6. Persons who may initiate corporate insolvency resolution process.—Where any corporate
debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may
initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as
provided under this Chapter.
7. Initiation of corporate insolvency resolution process by financial creditor.—(1) A financial
creditor either by itself or jointly with 5
[other financial creditors, or any other person on behalf of the
financial creditor, as may be notified by the Central Government,] may file an application for initiating
corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority
when a default has occurred.
6
[Provided that for the financial creditors, referred to in clauses (a) and (b) of sub-section (6A) of
section 21, an application for initiating corporate insolvency resolution process against the corporate
debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less
than ten per cent. of the total number of such creditors in the same class, whichever is less:
Provided further that for financial creditors who are allottees under a real estate project, an
application for initiating corporate insolvency resolution process against the corporate debtor shall be
filed jointly by not less than one hundred of such allottees under the same real estate project or not less
1. Subs. by Act 8 of 2018, s.3 (w.e.f. 23-11-2017).
2. Ins. by Act 26 of 2021, s. 3 (w.e.f. 4-4-2021).
3. Subs. by Act 8 of 2018, s. 3, for “any person” (w.e.f. 23-11-2017).
4. Ins. by Act 26 of 2019, s. 2 (w.e.f. 16-08-2019).
5. Subs. by Act 26 of 2018, s. 4, for “other financial creditors” (w.e.f. 6-6-2018).
6. Ins. by Act 1 of 2020, s. 3 (w.e.f. 28-12-2019).
24
than ten per cent. of the total number of such allottees under the same real estate project, whichever is
less:
Provided also that where an application for initiating the corporate insolvency resolution process
against a corporate debtor has been filed by a financial creditor referred to in the first and second provisos
and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and
Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the
requirements of the first or second proviso within thirty days of the commencement of the said Act,
failing which the application shall be deemed to be withdrawn before its admission.]
Explanation.—For the purposes of this sub-section, a default includes a default in respect of a
financial debt owed not only to the applicant financial creditor but to any other financial creditor of the
corporate debtor.
(2) The financial creditor shall make an application under sub-section (1) in such form and manner
and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish—
(a) record of the default recorded with the information utility or such other record or evidence of
default as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution professional;
and
(c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under
sub-section (2), ascertain the existence of a default from the records of an information utility or on the
basis of other evidence furnished by the financial creditor under sub-section (3).
1
[Provided that if the Adjudicating Authority has not ascertained the existence of default and passed
an order under sub-section (5) within such time, it shall record its reasons in writing for the same.]
(5) Where the Adjudicating Authority is satisfied that—
(a) a default has occurred and the application under sub-section (2) is complete, and there is no
disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit
such application; or
(b) default has not occurred or the application under sub-section (2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution professional, it may, by order,
reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of
sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of
receipt of such notice from the Adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of the
application under sub-section (5).
(7) The Adjudicating Authority shall communicate—
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor,
within seven days of admission or rejection of such application, as the case may be.
8. Insolvency resolution by operational creditor.—(1) An operational creditor may, on the
occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice
1. Ins. by Act 26 of 2019, s. 3 (w.e.f. 16-08-2019).
25
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).
26
(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).
27
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 prepackaged 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).
28
(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).
29
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).
30
(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).
31
(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).
32
(v) securities including shares held in any subsidiary of the corporate debtor, financial
instruments, insurance policies;
(vi) assets subject to the determination of ownership by a court or authority;
(g) to perform such other duties as may be specified by the Board.
Explanation.—For the purposes of this 1
[section], the term “assets” shall not include the following,
namely:—
(a) assets owned by a third party in possession of the corporate debtor held under trust or under
contractual arrangements including bailment;
(b) assets of any Indian or foreign subsidiary of the corporate debtor; and
(c) such other assets as may be notified by the Central Government in consultation with any
financial sector regulator.
19. Personnel to extend cooperation to interim resolution professional.—(1) The personnel of the
corporate debtor, its promoters or any other person associated with the management of the corporate
debtor shall extend all assistance and cooperation to the interim resolution professional as may be
required by him in managing the affairs of the corporate debtor.
(2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or
cooperate with the interim resolution professional does not assist or cooperate, the interim resolution
professional may make an application to the Adjudicating Authority for necessary directions.
(3) The Adjudicating Authority, on receiving an application under sub-section (2), shall by an order,
direct such personnel or other person to comply with the instructions of the resolution professional and to
cooperate with him in collection of information and management of the corporate debtor.
