution plan does not comply with any other criteria
                specified by the Board.
Q.107. Does an appeal lie from the order of National Company Law
       Appellate Tribunal?
A.107   Yes, as per Section 62 of the Code, any person aggrieved by the
        order of National Company Law Appellate Tribunal may file an
        appeal to the Supreme Court within 45 days from the date of receipt
        of the order. However, appeal shall lie only on the Question of law
        arising out of this Code.
Q.108. Does Civil Court have jurisdiction in matters relating to
       insolvency of corporate persons?
A.108   No, Civil Court shall not have jurisdiction to entertain any suit or
        proceedings or grant injunction or any other relief in respect of any
        matter relating to insolvency of corporate persons on which the
        National Company Law Tribunal or the National Company Law
        Appellate Tribunal has jurisdiction under this Code.
Q.109. Is there any provision for extension of the time specified in the
       Code where an application is not disposed off or an order has
       not been passed?
A.109   Yes, the President of National Company Law Tribunal (NCLT) or the
        Chairperson of National Company Law Appellate Tribunal (NCLAT)
        may extend the time specified in the Act for not more than ten (10)
        days, where an application is not disposed off or an order is not
        passed within the period specified in the Code.
Q.110. What is the punishment for fraudulently or maliciously initiating
       the insolvency resolution process or liquidation?
A.110   According to Section 65 of the Code, any person who fraudulently or
        with malicious intent initiates the insolvency resolution process or
        liquidation process shall be punishable with a minimum penalty of
        one lakh rupees which may extend to one crore rupees.
        Further, any person who initiates voluntary liquidation proceedings
        with the intent to defraud any person shall be punishable with a

                                    31
FAQs on The Insolvency and Bankruptcy Code 2016

        minimum penalty of one lakh rupees which may extend to one crore
        rupees.
Q.111. What is the punishment for concealment of property by the
       officers of the corporate debtor?
A.111   Where any officer of the Corporate Debtor, within twelve months
        immediately preceding the insolvency commencement date,
        (i)     wilfully concealed any property or part of such property of
                the value of Rs 10,000/- or more,
        (ii)    fraudulently removed any part of the property of the value of
                Rs 10,000/- or more,
        (iii)   wilfully concealed, destroyed or mutilated or falsified any
                book or paper
        (iv)    wilfully made any false entry in any book or paper affecting
                or related to the property,
        (v)     fraudulently parted with, altered or made any omission in
                any document affecting or relating to property,
        (vi)    wilfully created any security interest over, transferred or
                disposed of any property unless it was in the ordinary
                course of business,
        (vii)   wilfully concealed the knowledge of the doing by other of
                any acts mentioned above;
        he shall be punishable with imprisonment for a term which shall not
        be less than three years and may extend to five years or with a fine
        shall not be less than one lakh rupees but which can extend to one
        crore rupees or both.
Q.112. What is the punishment for entering in transactions for
       defrauding creditors?
A.112   Where on or after the insolvency commencement date, an officer of
        the corporate debtor or the corporate debtor
        (i)     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 or where the property of the
                corporate debtor
        (ii)    has concealed or removed any part of the property of the
                corporate debtor within two months before the date of any


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             Insolvency Resolution and Liquidation for Corporate Persons

                unsatisfied judgment, decree or order for payment of money
                obtained against the corporate debtor
        he 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.
Q.113. What shall be treated as misconduct in the course of corporate
       insolvency resolution process?
A.113   The following acts of an officer of the corporate debtor on or after
        the commencement of insolvency date will be treated as
        misconduct:-
        a)      When he 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 required
                by the resolution professional.
        b)      When he 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.
        c)      When he does not deliver to the resolution professional all
                books and papers in his control or custody belonging to the
                corporate debtor and which he is required to deliver.
        d)      When he fails to inform their resolution professional the
                information in his knowledge that a debt has been falsely
                proved by any person during the corporate insolvency
                resolution process.
        e)      When he prevents the production of any book or paper
                affecting or relating to the property or affairs of the
                corporate debtor.
        f)      When he 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.
Q.114. What is the punishment for misconduct in the course of
       corporate insolvency resolution process?
A.114   Where an officer of the corporate debtor is liable for misconduct
        under Section 70 of the Code he shall be punishable with

                                     33
FAQs on The Insolvency and Bankruptcy Code 2016

        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.
Q.115. What is the punishment for contravention of the provisions of
       the Code by an Insolvency Professional?
A.115   If an insolvency professional deliberately contravenes the provisions
        of the Code he shall be punishable with imprisonment for a term
        which may extend to six months or with fine which shall not be less
        than one lakh rupees but may extend to five lakhs rupees or with
        both.
Q.116. What is the punishment for falsification of books of corporate
       debtor?
A.116   Where on and after the insolvency commencement date 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.
Q.117. What is the punishment for willful and material omissions from
       statements relating to affairs of corporate debtor?
A.117   Where an officer of the corporate debtor makes any material and
        willful 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.
Q.118. What is the punishment for making false representations to
       creditors?
A.118   Where any officer of the corporate debtor makes false
        representations to the creditors on or after the insolvency
        commencement date or has made any false representation, or
        committed any fraud prior to the commencement of insolvency 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

                                     34
              Insolvency Resolution and Liquidation for Corporate Persons

        shall not be less than one lakh rupees but may extend to one crore
        rupees or with both.
Q.119. What is the punishment for contravention of moratorium or
       resolution plan?
A.119   If the corporate debtor or any of its officer violates the
        provisions of Section 14 (Moratorium), 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.
        If any creditor violates the provisions of Section 14
        (Moratorium), 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.
        If 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.
Q.120. What is the punishment for furnishing false information in
       application for initiating insolvency process under Section 7 of
       the Code?
A.120   Any person who knowingly furnishes information in the application
        made under Section 7 (Initiation of corporate insolvency resolution
        process by financial creditor) which is false in material particulars or
        omits any material fact, such person shall be punishable with fine
        which shall not be less than one lakh rupees but may extend to one
        crore rupees.
Q.121. What is the punishment for non-disclosure of dispute or
       repayment of debt by operational creditor?
A.121   If an operational creditor has wilfully or knowingly concealed in an
        application under Section 9 the fact that the corporate debtor had

                                      35
FAQs on The Insolvency and Bankruptcy Code 2016

        notified him of a dispute in respect of the unpaid operational debt or
        the full and final repayment of the unpaid operational debt or has
        knowingly and wilfully authorised or permitted such concealment,
        such operational creditor or person 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.
Q.122. What is the punishment for providing false information in
       application made by corporate debtor?
A.122   If a corporate debtor knowingly provides information in the
        application under Section 10 which is false in material particulars or
        omits any material fact or any person who knowingly and wilfully
        authorised or permitted the furnishing of such information, such
        corporate debtor or person shall be punishable with imprisonment
        for a term which shall not be less than three years but which may
        extend to five years or with fine which shall not be less than one
        lakh rupees but which may extend to one crore rupees, or with both.




                                     36
                                                                          Part III

                   Insolvency Resolution and
                Bankruptcy for Individuals and
                                         Firms
Q.123. What is a qualifying debt?
A.123   As per Section 79(19) of the Code, 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
        (i)       an excluded debt,
        (ii)      a debt to the extent it is secured and
        (iii)     any debt which has been incurred three months prior to the
                  date of the application for fresh start process.
Q.124. What shall be treated as excluded debt?
A.124   As per Section 79(15) of the Code, excluded debt shall mean any -
        (i)       liability to pay fine imposed by a Court or Tribunal,
        (ii)      liability to pay damages for negligence, nuisance or breach
                  of a statutory, contractual or other legal obligation,
        (iii)     liability to pay maintenance to any person under any law for
                  the time being in force,
        (iv)      liability in relation to a student loan and
        (v)       any other debt as may be prescribed.
Q.125. Who shall be referred as an undischarged bankrupt?
A.125   As per Section 79(22) of the Code, undischarged bankrupt refers to
        a bankrupt who has not received a discharge order under Section
        138.
Q.126. On what grounds can an aggrieved debtor or creditor make an
       application to the Adjudicating Authority against the action
       taken by the Resolution Professional under the Fresh Start
       Process?
FAQs on The Insolvency and Bankruptcy Code 2016

A.126   Section 87 of the Code empowers an aggrieved debtor or creditor to
        make an application to the Adjudicating Authority against the action
        taken by the Resolution Professional under the Fresh Start Process
        on any of the following grounds:-
        a)      The resolution professional has not given an opportunity to
                debtor or creditor to make a representation.
        b)      The resolution professional colluded with the other party in
                arriving at the decision.
        c)      The resolution professional has not complied with the
                requirements laid down in Section 86 of the Code stating
                objection by creditor.
Q.127. Is there any time limit for which moratorium shall be in force?
A.127   Yes, if 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.
Q.128. What is the effect of commencement of moratorium period?
A.128   After the commencement of moratorium period any pending legal
        action or legal proceeding in respect of any debt shall be deemed to
        have been stayed and the creditors shall not initiate any legal action
        or proceedings in respect of any debt.
Q.129. What are the restrictions imposed on a debtor during
       moratorium period?
A.129   The following restrictions are imposed on debtor during moratorium
        period u/s 85(3):-
        a)      He shall not act as a director of any company, or directly or
                indirectly take part in or be concerned in promotion,
                formation or management of the company.
        b)      He shall not dispose off or alienate any of the assets.
        c)      He shall inform his business partners that he is undergoing
                a fresh start process.
        d)      He shall be required to inform prior to entering into any
                financial or commercial transaction of such value as maybe



                                     38
             Insolvency Resolution and Bankruptcy for Individuals and Firms

                  notified by the Central Government, either individually or
                  jointly, that he is undergoing a fresh start process.
        e)        He shall disclose the name under which he enters into
                  business transactions, if it is a different name then the one
                  under the application.
        f)        He shall not travel outside India except with the permission
                  of the Adjudicating Authority.
Q.130. When can an order passed by the Adjudicating Authority be
       revoked?
A.130   As per Section 91 of the Code a resolution professional may submit
        an application to the Adjudicating Authority seeking revocation of an
        order on the following grounds:-
        a)        When due to any change in financial circumstances of the
                  debtor, the debtor is ineligible for a fresh start process.
        b)        When the debtor fails to comply with the requirements
                  stated u/s 85(3) during the moratorium period.
        c)        When the debtor has acted in a mala fide manner and has
                  wilfully failed to comply with the provisions of the Code.
Q.131. Can a partner of a firm file an application to the Adjudicating
       Authority as a debtor on behalf of the firm?
A.131   Section 94(2) of the Code states that where a debtor is a partner of
        a firm, such debtor shall not apply to the Adjudicating Authority in
        respect of the firm unless all or a majority of partners of the firm file
        the application jointly.
Q.132. Under what circumstances debtor is not entitled to make an
       application to the Adjudicating Authority?
A.132   A debtor shall not be entitled to make an application to the
        Adjudicating Authority in following cases:-
        a)        If he is an undischarged bankrupt.
        b)        If he is undergoing a fresh start process.
        c)        If he is undergoing an insolvency resolution process.
        d)        If he is undergoing a bankruptcy process.
Q.133. What are the requirements for making an application by a
       creditor for initiating an insolvency resolution process?


