8. Insolvency resolution by operational creditor.—
(1) An operational creditor may, on the
occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice
1. Ins. by Act 26 of 2019, s. 3 (w.e.f. 16-08-2019).
24
demanding payment of the amount involved in the default to the corporate debtor in such form and
manner as may be prescribed.
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy
of the invoice mentioned in sub-section
(1) bring to the notice of the operational creditor—
(a) existence of a dispute, 1[if any, or] record of the pendency of the suit or arbitration
proceedings filed before the receipt of such notice or invoice in relation to such dispute;
(b) the 2[payment] of unpaid operational debt—
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from
the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque
issued by the corporate debtor.
Explanation.—For the purposes of this section, a “demand notice” means a notice served by an
operational creditor to the corporate debtor demanding 3[payment] of the operational debt in respect of
which the default has occurred.
9. Application for initiation of corporate insolvency resolution process by operational
creditor.—
(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice
demanding payment under sub-section
(1) of section 8, if the operational creditor does not receive
payment from the corporate debtor or notice of the dispute under sub-section
(2) of section 8, the
operational creditor may file an application before the Adjudicating Authority for initiating a corporate
insolvency resolution process.
(2) The application under sub-section
(1) shall be filed in such form and manner and accompanied
with such fee as may be prescribed.
(3) The operational creditor shall, along with the application furnish—
(a) a copy of the invoice demanding payment or demand notice delivered by the operational
creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a
dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts of the operational
creditor confirming that there is no payment of an unpaid operational debt 3[by the corporate debtor,
if available;]
4
[
(d) a copy of any record with information utility confirming that there is no payment of an
unpaid operational debt by the corporate debtor, if available; and
(e) any other proof confirming that there is no payment of an unpaid operational debt by the
corporate debtor or such other information, as may be prescribed];
(4) An operational creditor initiating a corporate insolvency resolution process under this section,
may propose a resolution professional to act as an interim resolution professional.
(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under
sub-section
(2), by an order—
1. Subs. by Act 26 of 2018, s. 5, for “if any, and” (w.e.f. 6-6-2018).
2. Subs. by s. 5, ibid for “repayment” (w.e.f. 6-6-2018).
3. Subs. by Act 26 of 2018, s. 6, for “by the corporate debtor; and” (w.e.f. 6-6-2018).
4. Subs. by s. 6, ibid., for “clause
(d) such other information as may be specified” (w.e.f. 6-6-2018).
25
(i) admit the application and communicate such decision to the operational creditor and the
corporate debtor if,—
(a) the application made under sub-section
(2) is complete;
(b) there is no 1[payment] of the unpaid operational debt;
(c) the invoice or notice for payment to the corporate debtor has been delivered by the
operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is no record of
dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution professional proposed
under sub-section
(4), if any;
(ii) reject the application and communicate such decision to the operational creditor and the
corporate debtor, if—
(a) the application made under sub-section
(2) is incomplete;
(b) there has been 1[payment] of the unpaid operational debt;
(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor;
(d) notice of dispute has been received by the operational creditor or there is a record of
dispute in the information utility; or
(e) any disciplinary proceeding is pending against any proposed resolution professional:
Provided that Adjudicating Authority, shall before rejecting an application under
sub-clause
(a) of clause (ii) give a notice to the applicant to rectify the defect in his application
within seven days of the date of receipt of such notice from the Adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of the
application under sub-section
(5) of this section.
10. Initiation of corporate insolvency resolution process by corporate applicant.—
(1) Where a
corporate debtor has committed a default, a corporate applicant thereof may file an application for
initiating corporate insolvency resolution process with the Adjudicating Authority.
(2) The application under sub-section
(1) shall be filed in such form, containing such particulars and
in such manner and accompanied with such fee as may be prescribed.
2
[
(3) The corporate applicant shall, along with the application, furnish—
(a) the information relating to its books of account and such other documents for such period as
may be specified;
(b) the information relating to the resolution professional proposed to be appointed as an interim
resolution professional; and
(c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at
least three-fourth of the total number of partners of the corporate debtor, as the case may be, approving
filing of the application.];
(4) The Adjudicating Authority shall, within a period of fourteen days of the receipt of the
application, by an order—
(a) admit the application, if it is complete; 3[and no disciplinary proceeding is pending against the
proposed resolution professional] or
(b) reject the application, if it is incomplete: 3[or any disciplinary proceeding is pending against
the proposed resolution professional]
1. Subs. by Act 26 of 2018, s. 6, for “repayment” (w.e.f. 6-6-2018).
2. Subs. by s. 7, ibid., for “section 10 of sub-section
(3)” (w.e.f. 6-6-2018).