20. Management of operations of corporate debtor as going concern.—(1) The interim resolution
professional shall make every endeavour to protect and preserve the value of the property of the corporate
debtor and manage the operations of the corporate debtor as a going concern.
(2) For the purposes of sub-section (1), the interim resolution professional shall have the authority—
(a) to appoint accountants, legal or other professionals as may be necessary;
(b) to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or
transactions which were entered into before the commencement of corporate insolvency resolution
process;
(c) to raise interim finance provided that no security interest shall be created over any
encumbered property of the corporate debtor without the prior consent of the creditors whose debt is
secured over such encumbered property:
Provided that no prior consent of the creditor shall be required where the value of such property is not
less than the amount equivalent to twice the amount of the debt.
(d) to issue instructions to personnel of the corporate debtor as may be necessary for keeping the
corporate debtor as a going concern; and
(e) to take all such actions as are necessary to keep the corporate debtor as a going concern.
21. Committee of creditors.—(1) The interim resolution professional shall after collation of all
claims received against the corporate debtor and determination of the financial position of the corporate
debtor, constitute a committee of creditors.
(2) The committee of creditors shall comprise all financial creditors of the corporate debtor:
Provided that a 2
[financial creditor or the authorised representative of the financial creditor referred to
in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the
1. Subs. by Act 26 of 2018, s. 14, for “sub-section” (w.e.f. 6-6-2018).
2. Subs. by s.15, ibid., for “related party to whom a corporate debtor owes a financial debt” (w.e.f. 6-6-2018).
33
corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the
committee of creditors.
1
[Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial
sector regulator, if it is a related party of the corporate debtor solely on account of conversion or
substitution of debt into equity shares or instruments convertible into equity shares 2
[or completion of
such transactions as may be prescribed,] prior to the insolvency commencement date.];
(3) 3
[Subject to sub-sections (6) and (6A), where] the corporate debtor owes financial debts to two or
more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of
the committee of creditors and their voting share shall be determined on the basis of the financial debts
owed to them.
(4) Where any person is a financial creditor as well as an operational creditor,—
(a) such person shall be a financial creditor to the extent of the financial debt owed by the
corporate debtor, and shall be included in the committee of creditors, with voting share proportionate
to the extent of financial debts owed to such creditor;
(b) such person shall be considered to be an operational creditor to the extent of the operational
debt owed by the corporate debtor to such creditor.
(5) Where an operational creditor has assigned or legally transferred any operational debt to a
financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of
such assignment or legal transfer.
(6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated
facility 4*** provide for a single trustee or agent to act for all financial creditors, each financial creditor
may—
(a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of
his voting share;
(b) represent himself in the committee of creditors to the extent of his voting share;
(c) appoint an insolvency professional (other than the resolution professional) at his own cost to
represent himself in the committee of creditors to the extent of his voting share; or
(d) exercise his right to vote to the extent of his voting share with one or more financial creditors
jointly or severally.
5
[(6A) Where a financial debt—
(a) is in the form of securities or deposits and the terms of the financial debt provide for
appointment of a trustee or agent to act as authorised representative for all the financial creditors, such
trustee or agent shall act on behalf of such financial creditors;
(b) is owed to a class of creditors exceeding the number as may be specified, other than the
creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an
application to the Adjudicating Authority along with the list of all financial creditors, containing the
name of an insolvency professional, other than the interim resolution professional, to act as their
authorised representative who shall be appointed by the Adjudicating Authority prior to the first
meeting of the committee of creditors;
1. Ins. by Act 26 of 2018, s. 15 (w.e.f. 6-6-2018).
2. Ins. by Act 1 of 2020, s. 7 (w.e.f. 28-12-2019).
3. Subs. by Act 26 of 2018, s. 15, for “Where” (w.e.f. 6-6-2018).
4. The words “or issued as securities” omitted by s.15, ibid. (w.e.f. 6-6-2018).
5. Ins. by s. 15, ibid., (w.e.f. 6-6-2018).
34
(c) is represented by a guardian, executor or administrator, such person shall act as authorised
representative on behalf of such financial creditors,
and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of
the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.
(6B) The remuneration payable to the authorised representative—
(i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial
debt or the relevant documentation; and
(ii) under clause (b) of sub-section (6A) shall be as specified which shall form part of the
insolvency resolution process costs];
1
[(7) The Board may specify the manner of voting and the determining of the voting share in respect
of financial debts covered under sub-sections (6) and (6A).