                                       39
FAQs on The Insolvency and Bankruptcy Code 2016

A.133   As per Section 95 of the Code a creditor can file an application
        either himself or jointly with other creditors or through an insolvency
        professional to the Adjudicating Authority for initiating an insolvency
        resolution process by submitting an application. This application
        shall be accompanied with the following 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 the demand.
        c)       Relevant evidence of such default or non- repayment of
                 debt.
Q.134. Can a resolution professional be replaced?
A.134   Yes, if a debtor or a creditor is of the opinion that the resolution
        professional appointed is required to be replaced, he may apply to
        the Adjudicating Authority for replacement of such professional. The
        Adjudicating Authority within seven days of receipt of the application
        may make reference to the Board for Replacement of Resolution
        Professional.
Q.135. How can a debtor prove that the debt claimed as unpaid by the
       creditor has already been settled and paid?
A.135   The debtor may prove the repayment of debt claimed as unpaid by a
        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.
        c)       A signed acknowledgement by the creditor accepting
                 receipt of dues.
        However, where the debt for which an application has filed by a
        creditor is registered with the information utility, the debtor shall not
        be entitled to dispute the validity of such debt.
Q.136. What is a repayment plan and what details shall it include?
A.136   A Repayment plan means a plan prepared by the debtor in
        consultation with resolution professional containing a proposal to the
        committee of creditors for restructuring of his debt or affairs.

                                       40
             Insolvency Resolution and Bankruptcy for Individuals and Firms

        A repayment plan shall include the following:-
        a)        A justification for preparation of such repayment plan and
                  reasons on the basis of which the creditors may agree upon
                  the plan.
        b)        A provision for payment of fee to the resolution professional
                  and any such other matters as may be specified.
Q.137. How will a repayment plan be approved?
A.137   A 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.
Q.138. When does a repayment plan end prematurely?
A.138   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.
Q.139. Who can file an application for bankruptcy of a debtor?
A.139   An application for bankruptcy of a debtor may be made, by a creditor
        individually or jointly with other creditors or by a debtor.
Q.140. When can one make an application for bankruptcy?
A.140   An application for bankruptcy of a debtor may be made in the
        following circumstances:-
        a)        Where an order has been passed by an Adjudicating
                  Authority under Section 100(4) of the Code, rejecting an
                  application for insolvency resolution process.
        b)        Where an order has been passed by an Adjudicating
                  under Section 115(4) of the Code, rejecting the repayment
                  plan.
        c)        Where an order has been passed by an Adjudicating
                  Authority under Section 118(3) of the Code, where the
                  repayment plan has not been completely implemented.
Q.141. Is there any time limit for making application for bankruptcy?
A.141   Yes, the application for bankruptcy of a debtor shall be made within
        a period of three months of the date of the order passed by the
        Adjudicating Authority.


                                      41
FAQs on The Insolvency and Bankruptcy Code 2016

Q.142. How will an application for bankruptcy be made?
A.142   The application for bankruptcy shall be made in the following
        manner and shall be accompanied with following:-
        a)      The records of insolvency resolution process.
        b)      A copy of the order passed by the Adjudicating Authority
                granting permission to apply for bankruptcy.
        c)      The statement of affairs of the debtor or the details of the
                debts owed by the debtor to the creditor as on the date of
                the application for bankruptcy, as the case may be.
        Further, in case of application made by the secured creditor it shall
        also be accompanied with:-
        a)      A statement by the creditor having the right to enforce the
                security that he shall, in the event of an Order of
                Bankruptcy being made, give up his security for the benefit
                of all the creditors of the bankrupt.
        b)      A statement by the creditor stating that the application for
                bankruptcy is only in respect of the unsecured part of the
                debt and an estimated value of the unsecured part of the
                debt.
Q.143. Can application of bankruptcy be withdrawn?
A.143   An application for bankruptcy by the debtor may be withdrawn with
        the leave of the Adjudicating Authority and by the creditor with the
        permission of the Adjudicating Authority.
Q.144. What will be the effect of application of bankruptcy?
A.144   When an application of bankruptcy is filed an interim-moratorium
        shall commence on the date of the making of the application on all
        actions against the properties of the debtor in respect of his debts
        and such moratorium shall cease to have effect on the bankruptcy
        commencement date.
Q.145. What is the effect of beginning of an interim moratorium?
A.145   After commencement of interim moratorium following shall be the
        effect:-
        a)      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.


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             Insolvency Resolution and Bankruptcy for Individuals and Firms

        b)        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.
Q.146. What is the process of Appointment of a Bankruptcy Trustee?
A.146   The Bankruptcy Trustee shall be appointed by the Adjudicating
        Authority in following manner:-
        a)        Where an insolvency professional is proposed as the
                  Bankruptcy Trustee in the application for bankruptcy 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.
                  The Board shall confirm or reject the proposed Appointment
                  within ten days of the receipt of the direction.
        b)        In other cases, the Adjudicating Authority shall direct the
                  Board within seven days of receiving the application to
                  nominate a Bankruptcy Trustee for the bankruptcy process.
                  The Board shall nominate a Bankruptcy Trustee within ten
                  days of receiving the direction of the Adjudicating Authority.
Q.147. Is there any time limit for passing an Order of Bankruptcy by
       the Adjudicating Authority?
A.147   Yes, the Adjudicating Authority shall pass an Order of Bankruptcy
        within fourteen days of receiving the confirmation or nomination of
        the Bankruptcy Trustee.
Q.148. What shall be the validity of Order of Bankruptcy?
A.148   The Order of Bankruptcy passed by the Adjudicating Authority shall
        continue to have effect till the debtor is discharged.
Q.149. What will be the effect of passing of Order of Bankruptcy?
A.149   The following shall be the effect of the passing of the Order of
        Bankruptcy:-
        a)        The estate of the bankrupt shall vest in the Bankruptcy
                  Trustee
        b)        The estate of the bankrupt shall be divided among his
                  creditors



                                      43
FAQs on The Insolvency and Bankruptcy Code 2016

        c)      A creditor of the bankrupt indebted in respect of any debt
                claimed as a bankruptcy debt shall not be permitted to
                initiate any action against the property of the bankrupt in
                respect of such debt or commence any suit or other legal
                proceedings except with the leave of the Adjudicating
                Authority.
        However, the Order of Bankruptcy shall not affect the right of any
        secured creditor to realise or otherwise deal with his security
        interest.
Q.150. How are claims invited from creditors by the Adjudicating
       Authority?
A.150   The Adjudicating Authority invites the claims from creditors by
        issuing notices to the creditors, within ten days of the bankruptcy
        commencement date and also by issuing a public notice inviting
        claims from creditors.
Q.151. What is the mode of publication of public notice?
A.151   The notice shall be published in at least one English and one
        vernacular newspaper which is in circulation in the state where the
        debtor resides. It shall also be affixed in the premises of the
        Adjudicating Authority and shall also be placed on the website of the
        Adjudicating Authority.
Q.152. What is the time limit for registration of claims by the creditors?
A.152   The creditors shall register claims with the Bankruptcy Trustee by
        sending details of the claims to the Bankruptcy Trustee within seven
        days of the publication of the public notice.
Q.153. How shall a workman or employee of the corporate debtor
       submit his claim?
A.153   Workman or employee of the corporate debtor shall submit proof of
        claim to the interim resolution professional in person or by post or by
        electronic means in Form D of the Schedule to Insolvency and
        Bankruptcy (Insolvency Resolution) Regulations, 2016.
Q.154. How can workmen or employees prove their claims against the
       corporate debtor?
A.154   The workmen or employees may prove the existence of dues
        against the corporate debtor on the basis of:-
                Records available with an information utility


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             Insolvency Resolution and Bankruptcy for Individuals and Firms

                  Proof of employment such as contract of employment for
                  the period for which the dues are claimed
                  Evidence of notice demanding payment of unpaid dues and
                  any documentary or other proof that payment has not been
                  made
                  An order of Court or Tribunal that has adjudicated upon non
                  payment of dues
Q.155. Is there any time limit for submission of repayment plan?
A.155   Yes, the resolution professional shall submit the repayment plan
        alongwith his report on such plan to the Adjudication Authority within
        21 days from the last date of submission of claims by creditors.
Q.156. Who will convene the meeting of creditors in bankruptcy?
A.156   The Bankruptcy Trustee shall be the convener of the meeting of the
        creditors and will summon the meeting of creditors by issuing a
        notice for calling a meeting of the creditors within twenty-one days
        from the date of bankruptcy commencement.
Q.157. What is the process of passing of Discharge Order by the
       Adjudicating Authority?
A.157   The Bankruptcy Trustee shall apply to the Adjudicating Authority for
        passing of a Discharge Order on the expiry of one year from the
        bankruptcy commencement date or within seven (7) days of the
        approval of the Committee of Creditors of the completion of
        administration of the estates of the bankrupt.
Q.158. What is the effect of Discharge Order?
A.158   The Discharge Order shall release the bankrupt from all the
        bankruptcy debt. However, it shall not affect the following:-
        a)        It shall not affect the functions of the Bankruptcy Trustee.
        b)        It shall not affect the operation of the provisions of Chapters
                  IV and V of Part III.
        c)        It shall not release the bankrupt from any debt incurred by
                  means of fraud or breach of trust to which he was a party.
        d)        It shall not discharge the bankrupt from any excluded debt.
Q.159. What are the restrictions imposed on a Bankrupt?
A.159   The following restrictions shall be imposed on a Bankrupt:-


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FAQs on The Insolvency and Bankruptcy Code 2016

        a)      He shall 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)      He shall be prohibited from creating any charge on his
                estate or taking any further debt, except with the previous
                sanction of the Bankruptcy Trustee.
        c)      He shall be required to inform his business partners that he
                is undergoing a bankruptcy process.
        d)      He shall inform all the parties involved in transaction with
                him that he is undergoing a bankruptcy process.
        e)      He shall be incompetent to maintain any legal action or
                proceedings in relation to the bankruptcy debts, except with
                the previous sanction of the Adjudicating Authority.
        f)      He shall not be permitted to travel overseas without the
                permission of the Adjudicating Authority.
Q.160. Can restriction imposed on a bankrupt cease to have effect?
A.160   Yes, any restriction imposed on a bankrupt shall cease to have
        effect if the Order of Bankruptcy against him is modified or recalled
        under Section 142 or when he is discharged under Section 138.
Q.161. Can the Order of Bankruptcy be modified or recalled by the
       authority?
A.161   Yes, the Adjudicating Authority may modify or recall an Order of
        Bankruptcy in following circumstances:-
        a)      There exists an error apparent on the face of such order.
        b)      The bankruptcy debts and the expenses of the bankruptcy
                have either been paid for or secured to the satisfaction of
                the Adjudicating Authority after the making of the Order of
                Bankruptcy.
Q.162. What will be the effect of modification or recall of order by the
       authority?
A.162   Where the Adjudicating Authority modifies or recalls the Order of
        Bankruptcy any sale or other disposition of property, payment made
        or other things duly done by the Bankruptcy Trustee shall be valid
        and the property of the bankrupt shall vest in such person as the
        Adjudicating Authority may appoint or, in default of any such



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             Insolvency Resolution and Bankruptcy for Individuals and Firms

        Appointment, revert to the bankrupt on such terms as the
        Adjudicating Authority may direct.
Q.163. Can a Bankruptcy Trustee be replaced?
A.163   Yes, a Bankruptcy Trustee can be replaced in the following manner:-
        a)        The Committee of Creditors may replace the Bankruptcy
                  Trustee at a meeting, by a vote of seventy-five per cent of
                  voting share and propose to replace the Bankruptcy Trustee
                  appointed with another Bankruptcy Trustee and it may
                  further apply to the Adjudicating Authority for the
                  replacement of the Bankruptcy Trustee.
        b)        The Adjudicating Authority shall within Seven (7) days of
                  the receipt of the application direct the Board to recommend
                  for replacement of Bankruptcy Trustee which shall further
                  recommend a Bankruptcy Trustee for replacement against
                  whom no disciplinary proceedings are pending within ten
                  days of the direction of the Adjudicating Authority.
        c)        The Adjudicating Authority shall order Appointment of the
                  Bankruptcy Trustee as recommended by the Board within
                  Fourteen (14) days of receiving such recommendation.
Q.164. Under what can a Bankruptcy Trustee resign?
A.164   A Bankruptcy Trustee may resign in following circumstances:-
        a)        When he intends to cease practicing as insolvency
                  professional.
        b)        When there is conflict of interest or change of personal
                  circumstances which preclude the further discharge of his
                  duties as a Bankruptcy Trustee.
        In case of resignation by Bankruptcy Trustee the Adjudicating
        Authority shall direct the Board for his replacement within seven (7)
        days of the acceptance of the resignation of the Bankruptcy Trustee.
Q.165. What is the role of the Bankruptcy Trustee?
A.165   The Bankruptcy Trustee shall investigate the affairs of the bankrupt
        and take necessary steps for realizing the estate of the bankrupt and
        distribute the estate of the bankrupt.
Q.166. What are the duties of Bankrupt towards the Bankruptcy
       Trustee?