3. Ins. by s. 7, ibid. (w.e.f. 6-6-2018).
26
Provided that Adjudicating Authority shall, before rejecting an application, give a notice to the
applicant to rectify the defects in his application within seven days from the date of receipt of such notice
from the Adjudicating Authority.
(5) The corporate insolvency resolution process shall commence from the date of admission of the
application under sub-section
(4) of this section.
1
[10A. Suspension of initiation of corporate insolvency resolution process.—Notwithstanding
anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution
process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a
period of six months or such further period, not exceeding one year from such date, as may be notified in
this behalf:
Provided that no application shall ever be filed for initiation of corporate insolvency resolution
process of a corporate debtor for the said default occurring during the said period.
Explanation.—For the removal of doubts, it is hereby clarified that the provisions of this section shall
not apply to any default committed under the said sections before 25th March, 2020.]
11. Persons not entitled to make application.—The following persons shall not be entitled to make
an application to initiate corporate insolvency resolution process under this Chapter, namely:—
(a) a corporate debtor undergoing a corporate insolvency resolution process 2[or a pre-packaged
insolvency resolution process]; or
2
[(aa) a financial creditor or an operational creditor of a corporate debtor undergoing a pre-
packaged insolvency resolution process; or]
(b) a corporate debtor having completed corporate insolvency resolution process twelve months
preceding the date of making of the application; or
2
[(ba) a corporate debtor in respect of whom a resolution plan has been approved under
Chapter III-A, twelve months preceding the date of making of the application; or]
(c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan
which was approved twelve months before the date of making of an application under this Chapter; or
(d) a corporate debtor in respect of whom a liquidation order has been made.
3
[Explanation I].—For the purposes of this section, a corporate debtor includes a corporate applicant
in respect of such corporate debtor.
4
[Explanation II.—For the purposes of this section, it is hereby clarified that nothing in this section
shall prevent a corporate debtor referred to in clauses
(a) to
(d) from initiating corporate insolvency
resolution process against another corporate debtor.]
5
[11A. Disposal of applications under section 54C and under section 7 or section 9 or section
10.—
(1) Where an application filed under section 54C is pending, the Adjudicating Authority shall pass
an order to admit or reject such application, before considering any application filed under section 7 or
section 9 or section 10 during the pendency of such application under section 54C, in respect of the same
corporate debtor.
(2) Where an application under section 54C is filed within fourteen days of filing of any application
under section 7 or section 9 or section 10, which is pending, in respect of the same corporate debtor, then,
notwithstanding anything contained in sections 7, 9 and 10, the Adjudicating Authority shall first dispose
of the application under section 54C.
1. Ins. by Act 17 of 2020, s. 2 (w.e.f. 5-6-2020).
2. Ins. by Act 26 of 2021, s. 4 (w.e.f. 4-4-2021).
3. The existing Explanation shall be numbered as Explanation I by Act 1 of 2020, s. 4 (w.e.f. 28-12-2019).
4. Ins. by Act 1 of 2020, s. 4 (w.e.f. 28-12-2019).
5. Ins. by Act 26 of 2021, s. 5 (w.e.f. 4-4-2021).
27
(3) Where an application under section 54C is filed after fourteen days of the filing of any application
under section 7 or section 9 or section 10, in respect of the same corporate debtor, the Adjudicating
Authority shall first dispose of the application under section 7or section 9 or section 10.
(4) The provisions of this section shall not apply where an application under section 7 or section 9 or
section 10 is filed and pending as on the date of the commencement of the Insolvency and Bankruptcy
Code (Amendment) Act, 2021.]
12. Time-limit for completion of insolvency resolution process.—
(1) Subject to sub-section
(2),
the corporate insolvency resolution process shall be completed within a period of one hundred and eighty
days from the date of admission of the application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend the
period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to
do so by a resolution passed at a meeting of the committee of creditors by a vote of 1[sixty-six] per cent.
of the voting shares.
(3) On receipt of an application under sub-section
(2), if the Adjudicating Authority is satisfied that
the subject matter of the case is such that corporate insolvency resolution process cannot be completed
within one hundred and eighty days, it may by order extend the duration of such process beyond one
hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days:
Provided that any extension of the period of corporate insolvency resolution process under this
section shall not be granted more than once.
2
[Provided further that the corporate insolvency resolution process shall mandatorily be completed
within a period of three hundred and thirty days from the insolvency commencement date, including any
extension of the period of corporate insolvency resolution process granted under this section and the time
taken in legal proceedings in relation to such resolution process of the corporate debtor:
Provided also that where the insolvency resolution process of a corporate debtor is pending and has
not been completed within the period referred to in the second proviso, such resolution process shall be
completed within a period of ninety days from the date of commencement of the Insolvency and
Bankruptcy Code (Amendment) Act, 2019.]