(8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken
by a vote of not less than fifty-one per cent. of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the committee of
creditors shall be constituted and shall comprise of such persons to exercise such functions in such
manner as may be specified.]
(9) The committee of creditors shall have the right to require the resolution professional to furnish
any financial information in relation to the corporate debtor at any time during the corporate insolvency
resolution process.
(10) The resolution professional shall make available any financial information so required by the
committee of creditors under sub-section (9) within a period of seven days of such requisition.
22. Appointment of resolution professional.—(1) The first meeting of the committee of creditors
shall be held within seven days of the constitution of the committee of creditors.
(2) The committee of creditors, may, in the first meeting, by a majority vote of not less than 2
[sixtysix] per cent. of the voting share of the financial creditors, either resolve to appoint the interim resolution
professional as a resolution professional or to replace the interim resolution professional by another
resolution professional.
(3) Where the committee of creditors resolves under sub-section (2)—
(a) to continue the interim resolution professional as resolution professional, 3
[subject to a written
consent from the interim resolution professional in the specified form] it shall communicate its
decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority;
or
(b) to replace the interim resolution professional, it shall file an application before the
Adjudicating Authority for the appointment of the proposed resolution professional 4
[along with a
written consent from the proposed resolution professional in the specified form].
(4) The Adjudicating Authority shall forward the name of the resolution professional proposed under
clause (b) of sub-section (3) to the Board for its confirmation and shall make such appointment after
confirmation by the Board.
1. Subs. by Act 26 of 2018, s. 15, for “sub-sections (7) and (8)” (w.e.f. 6-6-2018).
2. Subs. by s. 16, ibid., for “seventy-five” (w.e.f. 6-6-2018).
3. Ins. by s. 16, ibid. (w.e.f. 6-6-2018).
4. Ins. by Act 26 of 2018, s. 16 (w.e.f. 6-6-2018).
35
(5) Where the Board does not confirm the name of the proposed resolution professional within ten
days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall,
by order, direct the interim resolution professional to continue to function as the resolution professional
until such time as the Board confirms the appointment of the proposed resolution professional.
23. Resolution professional to conduct corporate insolvency resolution process.—(1) Subject to
section 27, the resolution professional shall conduct the entire corporate insolvency resolution process and
manage the operations of the corporate debtor during the corporate insolvency resolution process period.
1
[Provided that the resolution professional shall continue to manage the operations of the corporate
debtor after the expiry of the corporate insolvency resolution process period, until an order approving the
resolution plan under sub-section (1) of section 31 or appointing a liquidator under section 34 is passed by
the Adjudicating Authority.]
(2) The resolution professional shall exercise powers and perform duties as are vested or conferred on
the interim resolution professional under this Chapter.
(3) In case of any appointment of a resolution professional under sub-section (4) of section 22, the
interim resolution professional shall provide all the information, documents and records pertaining to the
corporate debtor in his possession and knowledge to the resolution professional.
24. Meeting of committee of creditors.—(1) The members of the committee of creditors may meet
in person or by such electronic means as may be specified.
(2) All meetings of the committee of creditors shall be conducted by the resolution professional.
(3) The resolution professional shall give notice of each meeting of the committee of creditors to—
(a) members of 2
[committee of creditors, including the authorised representatives referred to in
sub-sections (6) and (6A) of section 21 and sub-section (5)];
(b) members of the suspended Board of Directors or the partners of the corporate persons, as the
case may be;
(c) operational creditors or their representatives if the amount of their aggregate dues is not less
than ten per cent. of the debt.
(4) The directors, partners and one representative of operational creditors, as referred to in
sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in
such meetings:
Provided that the absence of any such director, partner or representative of operational creditors, as
the case may be, shall not invalidate proceedings of such meeting.
(5) 3
[Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor] who is a member of the
committee of creditors may appoint an insolvency professional other than the resolution professional to
represent such creditor in a meeting of the committee of creditors:
Provided that the fees payable to such insolvency professional representing any individual creditor
will be borne by such creditor.
(6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial
debts owed to such creditor.