                                      47
FAQs on The Insolvency and Bankruptcy Code 2016

A.166   The bankrupt shall assist the Bankruptcy Trustee in carrying out his
        functions and shall-
        a)      give the information of his affairs to the Bankruptcy Trustee.
        b)      attend the Bankruptcy Trustee at such times as may be
                required
        c)      give notice to the Bankruptcy Trustee of acquisition or
                devolution of any property upon the bankrupt and any
                increase in the income of the bankrupt.
        Also, as per Section 156 of the Code, the bankrupt, his banker or
        agent or any other person having possession of any property, books,
        papers or other records shall deliver the said property and
        documents to the Bankruptcy Trustee. Any failure to give possession
        of such property or documents 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.
Q.167. What are the rights of Bankruptcy Trustee?
A.167   As per Section 151 of the Code, the Bankruptcy Trustee has right to
        hold property, make contracts, sue and be sued, enter into
        engagements in respect of the estate of the bankrupt, employ
        persons to assist him, execute any power of attorney, deed or other
        instrument and do any other act which is necessary or expedient for
        the purposes of or in connection with the exercise of his rights.
Q.168. Does the Bankruptcy Trustee have any rights towards estate of
       the bankrupt?
A.168   The Bankruptcy Trustee has right to sell any part of the estate of the
        bankrupt, exercise the right of redemption in respect of any property
        which is pledged or hypothecated, 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 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.
Q.169. Which are the acts that require approval from creditors prior to
       being conducted by the Bankruptcy Trustee?
A.169   The Bankruptcy Trustee shall require approval of the Committee of
        Creditors for the following acts:-
        a)      To carry on any business of the bankrupt as far as may be
                necessary for winding it up beneficially.

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             Insolvency Resolution and Bankruptcy for Individuals and Firms

        b)        To bring, institute or defend any legal action or proceedings
                  relating to the property comprised in the estate of the
                  bankrupt.
        c)        To accept as consideration for the sale of any property a
                  sum of money due at a future time subject to certain
                  stipulations such as security.
        d)        To mortgage or pledge any property for the purpose of
                  raising money for the payment of the debts of the bankrupt.
        e)        Where any right, option or other power forms part of the
                  estate of the bankrupt, make payments or incur liabilities
                  with a view to obtaining, for the benefit of the creditors, any
                  property which is the subject of such right, option or power.
        f)        To 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)        To make compromise or other arrangement as may be
                  considered expedient, with the creditors.
        h)        To make compromise or other arrangement as he may
                  deem expedient with respect to any claim arising out of or
                  incidental to the bankrupt's estate.
        i)        To appoint the bankrupt to supervise the management of
                  the estate of the bankrupt, carry on his business for the
                  benefit of his creditors and to assist the Bankruptcy Trustee
                  in administering the estate of the bankrupt.
Q.170. What shall be included in the estate of the Bankrupt?
A.170   As per Section 155 of the Code, the estate of the bankrupt shall
        include all property belonging to or vested in the bankrupt at the
        bankruptcy commencement date or by virtue of any of the provisions
        of this Chapter is comprised in the estate.
        The estate of the bankrupt shall not include-
        a)        Excluded assets
        b)        Property held by the bankrupt on trust for any other person.
        c)        All sums due to any workman or employee from the
                  provident fund, the pension fund and the gratuity fund.



                                       49
FAQs on The Insolvency and Bankruptcy Code 2016

Q.171. What will be the effect of any disposition of property by the
       debtor?
A.171   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.
Q.172. Can the Bankruptcy Trustee claim the after acquired property of
       bankrupt?
A.172   The Bankruptcy Trustee shall be entitled to claim after-acquired
        property of the bankrupt by giving due notice to the bankrupt.
        However, such right shall not be exercised in case of excluded
        assets or any property which is acquired by or devolves upon the
        bankrupt after a Discharge Order is passed under Section 138.
Q.173. What is onerous property?
A.173   An onerous property means and includes any unprofitable contract
        and any other which is unsaleable or not readily saleable, or is such
        that it may give rise to a claim.
Q.174. Can a Bankruptcy Trustee disclaim any onerous property?
A.174   Yes, the Bankruptcy Trustee may disclaim any onerous property
        forming part of the estate of the bankrupt by giving notice to the
        bankrupt or any person interested in the onerous property. However,
        such notice shall not be necessary in the following cases:-
        a)      If 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.
        b)      If a decision under clause (a) has not been taken by the
                Bankruptcy Trustee within seven days of receipt of the
                notice.
Q.175. Who can make an application to challenge against disclaimed
       property?
A.175   The following persons may make an application challenging the
        disclaimer of property:-
        a)      Any person who claims an interest in the disclaimed
                property.
        b)      Any person who is under any liability in respect of the
                disclaimed property.

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             Insolvency Resolution and Bankruptcy for Individuals and Firms

        Where the disclaimed property is a dwelling house, any person who
        on the date of application for bankruptcy was in occupation of or
        entitled to occupy that dwelling house.
Q.176. What will amount to undervalued transactions?
A.176   A bankrupt is said to have entered into an undervalued transaction
        with any person if-
        a)        He makes a gift to that person.
        b)        No consideration has been received by that person from the
                  bankrupt.
        c)        It is in consideration of marriage.
        d)        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.
Q.177. What will be the consequence of an undervalued transaction
       entered between a bankrupt and any other person?
A.177   Where an undervalued transaction has been entered between a
        bankrupt and any other person, during the period of two years
        ending on the filing of the application for bankruptcy and thereby
        caused bankruptcy process to be triggered. The Bankruptcy Trustee
        may apply to the Adjudicating Authority for an order declaring an
        undervalued transaction void and 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.
Q.178. What will be the consequence where a bankrupt gives
       preference to any person in a transaction?
A.178   Where a bankrupt has given a preference to any person in a
        transaction during the period of two years ending on the filing of the
        application for bankruptcy and thereby caused bankruptcy process
        to be triggered. The Bankruptcy Trustee may apply to the
        Adjudicating Authority for an order declaring the preference
        transaction void and requiring any property transferred as a part of
        the preference transaction to be vested with the Bankruptcy Trustee
        as a part of the estate of the bankrupt.
Q.179. What will be the fate of extortionate credit transactions entered
       into by a bankrupt?




                                       51
FAQs on The Insolvency and Bankruptcy Code 2016

A.179   The Adjudicating Authority may make an order in respect of
        extortionate credit transactions to which the bankrupt is or has been
        a party. Such transactions should have been entered into by the
        bankrupt during the period of two years ending on the bankruptcy
        commencement date. The Bankruptcy Trustee may apply to the
        Adjudicating Authority for an order to set aside the whole or part of
        any debt created by the transaction or to vary the terms of the
        transaction or vary the terms on which any security for the purposes
        of the transaction is held. It may further require any person who has
        been paid by the bankrupt under any transaction, to pay a sum to
        the Bankruptcy Trustee or to surrender to the Bankruptcy Trustee
        any property of the bankrupt held as security for the purposes of the
        transaction.
Q.180. What are the rights of a party to a contract entered into with a
       bankrupt before the bankruptcy commencement date?
A.180   Where a contract has been entered into by the bankrupt with a
        person before the bankruptcy commencement date party to a
        contract, other than the bankrupt may apply to the Adjudicating
        Authority for an order discharging the obligations of the applicant or
        the bankrupt under the contract and payment of damages by the
        party or the bankrupt.
Q.181. Will death of a bankrupt affect the proceedings being initiated?
A.181   The death of bankrupt shall not affect the bankruptcy proceedings
        and the bankruptcy proceedings shall continue as if he were alive.
Q.182. What shall be acceptable as a proof of debt of the creditor?
A.182   The proof of debt shall require the creditor to give full particulars of
        debt and security if any and also include the date on which the debt
        was contracted and the value at which that person assesses it. The
        following may be proof of debt-
        a)       In case the creditor is a decree holder against the bankrupt,
                 a copy of the decree shall be a valid proof of debt.
        b)       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.
        c)       Where a secured creditor realizes his security, he may
                 produce proof of the balance due to him.



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             Insolvency Resolution and Bankruptcy for Individuals and Firms

        d)        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.
Q.183. Can a Bankruptcy Trustee distribute interim dividend?
A.183   When 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.
Q.184. Can a Bankruptcy Trustee distribute final dividend?
A.184   The Bankruptcy Trustee may declare and         distribute final dividend
        among the creditors who have proved their      debts, without regard to
        the claims of any other persons after he       has realized the entire
        estate of the bankrupt or so much of it as     could be realized in his
        opinion.
Q.185. What shall be the consequences if a creditor fails to prove his
       debt?
A.185   A creditor who has not proved his debt before the declaration of any
        dividend is not entitled to disturb the distribution of that dividend or
        any other dividend declared before his debt was proved. However,
        after he has proved his debt, he shall be entitled to be paid
        dividend(s) out of any money for the time being available for the
        payment of any further dividend.
Q.186. What shall be the order of priority of payments?
A.186   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 shall be paid in full.
        b)        Secondly, the workmen's dues for the period of twenty-four
                  (24) months preceding the bankruptcy commencement date
                  and debts owed to secured creditors shall be paid.
        c)        Thirdly, wages and any unpaid dues owed to employees,
                  other than workmen, of the bankrupt for the period of twelve
                  months preceding the bankruptcy commencement date
                  shall be paid.
        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


                                      53
FAQs on The Insolvency and Bankruptcy Code 2016

                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 shall be paid.
        e)      Lastly, all other debts and dues owed by the bankrupt
                including unsecured debts shall be paid.
Q.187. Who shall be the Adjudicating Authority for insolvency of
       individuals and partnership firms?
A.187   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 reside or carry on the business or personally
        work for gain.
        Further, the matters of appeal shall be handled by the Debt
        Recovery Appellate Tribunal.
Q.188. Does Civil Court have jurisdiction in matters relating to
       insolvency of individuals and partnership firms?
A.188   Civil Court does not have jurisdiction to entertain any suit or
        proceedings or grant injunction or any other relief in respect of any
        matter on which the Debt Recovery Tribunal or the Debt Recovery
        Appellate Tribunal has jurisdiction under this Code.
Q.189. Who shall be the appellate authority for insolvency of
       individuals and partnership firms?
A.189   An appeal from an order of the Debt Recovery Tribunal under this
        Code shall be filed before the Debt Recovery Appellate Tribunal.
        The appeal shall be filed within thirty (30) days from the date of
        impugned order.
Q.190. Can an appeal be filed against the Order of Debt Recovery
       Appellate Tribunal?
A.190   Yes, the order of the Debt Recovery Appellate Tribunal is
        appealable before the Supreme Court. It shall lie only on a question
        of law and shall be filed within 45 days from the date of impugned
        order.
Q.191. What is the punishment for furnishing false information by
       debtor or creditor?
A.191   A debtor or creditor who provides information which is false in any
        material particulars to the resolution professional shall be punishable