3
[12A. Withdrawal of application admitted under section 7, 9 or 10.—The Adjudicating Authority
may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an
application made by the applicant with the approval of ninety per cent. voting share of the committee of
creditors, in such manner as may be specified.].
13. Declaration of moratorium and public announcement.—
(1) The Adjudicating Authority, after
admission of the application under section 7 or section 9 or section 10, shall, by an order—
(a) declare a moratorium for the purposes referred to in section 14;
(b) cause a public announcement of the initiation of corporate insolvency resolution process and
call for the submission of claims under section 15; and
(c) appoint an interim resolution professional in the manner as laid down in section 16.
(2) The public announcement referred to in clause
(b) of sub-section
(1) shall be made immediately
after the appointment of the interim resolution professional.
1. Subs. by Act 26 of 2018, s. 8, for “seventy-five” (w.e.f. 6-6-2018).
2. Ins. by Act 26 of 2019, s. 4 (w.e.f. 16-08-2019).
3. Ins. by Act 26 of 2018, s. 9 (w.e.f. 6-6-2018).
28
14. Moratorium.—
(1) Subject to provisions of sub-sections
(2) and
(3), on the insolvency
commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of
the following, namely:—
(a) the institution of suits or continuation of pending suits or proceedings against the corporate
debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration
panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets
or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor
in respect of its property including any action under the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(d) the recovery of any property by an owner or lessor where such property is occupied by or in
the possession of the corporate debtor.
1
[Explanation.—For the purposes of this sub-section, it is hereby clarified that notwithstanding
anything contained in any other law for the time being in force, a license, permit, registration, quota,
concession, clearances or a similar grant or right given by the Central Government, State
Government, local authority, sectoral regulator or any other authority constituted under any other law
for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject
to the condition that there is no default in payment of current dues arising for the use or continuation
of the license, permit, registration, quota, concession, clearances or a similar grant or right during the
moratorium period;]
(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be
terminated or suspended or interrupted during moratorium period.
1
[(2A) Where the interim resolution professional or resolution professional, as the case may be,
considers the supply of goods or services critical to protect and preserve the value of the corporate debtor
and manage the operations of such corporate debtor as a going concern, then the supply of such goods or
services shall not be terminated, suspended or interrupted during the period of moratorium, except where
such corporate debtor has not paid dues arising from such supply during the moratorium period or in such
circumstances as may be specified;]
2
[
(3) The provisions of sub-section
(1) shall not apply to—
3
[
(a) such transactions, agreements or other arrangements as may be notified by the Central
Government in consultation with any financial sector regulator or any other authority;]
(b) a surety in a contract of guarantee to a corporate debtor.].
(4) The order of moratorium shall have effect from the date of such order till the completion of the
corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process period, if the
Adjudicating Authority approves the resolution plan under sub-section
(1) of section 31 or passes an order
for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the
date of such approval or liquidation order, as the case may be.
15. Public announcement of corporate insolvency resolution process.—
(1) The public
announcement of the corporate insolvency resolution process under the order referred to in section 13
shall contain the following information, namely:—
1. Ins. by Act 1 of 2020, s. 5 (w.e.f. 28-12-2019).
2. Subs. by Act 26 of 2018, s. 10, for “sub-section
(3)” (w.e.f. 6-6-2018).
3. Subs. by Act 1 of 2020, s. 5, for clause
(a) (w.e.f. 28-12-2019).
29
(a) name and address of the corporate debtor under the corporate insolvency resolution process;
(b) name of the authority with which the corporate debtor is incorporated or registered;
(c) the last date for submission of 1[claims, as may be specified];
(d) details of the interim resolution professional who shall be vested with the management of the
corporate debtor and be responsible for receiving claims;
(e) penalties for false or misleading claims; and
(f) the date on which the corporate insolvency resolution process shall close, which shall be the
one hundred and eightieth day from the date of the admission of the application under sections 7, 9 or
section 10, as the case may be.
(2) The public announcement under this section shall be made in such manner as may be specified.
16. Appointment and tenure of interim resolution professional.—
(1) The Adjudicating Authority
shall appoint an interim resolution professional 2[on the insolvency commencement date].
(2) Where the application for corporate insolvency resolution process is made by a financial creditor
or the corporate debtor, as the case may be, the resolution professional, as proposed respectively in the
application under section 7 or section 10, shall be appointed as the interim resolution professional, if no
disciplinary proceedings are pending against him.