1. Subs. by Act 1 of 2020, s. 8, for the proviso (w.e.f. 28-12-2019).
2. Subs. by Act 26 of 2018, s. 18, for “Committee of creditors” (w.e.f. 6-6-2018).
3. Subs. by s. 18, ibid., for “Any creditor” (w.e.f. 6-6-2018).
36
(7) The resolution professional shall determine the voting share to be assigned to each creditor in the
manner specified by the Board.
(8) The meetings of the committee of creditors shall be conducted in such manner as may be
specified.
25. Duties of resolution professional.—(1) It shall be the duty of the resolution professional to
preserve and protect the assets of the corporate debtor, including the continued business operations of the
corporate debtor.
(2) For the purposes of sub-section (1), the resolution professional shall undertake the following
actions, namely:—
(a) take immediate custody and control of all the assets of the corporate debtor, including the
business records of the corporate debtor;
(b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the
benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings;
(c) raise interim finances subject to the approval of the committee of creditors under section 28;
(d) appoint accountants, legal or other professionals in the manner as specified by Board;
(e) maintain an updated list of claims;
(f) convene and attend all meetings of the committee of creditors;
(g) prepare the information memorandum in accordance with section 29;
1
[(h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him
with the approval of committee of creditors, having regard to the complexity and scale of operations of
the business of the corporate debtor and such other conditions as may be specified by the Board, to
submit a resolution plan or plans.].
(i) present all resolution plans at the meetings of the committee of creditors;
(j) file application for avoidance of transactions in accordance with Chapter III, if any; and
(k) such other actions as may be specified by the Board.
2
[25A. Rights and duties of authorised representative of financial creditors.—(1) The authorised
representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall
have the right to participate and vote in meetings of the committee of creditors on behalf of the financial
creditor he represents in accordance with the prior voting instructions of such creditors obtained through
physical or electronic means.
(2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the
meeting of the committee of creditors to the financial creditor he represents.
(3) The authorised representative shall not act against the interest of the financial creditor he
represents and shall always act in accordance with their prior instructions:
Provided that if the authorised representative represents several financial creditors, then he shall
cast his vote in respect of each financial creditor in accordance with instructions received from each
financial creditor, to the extent of his voting share:
Provided further that if any financial creditor does not give prior instructions through physical or
electronic means, the authorised representative shall abstain from voting on behalf of such creditor.
1. Subs. by Act 8 of 2018, s. 4, for sub-section (2) (w.e.f. 23-11-2017).
2. Ins. by Act 26 of 2018, s. 19 (w.e.f. 6-6-2018).
37
1
[(3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised
representative under sub-section (6A) of section 21 shall cast his vote on behalf of all the financial
creditors he represents in accordance with the decision taken by a vote of more than fifty per cent. of
the voting share of the financial creditors he represents, who have cast their vote:
Provided that for a vote to be cast in respect of an application under section 12A, the authorised
representative shall cast his vote in accordance with the provisions of sub-section (3).]
(4) The authorised representative shall file with the committee of creditors any instructions
received by way of physical or electronic means, from the financial creditor he represents, for voting
in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he
represents is correctly recorded by the interim resolution professional or resolution professional, as
the case may be.
Explanation.—For the purposes of this section, the “electronic means” shall be such as may be
specified.]
26. Application for avoidance of transactions not to affect proceedings.—The filing of an
avoidance application under clause (j) of sub-section (2) of section 25 by the resolution professional shall
not affect the proceedings of the corporate insolvency resolution process.
27. Replacement of resolution professional by committee of creditors.—(1) Where, at any time
during the corporate insolvency resolution process, the committee of creditors is of the opinion that a
resolution professional appointed under section 22 is required to be replaced, it may replace him with
another resolution professional in the manner provided under this section.
2
[(2) The committee of creditors may, at a meeting, by a vote of sixty-six per cent. of voting shares,
resolve to replace the resolution professional appointed under section 22 with another resolution
professional, subject to a written consent from the proposed resolution professional in the specified form.]
(3) The committee of creditors shall forward the name of the insolvency professional proposed by
them to the Adjudicating Authority.
(4) The Adjudicating Authority shall forward the name of the proposed resolution professional to the
Board for its confirmation and a resolution professional shall be appointed in the same manner as laid
down in section 16.