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          Insolvency Resolution and Bankruptcy for Individuals and Firms

        with imprisonment for a term which may extend to one year, or with
        fine which may extend to five lakh rupees, or with both.
Q.192. What shall be the consequence where a creditor dishonestly
       accepts money for voting in favour of repayment plan?
A.192   Where a creditor dishonestly accepts any money, property or
        security from the debtor for a promise to vote in favour of the
        repayment plan, 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 equivalent to such money, property or
        security accepted by such creditor, as the case may be, or with both.
        However, where such amount is not quantifiable, the total amount of
        fine shall not exceed five lakh rupees.
Q.193. What is the punishment for contraventions by insolvency
       professional?
A.193   An insolvency professional, who deliberately contravenes the
        provisions of the Code, 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.
Q.194. What is the punishment for false information and concealment
       by the bankrupt?
A.194   A bankrupt who knowingly makes a false representation or wilfully
        omits or conceals any material information while making an
        application for bankruptcy under Section 122 or while providing any
        information during the bankruptcy process shall be punishable with
        imprisonment which may extend to six months, or with fine which
        may extend to five lakh rupees, or with both.
Q.195. What is the punishment for withholding or destroying or
       altering etc. of books of accounts by bankrupt?
A.195   A bankrupt who has fraudulently 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 shall be punishable with imprisonment which may extend
        to one year, or with fine, which may extend to five lakh rupees, or
        with both.
Q.196. What is the punishment for loss of property by the Bankrupt?



                                     55
FAQs on The Insolvency and Bankruptcy Code 2016

A.196   Where a bankrupt has failed to account 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, without any reasonable cause or
        satisfactory explanation. 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. However,
        where such loss is not quantifiable, the total amount of fine imposed
        shall not exceed five lakh rupees.
Q.197. What is the punishment for absconding Bankrupt?
A.197   Where a bankrupt has absconded or attempts to absconds or
        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, after the bankruptcy
        commencement date, he shall be punishable with imprisonment for a
        term which may extend to one year, or with fine, which may extend
        to five lakh rupees, or with both.
Q.198. What are the punishments for violations of the Code by
       Bankruptcy Trustee?
A.198   The Bankruptcy Trustee who has fraudulently misapplied, retained
        or accounted for any money or property comprised in the estate of
        the bankrupt or 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 under Section 149, 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. However,
        where the loss incurred is not quantifiable, the total amount of fine
        imposed shall not exceed five lakh rupees.




                                     56
                                                                  Part IV

                   Regulation of Insolvency
                Professionals, Agencies and
                        Information Utilities
Q.199. When was the Insolvency and Bankruptcy Board of India
       established?
A.199   The Insolvency and Bankruptcy Board of India has been established
        on 1st October, 2016, vide notification no. SO 3110(E) dated
        01.10.2016.
Q.200. Where is the Head Office of Insolvency and Bankruptcy Board
       of India situated?
A.200   The Head Office of Insolvency and Bankruptcy Board of India is
        situated in the National Capital i.e., New Delhi.
Q.201. What is the composition of the Insolvency and Bankruptcy
       Board of India?
A.201   The Insolvency and Bankruptcy Board of India is constituted u/s 189
        of the Insolvency and Bankruptcy Code, 2016. It shall consist of
        following members who shall be appointed by the Central
        Government:-
        (i)     Chairperson
        (ii)    3 members from amongst the officers of Central
                Government one each to represent the Ministry of Finance,
                the Ministry of Corporate Affairs and Ministry of Law, ex
                officio
        (iii)   1 member to be nominated by the Reserve Bank of India,
                ex officio
        (iv)    5 other members to be nominated by the Central
                Government, of whom at least three shall be the whole-time
                members
Q.202. What is the term of office of Chairperson of Insolvency and
       Bankruptcy Board of India?
FAQs on The Insolvency and Bankruptcy Code 2016

A.202   The term of office of the Chairperson shall be 5 years or till they
        attain age of 65 years, whichever is earlier.
Q.203. What are the functions of the Insolvency and Bankruptcy Board
       of India?
A.203   The functions of the Board have been entailed in Section 196 of the
        Code. The major function of the board is to exercise regulatory
        measures on insolvency professionals, insolvency professional
        agencies and information utilities.
Q.204. What are the grounds for removal of a member of Insolvency
       and Bankruptcy Board of India?
A.204   As per Section 190 of Insolvency and Bankruptcy Code,2016 the
        Central Government has the power to remove a member of
        Insolvency And Bankruptcy Board Of India on following grounds:-
        a)      If he is an undischarged bankrupt;
        b)      If he has become physically or mentally incapable of acting
                as a member;
        c)      If he has been convicted of an offence, which in the opinion
                of the Central Government involves moral turpitude;
        d)      If he has, so abused his position as to render his
                continuation in office detrimental to the public interest.
Q.205. Is there any requirement for disclosure of interest by member of
       the Insolvency and Bankruptcy Board of India?
A.205     Yes, Section 193 of the Insolvency and Bankruptcy Code, 2016
        mandates any member of Insolvency and Bankruptcy Board of India,
        who being a director of a company has any direct or indirect
        pecuniary interest in any matter under consideration at a meeting of
        the Board, to disclose the nature of his interest. Further, such
        member shall not take any part in any deliberation or decision of the
        Board with respect to that matter.
Q.206. Who shall make the Model Bye-Laws of an Insolvency
       Professional Agency?
A.206   The Insolvency and Bankruptcy Board of India has the power to
        make Model Bye-Laws to be adopted by the Insolvency Professional
        Agencies.
Q.207. Who has the power to condone delay in performance of acts
       under the Insolvency and Bankruptcy Code, 2016?

                                    58
             Insolvency Resolution and Bankruptcy for Individuals and Firms

A.207   The relevant Adjudicating Authority i.e., National Company Law
        Tribunal or Debt Recovery Tribunal, as the case may be, has the
        power to condone any delay in performing an act under the
        Insolvency and Bankruptcy Code, 2016.
Q.208. Explain the eligibility requirements to register as an Insolvency
       Professional Agency?
A.208   As per regulation 3 of Insolvency And Bankruptcy Board of India
        (Insolvency Professional Agencies) Regulations, 2016 following are
        the eligibility requirements for registration as an insolvency
        professional agencies:
        a)        It shall be registered as a company under Section 8 of the
                  Companies Act, 2013.
        b)        Its sole object shall be to carry on the functions of an
                  insolvency professional agency.
        c)        It has bye-laws and governance structure in accordance
                  with the Insolvency and Bankruptcy Board of India (Model
                  Bye-laws and Governing Board of Insolvency Professional
                  Agencies), 2016.
        d)        It shall have minimum net worth of ten crore rupees.
        e)        It shall have a paid up share capital of five crore rupees.
        f)        It shall not be under control of person(s) resident outside
                  India
        g)        The person's resident outside India does not hold more
                  than 49% of its share capital.
        h)        It shall not be subsidiary of a body corporate through more
                  than one layer.
        i)        It itself, its promoters, its directors and persons holding
                  more than 10% of its share capital shall be fit and proper
                  persons.
Q.209. What is the procedure for registration as an Insolvency
       Professional Agency?
A.209   The company eligible for registration shall make an application to
        the Insolvency and Bankruptcy Board of India in Form A, as
        prescribed, along with non-refundable application fee of ten lakh
        rupees.



                                       59
FAQs on The Insolvency and Bankruptcy Code 2016

Q.210. What is the term of validity of registration as an Insolvency
       Professional Agency?
A.210   As per Regulation 5(3) of Insolvency And Bankruptcy Board of India
        (Insolvency Professional Agencies) Regulations, 2016 the
        registration granted by Insolvency And Bankruptcy Board Of India to
        Insolvency Professional Agency shall be valid for a period of 5
        years.
Q.211. Can an Insolvency Professional Agency apply for renewal of
       certificate of registration?
A.211   As per Regulation 4(2) of Insolvency and Bankruptcy Board of India
        (Insolvency Professional Agencies) Regulations, 2016, an
        insolvency professional agency may apply for renewal of registration
        six months before the expiry of such registration in Form A, as may
        be prescribed, along with non-refundable fees of five lakh rupees.
Q.212. What are the consequences if application for renewal is
       rejected Insolvency and Bankruptcy Board of India?
A.212   As per Regulation 6(4) of Insolvency And Bankruptcy Board of
        India(Insolvency Professional Agencies) Regulations, 2016 upon
        rejection of application of renewal the insolvency professional
        agency shall be required to discharge its pending obligations and
        shall be allowed to continue its functions till such time so as to
        enable the enrolment of its members with another insolvency
        professional agency.
Q.213. Under what circumstances the Board may cancel or suspend
       the registration of an Insolvency Professional Agency?
A.213   As per Section 201(5) of the Code, the Board may cancel or
        suspend the registration of an Insolvency Professional Agency in
        following circumstances:-
a)      When registration is obtained by making a false statement or
        misrepresentation or by any other unlawful means.
b)      When Agency has failed to comply with the requirements of the
        regulations made by the Board or bye-laws made by the agency.
c)      When it has contravened any of the provisions of the Act or rules or
        regulations made thereunder.
Q.214. Can an Insolvency Professional Agency appeal against the
       order of the Board?


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             Insolvency Resolution and Bankruptcy for Individuals and Firms

A.214   Yes, as per Section 202 of the Code read with Regulation 9 of
        Insolvency and Bankruptcy Board of India (Insolvency Professional
        Agencies) Regulations, 2016, any insolvency professional agency
        aggrieved by the order of the Board may prefer an appeal to
        National Company Law Tribunal within 30 days of receipt of the
        impugned order.
Q.215. What are the functions of an Insolvency Professional Agency?
A.215   An Insolvency Professional Agency shall perform following functions:
        a)        Grant membership to persons who fulfill all requirements
                  set out in its bye-laws on payment of membership fee.
        b)        Lay down standards of professional conduct for its
                  members.
        c)        Monitor the performance of its members.
        d)        Safeguard the rights, privileges and interests of insolvency
                  professionals who are its members.
        e)        Suspend or cancel the membership of insolvency
                  professionals who are its members on the grounds set out
                  in its bye-laws.
        f)        Redress the grievances of consumers against insolvency
                  professionals who are its members.
        g)        Publish information about its functions, list of its members,
                  performance of its members and such other information as
                  may be specified by regulations laid down by the Board.
Q.216. What is the process to be followed by Insolvency Professional
       Agency for enrolment of a Professional Member?
A.216   The following is the process for enrolment of a Professional Member
        by Insolvency Professional Agency:-
                  Application by individual with fees
                  Examination of application by the Agency
                  Agency may require applicant to submit additional
                  documents
                  Agency may reject the application after giving opportunity of
                  being heard to the applicant
                  Agency may accept the application and grant certificate of
                  membership

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FAQs on The Insolvency and Bankruptcy Code 2016