(3) Where the application for corporate insolvency resolution process is made by an operational
creditor and—
(a) no proposal for an interim resolution professional is made, the Adjudicating Authority shall
make a reference to the Board for the recommendation of an insolvency professional who may act as
an interim resolution professional;
(b) a proposal for an interim resolution professional is made under sub-section
(4) of section 9,
the resolution professional as proposed, shall be appointed as the interim resolution professional, if no
disciplinary proceedings are pending against him.
(4) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority
under sub-section
(3), recommend the name of an insolvency professional to the Adjudicating Authority
against whom no disciplinary proceedings are pending.
(5) The term of the interim resolution professional 3[shall continue till the date of appointment of the
resolution professional under section 22].
17. Management of affairs of corporate debtor by interim resolution professional.—
(1) From the
date of appointment of the interim resolution professional,—
(a) the management of the affairs of the corporate debtor shall vest in the interim resolution
professional;
(b) the powers of the board of directors or the partners of the corporate debtor, as the case may
be, shall stand suspended and be exercised by the interim resolution professional;
(c) the officers and managers of the corporate debtor shall report to the interim resolution
professional and provide access to such documents and records of the corporate debtor as may be
required by the interim resolution professional;
1. Subs. by Act 26 of 2018, s. 11, for “claims” (w.e.f. 6-6-2018).
2. Subs. by Act 1 of 2020, s. 6, for “within fourteen days from the insolvency commencement date” (w.e.f. 28-12-2019).
3. Subs. by Act 26 of 2018, s. 12, for “shall not exceed thirty days from date of his appointment” (w.e.f. 6-6-2018).
30
(d) the financial institutions maintaining accounts of the corporate debtor shall act on the
instructions of the interim resolution professional in relation to such accounts and furnish all
information relating to the corporate debtor available with them to the interim resolution professional.
(2) The interim resolution professional vested with the management of the corporate debtor shall—
(a) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other
documents, if any;
(b) take such actions, in the manner and subject to such restrictions, as may be specified by the
Board;
(c) have the authority to access the electronic records of corporate debtor from information utility
having financial information of the corporate debtor;
(d) have the authority to access the books of account, records and other relevant documents of
corporate debtor available with government authorities, statutory auditors, accountants and such other
persons as 1[may be specified; and].
2
[
(e) be responsible for complying with the requirements under any law for the time being in
force on behalf of the corporate debtor.].
18. Duties of interim resolution professional.—The interim resolution professional shall perform
the following duties, namely:—
(a) collect all information relating to the assets, finances and operations of the corporate debtor
for determining the financial position of the corporate debtor, including information relating to—
(i) business operations for the previous two years;
(ii) financial and operational payments for the previous two years;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified;
(b) receive and collate all the claims submitted by creditors to him, pursuant to the public
announcement made under sections 13 and 15;
(c) constitute a committee of creditors;
(d) monitor the assets of the corporate debtor and manage its operations until a resolution
professional is appointed by the committee of creditors;
(e) file information collected with the information utility, if necessary; and
(f) take control and custody of any asset over which the corporate debtor has ownership rights as
recorded in the balance sheet of the corporate debtor, or with information utility or the depository of
securities or any other registry that records the ownership of assets including—
(i) assets over which the corporate debtor has ownership rights which may be located in a
foreign country;
(ii) assets that may or may not be in possession of the corporate debtor;
(iii) tangible assets, whether movable or immovable;
(iv) intangible assets including intellectual property;
1. Subs. by Act 26 of 2018, s. 13, for “may be specified” (w.e.f. 6-6-2018).
2. Ins. by s. 13, ibid., (w.e.f. 6-6-2018).
31
(v) securities including shares held in any subsidiary of the corporate debtor, financial
instruments, insurance policies;
(vi) assets subject to the determination of ownership by a court or authority;
(g) to perform such other duties as may be specified by the Board.
Explanation.—For the purposes of this 1[section], the term “assets” shall not include the following,
namely:—
(a) assets owned by a third party in possession of the corporate debtor held under trust or under
contractual arrangements including bailment;
(b) assets of any Indian or foreign subsidiary of the corporate debtor; and
(c) such other assets as may be notified by the Central Government in consultation with any
financial sector regulator.
19. Personnel to extend cooperation to interim resolution professional.—
(1) The personnel of the
corporate debtor, its promoters or any other person associated with the management of the corporate
debtor shall extend all assistance and cooperation to the interim resolution professional as may be
required by him in managing the affairs of the corporate debtor.
(2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or
cooperate with the interim resolution professional does not assist or cooperate, the interim resolution
professional may make an application to the Adjudicating Authority for necessary directions.
(3) The Adjudicating Authority, on receiving an application under sub-section
(2), shall by an order,
direct such personnel or other person to comply with the instructions of the resolution professional and to
cooperate with him in collection of information and management of the corporate debtor.
20. Management of operations of corporate debtor as going concern.—