Q.217. What is the procedure for rejection of application by Insolvency
       Professional Agency?
A.217   The Agency while rejecting an application shall:-
                Communicate the reasons for such rejection within 30 days
                of receipt of application.
                It shall give time to the applicant for removing the
                discrepancies or deficiencies or presenting additional
                documents or clarifications.
Q.218. What is the remedy for the applicant aggrieved by the decision
       of Insolvency Professional Agency?
A.218   The applicant aggrieved of a decision of the Agency rejecting his
        application may prefer an appeal to the Membership Committee
        within 30 days of receipt of such decision.
Q.219. Which are the Committees to be constituted by Insolvency
       Professional Agency?
A.219   The Agency may form the following committees:-
                Advisory Committee
                Membership Committee
                Monitoring Committee
                Grievance Redressal Committee
                Disciplinary Committee
Q.220. What is the scope of functions of Advisory Committee?
A.220   The Advisory Committee may advise the Agency on matters
        pertaining to:-
                Development of profession
                Standards of professional and ethical conduct
                Best practices in respect of insolvency resolution,
                liquidation and bankruptcy
Q.221. What are the grounds for disciplinary proceedings against the
       Professional Member?
A.221   The Agency may initiate disciplinary           proceedings   against
        Professional Members in following cases:-



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             Insolvency Resolution and Bankruptcy for Individuals and Firms

                  On the basis of reference made by the Grievance Redressal
                  Committee
                  On the basis of monitoring of Professional Members
                  On the directions given by the Board or any court of law
                  The Agency may initiate proceedings suo moto, on the
                  basis of any information received by it
Q.222. Who can become an Insolvency Professional?
A.222   As per Section 206 and 207 read with Regulation 5 of Insolvency
        And Bankruptcy Board of India (Insolvency Professional)
        Regulations, 2016, an individual can become an insolvency
        professional by seeking requisite registration with an insolvency
        professional agency.
Q.223. Who is eligible to register as an Insolvency Professional?
A.223   The Insolvency And Bankruptcy Board of India has prescribed
        following persons to be eligible for registration as an Insolvency
        Professional:-
        a)        An individual who has passed the National Insolvency
                  Examination.
        b)        An individual who has passed the Limited Insolvency
                  Examination, and has 15 years of experience in
                  management, after he received a Bachelor's degree from a
                  university established or recognized by law.
        c)        An individual who has passed the Limited Insolvency
                  Examination and has 10 years of experience as a Chartered
                  Accountant, Company Secretary, Cost Accountant or an
                  Advocate.
Q.224. What is the role of Information Utilities?
A.224   The information utilities shall act as a regulated information agency
        which shall electronically record, maintain and provide access of
        financial information to the persons as may be specified e.g.,
        creditors, Adjudicating Authority and other persons having interest in
        the information and provide following services, referred to as core
        services:
        a)        Accept electronic submission of financial information.
        b)        Safe and accurate recording of financial information.


                                      63
FAQs on The Insolvency and Bankruptcy Code 2016

        c)      Authenticating and verifying the financial information
                submitted by a person.
        d)      Providing access to information stored with the information
                utility to persons as may be specified.
Q.225. What are the grounds on which registration of an Information
       Utility can be cancelled?
A.225   As per Section 210 of the Code, the Board may order for suspension
        or cancellation of the certificate of registration granted to an
        information utility on any of the following grounds:-
        a)      The Registration was obtained by making a false statement
                or misrepresentation or any other unlawful means.
        b)      The Information utility has failed to comply with the
                requirements of the regulations made by the Board.
        c)      The Information utility has contravened any of the
                provisions of the Act or the rules or the regulations made
                thereunder, or any other ground as may be specified by
                regulations.
Q.226. Can an Information Utility appeal against the order of the
       Board?
A.226   Yes, any Information Utility which is aggrieved by the order of the
        Board under Section 210 may prefer an appeal to the National
        Company Law Appellate Tribunal.
Q.227. Does Information Utility require constituting governing board?
A.227   Yes, the Board requires every information utility to set up a
        governing board for ensuring that an information utility takes into
        account the objectives sought to be achieved by the Code.
Q.228. What are the obligations of Information Utility?
A.228   The information Utility shall provide such services as may be
        specified by the Board including core services and for such
        purposes it shall perform the following:-
        a)      It shall create and store financial information in a universally
                accessible format.
        b)      It shall accept electronic submissions of financial
                information from persons who are under obligations to
                submit financial information under sub-section (1) of Section
                215.

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             Insolvency Resolution and Bankruptcy for Individuals and Firms

        c)        It shall accept electronic submissions of financial
                  information from persons who intend to submit such
                  information.
        d)        It shall meet such minimum service quality standards as
                  may be specified by regulations.
        e)        It shall get the information received from various persons
                  authenticated by all concerned parties before storing such
                  information.
        f)        It shall provide access to the financial information stored by
                  it to any person who intends to access such information.
        g)        It shall publish such statistical information as may be
                  specified by regulations.
        h)        It shall have inter-operatability with other information
                  utilities.
Q.229. What is the procedure for submission of financial information to
       Information Utility?
A.229   Any person may submit financial information to the information utility
        or access the information from the information utility on payment of
        requisite fee in such form and manner as may be specified by
        regulations.
Q.230. Can a person share the financial information submitted to
       Information Utility?
A.230   No, any person who submits financial information to an information
        utility shall not provide such information to any other person except
        to such extent and under such circumstances as may be specified.
Q.231. Can a person modify the information submitted to Information
       Utility?
A.231   Yes, a person may modify or update or rectify error in the financial
        information submitted to Information Utility by stating reasons in the
        manner as may be prescribed.
Q.232. What is the procedure to raise complaint against an Insolvency
       professional agency or its member or an information utility?
A.232   Any person aggrieved by the functioning of an insolvency
        professional agency or its member or an information utility may file a
        complaint to the Board. The complaint shall be subjected to
        inspection and investigation by an Investigating Authority appointed

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FAQs on The Insolvency and Bankruptcy Code 2016

        by the Board and upon completion of investigation the Board may
        issue show cause notice to such person or agency and shall submit
        the report of the investigating authority to the disciplinary committee
        which may pass such order as it deems fit.
Q.233. What are the powers of disciplinary committee?
A.233   The disciplinary committee may suspend or cancel the registration of
        the insolvency professional or, insolvency professional agency or
        information utility as the case may be. It may further impose penalty
        which shall be three times the amount of the loss caused, or likely to
        have been caused, to persons concerned on account of such
        contravention, or three times the amount of the unlawful gain made
        on account of such contravention, whichever is higher. However,
        where such loss or unlawful gain is not quantifiable, the total amount
        of the penalty imposed shall not exceed more than one crore
        rupees.
Q.234. Is there any provision for restitution of loss suffered on account
       of any activity in contravention of this Code?
A.234   Yes, the Board may direct the person who has made unlawful gain
        or averted loss by indulging in any activity in contravention of this
        Code to disgorge an amount equivalent to such unlawful gain or
        aversion of loss and may further provide restitution to the person
        who suffered loss on account of any contravention.
        However, restitution shall be made only where person who suffered
        such loss is identifiable and the loss so suffered is directly
        attributable to such person.
Q.235. How can the funds of the Board be utilized?
A.235   The Fund shall be applied for meeting the salaries, allowances and
        other remuneration of the members, officers and other employees of
        the Board, the expenses of the Board in the discharge of its
        functions under section 196 and such other expenses on objects
        and for purposes authorised by this Code.
Q.236. Who shall audit the accounts of the Board?
A.236   The accounts of the Board shall be audited by the Comptroller and
        Auditor-General of India.




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                                                                      Part V

                                               Miscellaneous
Q.237. Can any person contribute to and withdraw from Insolvency and
       Bankruptcy Fund?
A.237   Yes, a person can contribute to Insolvency and Bankruptcy Fund
        voluntarily as per the provisions of Section 224(3) of the Code. If
        insolvency proceedings are initiated against such person, he can
        withdraw funds not exceeding the amount contributed by him for
        making payments to workmen, protecting the assets of such person,
        meeting the incidental costs during the proceedings etc.
Q.238. What are the circumstances under which Central Government
       may supersede the Board?
A.238   The Central Government may supersede the Board at any time in
        the following circumstances:-
        a)      When the Board is unable to discharge the functions and
                duties imposed on it by or under the provisions of this Code
                on account of grave emergency.
        b)      When 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.
        c)      In any other circumstances which render it necessary in the
                public interest to supersede the Board.
Q.239. Is there any time period for which the Central Government may
       supersede the Board?
A.239   Yes, the Central Government may supersede the Board for a period
        not exceeding six months.
Q.240. Do Civil Courts have power to grant relief under the Code?
A.240   No, Civil Court shall not have jurisdiction to pass any order in
        respect of any matter in which the Adjudicating Authority is
        empowered under this Code shall be granted by any court and
        further Civil Court shall not grant injunction in respect of any action
FAQs on The Insolvency and Bankruptcy Code 2016

        taken or to be taken in pursuance of any order passed by such
        Adjudicating Authority under this Code.
Q.241. To whom shall the Board place its Annual Report?
A.241   As per Section 229 of the Code, the Board shall prepare in each
        financial year its annual report, giving a full account of its activities
        during the previous financial year, and submit a copy thereof to the
        Central Government. Further, a copy of the report shall be laid, as
        soon as may be after it is received, before each House of
        Parliament.
Q.242. Who shall take cognizance of offences under the Code?
A.242   The offences under this Code shall be tried by the Special Court
        established under Chapter XXVIII of the Companies Act, 2013.
Q.243. When can the Special Court take cognizance of offence under
       the Code?
A.243   Special Court shall take cognizance of an offence punishable under
        this Act only upon receipt of complaint made by the Board or the
        Central Government or any person authorised by the Central
        Government in this behalf.
Q.244. Who is the Appellate Authority under the Code?
A.244   The High Court shall be the appellate authority for adjudging on the
        appeals and deciding the applications for revisions from the
        decisions of the Special Court under Section 236 of the Code.
Q.245. Who has the power to make rules under the Code?
A.245   The Central government shall have the power to make rules for
        carrying out the provisions of this Code.
Q.246. Who has the power to make regulations under the Code?
A.246   The Board shall have the power to make regulations to carry out the
        provisions of this Code and such regulations shall be consistent with
        this Code and the rules made thereunder.
Q.247. Which law has been repealed by enactment of the Code?
A.247   The Code has repealed the Presidency Towns Insolvency Act, 1909
        and the Provincial Insolvency Act, 1920.
Q.248. If Voluntary liquidation of Corporates is regulated by the
       Insolvency and Bankruptcy Code, what is the status of the
       provisions of the Companies Act 2013 in relation to this aspect?


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          Insolvency Resolution and Bankruptcy for Individuals and Firms

A.248   The aspects relating to Revival and Rehabilitation of Sick
        Companies as well as voluntary winding up have been omitted from
        the Companies Act and will only be governed by the provisions of
        the Code.
Q.249. How does the Code affect the proceedings pending under Acts
       repealed by the Code?
A.249   The proceedings pending under and relating to the Presidency
        Towns Insolvency Act 1909, and the Provincial Insolvency Act 1920
        immediately before the commencement of this Code shall continue
        to be governed under the aforementioned Acts and be heard and
        disposed of by the concerned Courts or Tribunals, as if the
        aforementioned Acts have not been repealed.
Q.250. As the Sick Industrial Companies (Special Provisions) Act 1985
       has been repealed, what will be the effect of enforcement of
       Code on proceedings pending under Sick Industrial Companies
       (Special Provisions) Repeal Act, 2003?
A.250   As per Section 252 of the Code read with Section 4(b) of Sick
        Industrial Companies (Special Provisions) Repeal Act, 2003 as
        made effective on 01.02.2016, any reference pending before Board
        for Industrial and Financial Reconstruction(BIFR) or appeal made
        before Appellate Authority stands abated on 01.12.2016.
        The Company in respect of which such appeal or reference etc.,
        stands abated may make reference to National Company Law
        Tribunal (NCLT) under Insolvency and Bankruptcy Code, 2016
        within 180 days from commencement of Code.




                                   69
                                                             Annexure A

   Table of Amendments from Section
          245 to 255 of Insolvency and
               Bankruptcy Code, 2016
Schedule   Change
First      In section 41, clause (a) shall be omitted
           Compulsory dissolution.-- A firm is dissolved,--
           (a) by the adjudication of all the partners or of all the partners
           but one as insolvent, or
Second     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.
Third      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.
Fourth     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 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.
Fifth      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;
                                                      Annexure-A

      (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


                         71
FAQs on The Insolvency and Bankruptcy Code 2016

                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.
Sixth      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.
Seventh    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.
Eight      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.".
Ninth      In section 23, in sub-sections (4), (5) and (6), after the words






                                    72
                                                                  Annexure-A

           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.
           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.
Tenth      In section 64, Clause (c) shall be omitted.
           Circumstances in which limited liability partnership may be
           wound up by Tribunal .-A limited liability partnership may be
           wound up by the Tribunal,-
           c) if the limited liability partnership is unable to pay its debts;
Eleventh   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.

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FAQs on The Insolvency and Bankruptcy Code 2016

           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;
                (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. 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. A company may, on a petition under section 272, be
                wound up by the Tribunal,--
                (a) if the company has, by special resolution, resolved that
                the company be wound up by the Tribunal;
                (b) if the company has acted against the interests of the
                sovereignty and integrity of India, the security of the State,
                friendly relations with foreign States, public order, decency
                or morality;
                (c) if on an application made by the Registrar or any other
                person authorised by the Central Government by
                notification under this Act, the Tribunal is of the opinion that
                the affairs of the company have been conducted in a

                                     74
                                                       Annexure-A

    fraudulent manner or the company was formed for
    fraudulent and unlawful purpose or the persons concerned
    in the formation or management of its affairs have been
    guilty of fraud, misfeasance or misconduct in connection
    therewith and that it is proper that the company be wound
    up;
    (d) if the company has made a default in filing with the
    Registrar its financial statements or annual returns for
    immediately preceding five consecutive financial years; or
    (e) if the Tribunal is of the opinion that it is just and
    equitable that the company should be wound up.".
12. For section 272, the following section shall be substituted,
namely:--
    "272. (1) Subject to the provisions of this section, a petition
    to the Tribunal for the winding up of a company shall be
    presented by--
    (a) the company;
    (b) any contributory or contributories;
    (c) all or any of the persons specified in clauses ( a) and (b);
    (d) the Registrar;
    (e) any person authorised by the Central Government in
    that behalf; or
    (f) in a case falling under clause (b) of section 271, by the
    Central Government or a State Government.
    (2) A contributory shall be entitled to present a petition for
    the winding up of a company, notwithstanding that he may
    be the holder of fully paid-up shares, or that the company
    may have no assets at all or may have no surplus assets
    left for distribution among the shareholders after the
    satisfaction of its liabilities, and shares in respect of which
    he is a contributory or some of them were either originally
    allotted to him or have been held by him, and registered in
    his name, for at least six months during the eighteen
    months immediately before the commencement of the
    winding up or have devolved on him through the death of a
    former holder.
    (3) The Registrar shall be entitled to present a petition for
    winding up under section 271, except on the grounds
    specified in clause (a) or clause (e) of that sub-section:


                         75
FAQs on The Insolvency and Bankruptcy Code 2016

                Provided that the Registrar shall obtain the previous
                sanction of the Central Government to the presentation of a
                petition:
                Provided further that the Central Government shall not
                accord its sanction unless the company has been given a
                reasonable opportunity of making representations.
                (4) A petition presented by the company for winding up
                before the Tribunal shall be admitted only if accompanied
                by a statement of affairs in such form and in such manner
                as may be prescribed.
                (5) A copy of the petition made under this section shall also
                be filed with the Registrar and the Registrar shall, without
                prejudice to any other provisions, submit his views to the
                Tribunal within sixty days of receipt of such petition.".
           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. The Tribunal shall, notwithstanding anything
                contained in any other law for the time being in force, have
                jurisdiction to entertain, or dispose of,--
                (a) any suit or proceeding by or against the company;
                (b) any claim made by or against the company, including
                claims by or against any of its branches in India;
                (c) any application made under section 233;
                (d) any question of priorities or any other question
                whatsoever, whether of law or facts, including those relating
                to assets, business, actions, rights, entitlements, privileges,
                benefits, duties, responsibilities, obligations or in any matter
                arising out of, or in relation to winding up of the company,
           whether such suit or proceeding has been instituted, or is
           instituted, or such claim or question has arisen or arises or such
           application has been made or is made or such scheme has

                                     76
                                                     Annexure-A

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. (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


                         77
FAQs on The Insolvency and Bankruptcy Code 2016

               Disputes Act, 1947 (14 of 1947);
               (b) "workmen's dues'', in relation to a company, means the
               aggregate of the following sums due from the company to
               its workmen, namely:--
               (i) all wages or salary including wages payable for time or
               piece work and salary earned wholly or in part by way of
               commission of any workman in respect of services
               rendered to the company and any compensation payable
               to any workman under any of the provisions of the
               Industrial Disputes Act, 1947 (14 of 1947);
               (ii) all accrued holiday remuneration becoming payable to
               any workman or, in the case of his death, to any other
               person in his right on the termination of his employment
               before or by the effect of the winding up order or
               resolution;
               (iii) unless the company is being wound up voluntarily
               merely for the purposes of reconstruction or amalgamation
               with another company or unless the company has, at the
               commencement of the winding up, under such a contract
               with insurers as is mentioned in section 14 of the
               Workmen's Compensation Act, 1923 (19 of 1923), rights
               capable of being transferred to and vested in the workmen,
               all amount due in respect of any compensation or liability
               for compensation under the said Act in respect of the
               death or disablement of any workman of the company;
               (iv) all sums due to any workman from the provident fund,
               the pension fund, the gratuity fund or any other fund for the
               welfare of the workmen, maintained by the company;
               (c) "workmen's portion'', in relation to the security of any
               secured creditor of a company, means the amount which
               bears to the value of the security the same proportion as
               the amount of the workmen's dues bears to the aggregate
               of the amount of workmen's dues and the amount of the
               debts due to the secured creditors
           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


                                   78
                                                      Annexure-A

      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. 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. 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


                         79
FAQs on The Insolvency and Bankruptcy Code 2016

           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 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 commencement, the Company Liquidator
                 shall, unless he is exempted from so doing, either wholly
                 or in part by the Central Government, within two months of
                 the expiry of such year and thereafter until the winding up


                                    80
                                                       Annexure-A

      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. 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


                          81
FAQs on The Insolvency and Bankruptcy Code 2016

                of a company under this Act or in any proceedings under
                the Insolvency and Bankruptcy Code, 2016, in order to
                take into custody or under its control all property, books of
                account or other documents, request, in writing, the Chief
                Metropolitan Magistrate, Chief Judicial Magistrate or the
                District Collector within whose jurisdiction any such
                property, books of account or other documents of such
                company under this Act or of corporate persons under the
                said Code, are situated or found, to take possession
                thereof, and the Chief Metropolitan Magistrate, Chief
                Judicial Magistrate or the District Collector, as the case
                may be, shall, on such request being made to him,--
                (a) take possession of such property, books of account or
                other documents; and
                (b) cause the same to be entrusted to the Tribunal or other
                persons authorised by it.".
           34. For section 434, the following section shall be substituted,
           namely:--
                "434. (1) On such date as may be notified by the Central
                Government in this behalf,--
                (a) all matters, proceedings or cases pending before the
                Board of Company Law Administration (herein in this
                section referred to as the Company Law Board) constituted
                under sub-section (1) of section 10E of the Companies
                Act, 1956 (1 of 1956), immediately before such date shall
                stand transferred to the Tribunal and the Tribunal shall
                dispose of such matters, proceedings or cases in
                accordance with the provisions of this Act;
                (b) any person aggrieved by any decision or order of the
                Company Law Board made before such date may file an
                appeal to the High Court within sixty days from the date of
                communication of the decision or order of the Company
                Law Board to him on any question of law arising out of
                such order:
                Provided that the High Court may if it is satisfied that the
                appellant was prevented by sufficient cause from filing an
                appeal within the said period, allow it to be filed within a
                further period not exceeding sixty days; and
                (c) all proceedings under the Companies Act, 1956 (1 of
                1956), including proceedings relating to arbitration,

                                    82
                                                       Annexure-A

     compromise, arrangements and reconstruction and
     winding up of companies, pending immediately before
     such date before any District Court or High Court, shall
     stand transferred to the Tribunal and the Tribunal may
     proceed to deal with such proceedings from the stage
     before their transfer:
     Provided that only such proceedings relating to the winding
     up of companies shall be transferred to the Tribunal that
     are at a stage as may be prescribed by the Central
     Government.
     (2) The Central Government may make rules consistent
     with the provisions of this Act to ensure timely transfer of
     all matters, proceedings or cases pending before the
     Company Law Board or the courts, to the Tribunal under
     this section."
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.".

                         83
FAQs on The Insolvency and Bankruptcy Code 2016

           36. In Schedule V, in Part II, in section III, for clause ( b), the
           following clause shall be substituted, namely:--
                 "(b) where the company--
                 (i) is a newly incorporated company, for a period of seven
                 years from the date of its incorporation, or
                 (ii) is a sick company, for whom a scheme of revival or
                 rehabilitation has been ordered by the Board for Industrial
                 and Financial Reconstruction for a period of five years
                 from the date of sanction of scheme of revival, or
                 (iii) is a company in relation to which a resolution plan has
                 been approved by the National Company Law Tribunal
                 under the Insolvency and Bankruptcy Code, 2016 for a
                 period of five years from the date of such approval,
                 it may pay remuneration up to two times the amount
                 permissible under section II.".




                                    84
                                                           Annexure B

 List of Sections of The Insolvency
and Bankruptcy Code, 2016 notified
                   till 1st April, 2017
Parts & Chapters       Sections Notified
Part I - Preliminary   Section 2- Application
                       clause (a) to (d) (except with regard to voluntary
                       liquidation or Bankruptcy)
                       (Notified on 30th November, 2016)
                       Section 3- Definitions
                       Section 3(1)- Board
                       (Notified on 19th August, 2016)
                       Section 3(2)- Bench
                       (Notified on 1st November, 2016)
                       Section 3(3)-Bye- Laws
                       (Notified on 1st November, 2016)
                       Section 3(4)-Charge
                       (Notified on 1st November, 2016)
                       Section 3(5)- Chairperson
                       (Notified on 19th August, 2016)
                       Section 3(6)- Claim
                       (Notified on 1st November, 2016)
                       Section 3(7)- Corporate Person
                       (Notified on 1st November, 2016)
                       Section 3(8)- Corporate Debtor
                       (Notified on 1st November, 2016)
                       Section 3(9)- Core Services
                       (Notified on 1st November, 2016)
                       Section 3(10)- Creditor
                       (Notified on 1st November, 2016)
FAQs on The Insolvency and Bankruptcy Code 2016

                      Section 3(11)- Debt
                      (Notified on 1st November, 2016)
                      Section 3(12)- Default
                      (Notified on 1st November, 2016)
                      Section 3(13)- Financial Information
                      (Notified on 1st November, 2016)
                      Section 3(14)- Financial Institution
                      (Notified on 1st November, 2016)
                      Section 3(15)- Financial Product
                      (Notified on 1st November, 2016)
                      Section 3(16)- Financial Service
                      (Notified on 1st November, 2016)
                      Section 3(17)-Financial Service Provider
                      (Notified on 1st November, 2016)
                      Section 3(18)- Financial Sector Regulator
                      (Notified on 1st November, 2016)
                      Section 3(19)- Insolvency Professional
                      (Notified on 1st November, 2016)
                      Section 3(20)- Insolvency Professional Agency
                      (Notified on 1st November, 2016)
                      Section 3(21)- Information Utility
                      (Notified on 1st November, 2016)
                      Section 3(22)- Notification
                      (Notified on 19th August, 2016)
                      Section 3(23)-Person
                      (Notified on 1st November, 2016)
                      Section 3(24)-Person Resident in India
                      (Notified on 1st November, 2016)
                      Section 3(25)- Person Resident outside India
                      (Notified on 1st November, 2016)
                      Section 3(26)-Prescribed
                      (Notified on 19th August, 2016)
                       Section 3(27)-Property
                      (Notified on 1st November, 2016)

                                  86
                                                               Annexure-B

                      Section 3(28)-Regulations
                      (Notified on 19th August, 2016)
                      Section 3(29)- Schedule
                      (Notified on 1st November, 2016)
                      Section 3(30)- Secured Creditor
                      (Notified on 1st November, 2016)
                      Section 3(31)- Security Interest
                      (Notified on 1st November, 2016)
                      Section 3(32)- Specified
                      (Notified on 1st November, 2016)
                      Section 3(33)- Transaction
                      (Notified on 1st November, 2016)
                      Section 3(34)- Transfer
                      (Notified on 1st November, 2016)
                      Section 3(35)- Transfer of Property
                      (Notified on 1st November, 2016)
                      Section 3(36)- Workman
                      (Notified on 1st November, 2016)
                      Section 3(37)-Words & Expressions
                      (Notified on 19th August, 2016)

Part II- Insolvency Chapter I- Preliminary
Resolution      and Section 4- Application of this Part
Liquidation      for (Notified on 30th November, 2016)
Corporate Persons
                     Section 5- Definitions
                     (Notified on 30th November, 2016)
                      Chapter II- Corporate Insolvency Resolution
                      Process
                      Section 6- Persons who may initiate corporate
                      insolvency resolution process
                      (Notified on 30th November, 2016)
                      Section 7- Initiation of corporate insolvency
                      resolution process by financial creditor (Notified
                      on 30th November, 2016)




                                  87
FAQs on The Insolvency and Bankruptcy Code 2016

                      Section 8- Insolvency resolution by operational
                      creditor
                      (Notified on 30th November, 2016)
                      Section 9- Application for initiation of corporate
                      insolvency resolution process by operational
                      creditor
                      (Notified on 30th November, 2016)
                      Section 10- Initiation of corporate insolvency
                      resolution process by corporate applicant
                      (Notified on 30th November, 2016)
                      Section 11- Persons not entitled to make
                      application
                      (Notified on 30th November, 2016)
                      Section 12- Time-limit for completion of insolvency
                      resolution process
                      (Notified on 30th November, 2016)
                      Section 13- Declaration of moratorium and public
                      announcement
                      (Notified on 30th November, 2016)
                      Section 14- Moratorium
                      (Notified on 30th November, 2016)
                      Section 15- Public announcement of corporate
                      insolvency resolution process
                      (Notified on 30th November, 2016)
                      Section 16- Appointment and tenure of interim
                      resolution professional
                      (Notified on 30th November, 2016)
                      Section 17- Management of affairs of corporate
                      debtor by interim resolution professional
                      (Notified on 30th November, 2016)
                      Section 18- Duties of interim resolution
                      professional
                      (Notified on 30th November, 2016)
                      Section 19- Personnel to extend cooperation to
                      interim resolution professional
                      (Notified on 30th November, 2016)


                                  88
                                         Annexure-B

Section 20- Management of operations of
corporate debtor as going concern
(Notified on 30th November, 2016)
Section 21- Committee of creditors
(Notified on 30th November, 2016)
Section 22- Appointment of resolution
professional
(Notified on 30th November, 2016)
Section 23- Resolution professional to conduct
corporate insolvency resolution process
(Notified on 30th November, 2016)
Section 24- Meeting of committee of creditors
(Notified on 30th November, 2016)
Section 25- Duties of resolution professional
(Notified on 30th November, 2016)
Section 26- Application for avoidance of
transactions not to affect proceedings
(Notified on 30th November, 2016)
Section 27- Replacement of resolution
professional by committee of creditors
(Notified on 30th November, 2016)
Section 28- Approval of committee of creditors for
certain actions
(Notified on 30th November, 2016)
Section 29- Preparation of information
memorandum
(Notified on 30th November, 2016)
Section 30- Submission of resolution plan
(Notified on 30th November, 2016)
Section 31- Approval of resolution plan (Notified
on 30th November, 2016)
Section 32- Appeal
(Notified on 30th November, 2016)




           89
FAQs on The Insolvency and Bankruptcy Code 2016

                      Chapter III- Liquidation Process
                      Section 33- Initiation of Liquidation
                      (Notified on 9th December 2016)
                      Section 34- Appointment of liquidator and fee to
                      be paid
                      (Notified on 9th December 2016)
                      Section 35- Powers and duties of liquidator
                      (Notified on 9th December 2016)
                      Section 36- Liquidation estate
                      (Notified on 9th December 2016)
                      Section 37- Powers of liquidator to access
                      information
                      (Notified on 9th December 2016)
                      Section38- Consolidation of claims
                      (Notified on 9th December 2016)
                      Section 39- Verification of claims (Notified on 9th
                      December 2016)
                      Section 40- Admission or rejection of claims
                      (Notified on 9th December 2016)
                      Section 41- Determination of Valuation of Claims
                      (Notified on 9th December 2016)
                      Section 42- Appeal against the decision of
                      liquidator (Notified on 9th December 2016)
                      Section 43- Preferential transactions and relevant
                      time (Notified on 9th December 2016)
                      Section 44- Orders in case of preferential
                      transactions (Notified on 9th December 2016)
                      Section 45- Avoidance of undervalued
                      transactions
                      (Notified on 9th December 2016)
                      Section 46- Relevant period for avoidable
                      transactions (Notified on 9th December 2016)
                      Section 47- Application by creditor in cases of
                      undervalued transactions (Notified on 9th
                      December 2016)


                                  90
                                         Annexure-B

Section 48- Order in cases of undervalued
transactions (Notified on 9th December 2016)
Section 49- Transactions defrauding creditors
(Notified on 9th December 2016)
Section 50- Extortionate credit transactions
(Notified on 9th December 2016)
Section51- Orders of Adjudicating Authority in
respect of extorionate credit transactions
(Notified on 9th December 2016)
Section 52- Secured creditor in liquidation
proceedings (Notified on 9th December 2016)
Section 53- Distribution of assets (Notified on 9th
December 2016)
Section 54- Dissolution of corporate debtor
(Notified on 9th December 2016)


Chapter V- Voluntary Liquidation of Corporate
Persons
Section 59- Voluntary liquidation of corporate
persons (Notified on 1st April, 2017)


Chapter VI- Adjudicating Authority for
Corporate Persons
Section 60- Adjudicating Authority for corporate
persons (Notified on 30th November, 2016)
Section 61- Appeals and Appellate Authority
(Notified on 30th November, 2016)
Section 62- Appeal to Supreme Court (Notified
on 30th November, 2016)
Section 63- Civil court not to have jurisdiction
(Notified on 30th November, 2016)
Section 64- Expeditious disposal of applications
(Notified on 30th November, 2016)


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FAQs on The Insolvency and Bankruptcy Code 2016

                      Section 65- Fraudulent or malicious intiation of
                      proceedings (Notified on 30th November, 2016)
                      Section 66- Fraudulent trading or wrongful trading
                      (Notified on 30th November, 2016)
                      Section 67- Proceedings under section 66
                      (Notified on 30th November, 2016)
                      Section 68- Punishment for concealment of
                      property (Notified on 30th November, 2016)
                      Section 69- Punishment for transactions
                      defrauding creditors (Notified on 30th November,
                      2016)
                      Section 70- Punishment for misconduct in course
                      of corporate insolvency resolution process
                      (Notified on 30th November, 2016)
                      Section 71- Punishment for falsification of books
                      of corporate debtor (Notified on 30th November,
                      2016)
                      Section 72- Punishment for willful and material
                      omissions from statements relating to affairs of
                      corporate debtor (Notified on 30th November,
                      2016)
                      Section 73- Punishment for false representations
                      to creditors (Notified on 30th November, 2016)
                      Section 74- Punishment for contravention of
                      moratorium or the resolution plan
                      (Notified on 30th November, 2016)
                      Section 75- Punishment for false information
                      furnished in application
                      (Notified on 30th November, 2016)
                      Section 76- Punishment for nondisclosure of
                      dispute or repayment of debt by operational
                      creditor
                      (Notified on 30th November, 2016)
                      Section 77- Punishment for providing false
                      information in application made by corporate
                      debtor (Notified on 30th November, 2016)


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                                                             Annexure-B

Part IV- Regulation   Chapter I- The Insolvency and Bankruptcy
of Insolvency         Board of India
Professionals,        Section 188- Establishment and incorporation of
Agencies and          Board (Notified on 5th August, 2016)
Utilities
                      Section 189- Constitution of Board
                      (Notified on 5th August, 2016, 2016)
                      Section 190- Removal of member from office
                      (Notified on 5th August, 2016)
                      Section 191- Powers of Chairperson
                      (Notified on 5th August, 2016)
                      Section 192- Meetings of Board
                      (Notified on 5th August, 2016)
                      Section 193- Member not to participate in
                      meetings in certain cases (Notified on 5th August,
                      2016)
                      Section 194- Vacancies, etc., not to invalidate
                      proceedings of Board, Officers and employees of
                      Board. (Notified on 5th August, 2016)
                      Section 196- Powers and Functions of Board
                      (Notified on 1st November, 2016)
                      Section 197- Constitution of advisory committee,
                      executive committee or other committee
                      (Notified on 1st November, 2016)

                      Chapter II- Powers and Functions of the Board
                      Section 198- Condonation of Delay (Notified on
                      30th November, 2016)

                      Chapter III- Insolvency Professional Agencies
                      Section 199- No person to function as insolvency
                      professional agency without valid certificate of
                      registration (Notified on 15th November, 2016)
                      Section 200- Principles governing registration of
                      insolvency professional agency (Notified on 15th
                      November, 2016)


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FAQs on The Insolvency and Bankruptcy Code 2016

                      Section 201- Registration of insolvency
                      professional agency (Notified on 15th November,
                      2016)
                       Section 202- Appeal to National Company Law
                      Appellate Tribunal (Notified on 15th November,
                      2016)
                      Section 203- Governing Board of insolvency
                      professional agency (Notified on 15th November,
                      2016)
                      Section 204- Functions of insolvency professional
                      agencies (Notified on 15th November, 2016)
                      Section 205- Insolvency professional agencies to
                      make bye-laws (Notified on 15th November, 2016)


                      Chapter IV- Insolvency Professionals
                      Section 206- Enrolled and registered persons to
                      act as insolvency professionals (Notified on 15th
                      November, 2016)
                      Section 207- Registration of insolvency
                      professionals (Notified on 15th November,2016)
                      Section 208-Functions          and    obligations     of
                      insolvency professionals.
                      sub-section (1)
                         i. clause (c);
                         ii. clause (e)
                      sub-section (2)
                      ( Notified on 15th November 2016)

                      Chapter V- Information Utilities
                      Section 209- No person to function as information
                      utility without certificate of registration (Notified on
                      1st April, 2017)
                      Section 210- Registration of information utility
                      (Notified on 1st April, 2017)


                                  94
                                         Annexure-B

Section 211- Appeal to National Company Law
Tribunal (Notified on 1st April, 2017)
Section 212- Governing Board of Information
Utility (Notified on 1st April, 2017)
Section 213- Core Services, etc, of information
utilities (Notified on 1st April, 2017)
Section 214- Obligations of Information utilities
(Notified on 1st April, 2017)
Section 215- Procedure for submission, etc., of
financial information (Notified on 1st April, 2017)
Section 216(1)- Rights and Obligations of persons
submitting financial information. (Notified on 1st
April, 2017)


Chapter VI- Inspection and Investigation
Section 217- Complaints against insolvency
professional agency or its member or information
utility (Notified on 15th November, 2016)
Section 218- Investigation of insolvency
professional agency or its member or information
utility (Notified on 15th November, 2016)
Section 219- Show cause notice to insolvency
professional agency or its member or information
utility (Notified on 15th November, 2016)
Section 220- Appointment of disciplinary
committee (Notified on 15th November, 2016)


Chapter VII- Finance, Accounts and Audit
Section 221- Grants by Central Government
(Notified on 19th August, 2016)
Section 222- Board's Fund
(Notified on 19th August, 2016)
Section 223- Accounts and Audit
(Notified on 1st November, 2016)


            95
FAQs on The Insolvency and Bankruptcy Code 2016

      Part       V-   Section 225- Power of Central Government to
      Miscellaneous   issue directions (Notified on 19th August, 2016)
                      Section 226- Power of Central Government to
                      supersede Board (Notified on 19th August, 2016)
                      Section 230- Delegation
                      (Notified on 19th August, 2016)
                      Section 231-Bar of Jurisdiction
                      (Notified on 30th November, 2016)
                      Section 232- Members, officers and employees of
                      Board to the public servants
                      (Notified on 19th August, 2016)
                      Section 233- Protection of action taken in good
                      faith (Notified on 19th August, 2016)
                      Section 234- Arrangements with foreign countries
                      (Notified on 1st April, 2017)
                      Section 235- Letter of request to a country outside
                      India in certain cases
                      (Notified on 1st April, 2017)
                      Section 236- Trial of offences by Special Court
                      (Notified on 30th November, 2016)
                      Section 237-Appeal and Revision
                      (Notified on 30th November, 2016)
                      Section 238- Provisions of this Code to override
                      other laws (Notified on 30th November, 2016)
                      Section 239- Power to make rules.
                      sub-section (1) and clause (zd) of sub-section (2)
                      (Notified on 19th August, 2016)
                       Clause (ze) to (zh) and (zl) to (zm)
                      (Notified on 1st November, 2016)
                      sub-section (2)
                      i. clause (a) to (f)
                      (Notified on 30th November, 2016)
                      Section 240- Power to make regulations
                      sub-section (1) and clause (zt) of sub-section (2)

                                  96
                                        Annexure-B

(Notified on 19th August, 2016)
Clause (a) to (zm) and (zu) to (zzzc)
(Notified on 1st November, 2016)
Section 241- Rules and regulations to be laid
before Parliament (Notified on 19th August, 2016)
Section 242- Power to remove difficulties (Notified
on 19th August, 2016)
Section 244-Transitional provisions
(Notified on 1st November, 2016)
Section 246- Amendments of Act 1 of 1944
(Notified on 1st November, 2016)
Section 247- Amendments of Act 43 of 1961
(Notified on 1st November, 2016)
Section 248- Amendments of Act 52 of 1962
(Notified on 1st November, 2016)
Section 250- Amendments of Act 32 of 1994
(Notified on 1st November, 2016)
Section 251- Amendments of Act 54 of 2002
(Notified on 15th November, 2016)
Section 252- Amendments of Act 1 of 2004
(Notified on 1st November, 2016)
Section 253- Amendments of Act 51 of 2007
(Notified on 15th November, 2016)
Section 254- Amendments of Act 6 of 2009
(Notified on 15th November, 2016)
Section 255- Amendments of Act 18 of 2013
(Notified on 15th November, 2016)




           97
                                                            Annexure C

       List of Sections of the Insolvency
      and Bankruptcy Code, 2016 not yet
                 notified till 1st April 2017
Sl.    Section      Particulars
No.    No.
1.     Section 1    Short title, extent and commencement.
2.     Section 55   Fast track corporation insolvency resolution process.
3.     Section 56   Time period for completion of fast track corporate
                    insolvency resolution process.
4.     Section 57   Manner of initiating fast track corporate insolvency
                    resolution process.
5.     Section 58   Applicability of Chapter II to this Chapter.
6.     Section 78   Application.
7.     Section 79   Definitions.
8.     Section 80   Eligibility for making an application.
9.     Section 81   Application for fresh start order.
10.    Section 82   Appointment of resolution professional.
11.    Section 83   Examination of application by resolution professional.
12.    Section 84   Admission or rejection of application by Adjudicating
                    Authority.
13.    Section 85   Effect of admission of application.
14.    Section 86   Objections by creditor and their examination by
                    resolution professional.
15.    Section 87   Application against decision of resolution professional.
16.    Section 88   General duties of debtor.
17.    Section 89   Replacement of resolution professional.
18.    Section 90   Directions for compliances of restrictions, etc.
19.    Section 91   Revocation of order admitting application.
20.    Section 92   Discharge order.
21.    Section 93   Standard of conduct.
                                                                Annexure-C

22.   Section 94    Application by debtor to initiate insolvency resolution
                    process.
23.   Section 95    Application by creditor to initiate insolvency resolution
                    process.
24.   Section 96    Interim-moratorium.
25.   Section 97    Appointment of resolution professional.
26.   Section 98    Replacement of resolution professional.
27.   Section 99    Submission of report by resolution professional.
28.   Section 100   Admission or rejection of application.
29.   Section 101   Moratorium.
30.   Section 102   Public notice and claims from creditors.
31.   Section 103   Resistering of claims by creditors.
32.   Section 104   Preparation of list of creditors.
33.   Section 105   Repayment plan.
34.   Section 106   Report of resolution professional on repayment plan.
35.   Section 107   Summoning of meeting of creditors.
36.   Section 108   Conduct of meeting of creditors.
37.   Section 109   Voting rights in meeting of creditors.
38.   Section 110   Rights of secured creditors in relation to repayment
                    plan.
39.   Section 111   Approval of repayment plan by creditors.
40.   Section 112   Report of meeting of creditors on repayment plan.
41.   Section 113   Notice of decisions taken at meeting of creditors.
42.   Section 114   Order of Adjudicating Authority on repayment plan.
43.   Section 115   Effect of order of Adjudicating Authority on repayment
                    plan.
44.   Section 116   Implementation and supervision of repayment plan.
45.   Section 117   Completion of repayment plan.
46.   Section 118   Repayment plan coming to end prematurely.
47.   Section 119   Discharge order.
48.   Section 120   Standard of conduct.
49.   Section 121   Application for bankruptcy.
50.   Section 122   Application by debtor.
51.   Section 123   Application by creditor.
52.   Section 124   Effect of application.


                                    99
FAQs on The Insolvency and Bankruptcy Code 2016

53.   Section 125   Appointment of insolvency professional as bankruptcy
                    trustee.
54.   Section 126   Bankruptcy order.
55.   Section 127   Validity of bankruptcy order.
56.   Section 128   Effect of bankruptcy order.
57.   Section 129   Statement of financial position.
58.   Section 130   Public notice inviting claims from creditors.
59.   Section 131   Registration of claims.
60.   Section 132   Preparation of list of creditors.
61.   Section 133   Summoning of meeting of creditors.
62.   Section 134   Conduct of meeting of creditors.
63.   Section 135   Voting rights of creditors.
64.   Section 136   Administration and distribution of estate of bankrupt.
65.   Section 137   Completion of administration.
66.   Section 138   Discharge order.
67.   Section 139   Effect of discharge.
68.   Section 140   Disqualification of bankrupt.
69.   Section 141   Restrictions on bankrupt.
70.   Section 142   Modification or recall of bankruptcy order.
71.   Section 143   Standard of conduct.
72.   Section 144   Fees of bankruptcy trustee.
73.   Section 145   Replacement of bankruptcy trustee.
74.   Section 146   Resignation by bankruptcy trustee.
75.   Section 147   Vacancy in office of bankruptcy trustee.
76.   Section 148   Release of bankruptcy trustee.
77.   Section 149   Functions of bankruptcy trustee.
78.   Section 150   Duties of bankrupt towards bankruptcy trustee.
79.   Section 151   Rights of bankruptcy trustee.
80.   Section 152   General powers of bankruptcy trustee.
81.   Section 153   Approval of creditors for certain acts.
82.   Section 154   Vesting of estate of bankrupt in bankruptcy trustee.
83.   Section 155   Estate of bankrupt.
84.   Section 156   Delivery of property and documents to bankruptcy
                    trustee.
85.   Section 157   Acquisition of control by bankruptcy trustee.

                                  100
                                                                   Annexure-C

86.    Section 158   Restrictions on disposition of property.
87.    Section 159   After-acquired property of bankrupt.
88.    Section 160   Onerous property of bankrupt.
89.    Section 161   Notice to disclaim onerous property.
90.    Section 162   Disclaimer of leaseholds.
91.    Section 163   Challenge against disclaimed property.
92.    Section 164   Undervalued transactions.
93.    Section 165   Preference transactions.
94.    Section 166   Effect of order.
95.    Section 167   Extortionate credit transactions.
96.    Section 168   Obligations under contracts.
97.    Section 169   Continuance of proceedings on death of bankrupt.
98.    Section 170   Administration of estate of deceased bankrupt.
99.    Section 171   Proof of debt.
100.   Section 172   Proof of debt by secured creditors.
101.   Section 173   Mutual credit and set-off.
102.   Section 174   Distribution of interim dividend.
103.   Section 175   Distribution of property.
104.   Section 176   Final dividend.
105.   Section 177   Claims of creditors.
106.   Section 178   Priority of payment of debts.
107.   Section 179   Adjudicating Authority for individuals and partnership
                     firms.
108.   Section 180   Civil court not to have jurisdiction.
109.   Section 181   Appeal to Debt Recovery Appellate Tribunal.
110.   Section 182   Appeal to Supreme Court.
111.   Section 183   Expeditious disposal of applications.
112.   Section 184   Punishment for false information, etc., by creditor in
                     insolvency resolution process.
113.   Section 185   Punishment for contravention of provisions.
114.   Section 186   Punishment for false information, concealment, etc., by
                     bankrupt.
115.   Section 187   Punishment for certain actions.

                                        101
FAQs on The Insolvency and Bankruptcy Code 2016

116.   Section 195   Power to designate financial sector regulator.
117.   Section 216   Rights and obligations of persons submitting financial
                     information (sub-section 2)
118.   Section 224   Insolvency and Bankruptcy Fund.
119.   Section 227   Power of Central Government to notify financial service
                     providers, etc.
120.   Section 228   Budget.
121.   Section 229   Annual report.
122.   Section 243   Repeal of certain enactments and savings.
123.   Section 245   Amendments of Act 9 of 1932.
124.   Section 249   Amendments of Act 51 of 1993.




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