28. Approval of committee of creditors for certain actions.—(1) Notwithstanding anything
contained in any other law for the time being in force, the resolution professional, during the corporate
insolvency resolution process, shall not take any of the following actions without the prior approval of the
committee of creditors namely:—
(a) raise any interim finance in excess of the amount as may be decided by the committee of
creditors in their meeting;
(b) create any security interest over the assets of the corporate debtor;
(c) change the capital structure of the corporate debtor, including by way of issuance of additional
securities, creating a new class of securities or buying back or redemption of issued securities in case
the corporate debtor is a company;
(d) record any change in the ownership interest of the corporate debtor;
1. Ins. by Act 26 of 2019, s. 5 (w.e.f. 16-08-2019).
2. Subs. by Act 26 of 2018, s. 20, for sub-section (2) (w.e.f. 6-6-2018).
38
(e) give instructions to financial institutions maintaining accounts of the corporate debtor for a
debit transaction from any such accounts in excess of the amount as may be decided by the committee
of creditors in their meeting;
(f) undertake any related party transaction;
(g) amend any constitutional documents of the corporate debtor;
(h) delegate its authority to any other person;
(i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their
nominees to third parties;
(j) make any change in the management of the corporate debtor or its subsidiary;
(k) transfer rights or financial debts or operational debts under material contracts otherwise than
in the ordinary course of business;
(l) make changes in the appointment or terms of contract of such personnel as specified by the
committee of creditors; or
(m) make changes in the appointment or terms of contract of statutory auditors or internal
auditors of the corporate debtor.
(2) The resolution professional shall convene a meeting of the committee of creditors and seek the
vote of the creditors prior to taking any of the actions under sub-section (1).
(3) No action under sub-section (1) shall be approved by the committee of creditors unless approved
by a vote of 1
[sixty-six] per cent. of the voting shares.
(4) Where any action under sub-section (1) is taken by the resolution professional without seeking the
approval of the committee of creditors in the manner as required in this section, such action shall be void.
(5) The committee of creditors may report the actions of the resolution professional under
sub-section (4) to the Board for taking necessary actions against him under this Code.
29. Preparation of information memorandum.—(1) The resolution professional shall prepare an
information memorandum in such form and manner containing such relevant information as may be
specified by the Board for formulating a resolution plan.
(2) The resolution professional shall provide to the resolution applicant access to all relevant
information in physical and electronic form, provided such resolution applicant undertakes—
(a) to comply with provisions of law for the time being in force relating to confidentiality and
insider trading;
(b) to protect any intellectual property of the corporate debtor it may have access to; and
(c) not to share relevant information with third parties unless clauses (a) and (b) of this
sub-section are complied with.
Explanation.—For the purposes of this section, “relevant information” means the information
required by the resolution applicant to make the resolution plan for the corporate debtor, which shall
include the financial position of the corporate debtor, all information related to disputes by or against the
corporate debtor and any other matter pertaining to the corporate debtor as may be specified.
2
[29A. Person not eligible to be resolution applicant. —A person shall not be eligible to submit a
resolution plan, if such person, or any other person acting jointly or in concert with such person—
1. Subs. by Act 26 of 2018, s. 21, for “seventy five” (w.e.f. 6-6-2018).
2. Ins. by Act 8 of 2018, s. 5 (w.e.f. 23-11-2017)
39
(a) is an undischarged insolvent;
(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under
the Banking Regulation Act, 1949;
(c) 1
[at the time of submission of the resolution plan has an account,] or an account of a corporate
debtor under the management or control of such person or of whom such person is a promoter,
classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India
issued under the Banking Regulation Act, 1949 (10 1949) 2
[or the guidelines of a financial sector
regulator issued under any other law for the time being in force,] and at least a period of one year has
lapsed from the date of such classification till the date of commencement of the corporate insolvency
resolution process of the corporate debtor:
Provided that the person shall be eligible to submit a resolution plan if such person makes payment of
all overdue amounts with interest thereon and charges relating to non-performing asset accounts before
submission of resolution plan;
1
[Provided further that nothing in this clause shall apply to a resolution applicant where such applicant
is a financial entity and is not a related party to the corporate debtor.
Explanation I.—For the purposes of this proviso, the expression “related party” shall not include a
financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor
and is a related party of the corporate debtor solely on account of conversion or substitution of debt into
equity shares or instruments convertible into equity shares 3
[or completion of such transactions as may be
prescribed,] prior to the insolvency commencement date.
Explanation II.—For the purposes of this clause, where a resolution applicant has an account, or an
account of a corporate debtor under the management or control of such person or of whom such person is
a promoter, classified as non-performing asset and such account was acquired pursuant to a prior
resolution plan approved under this Code, then, the provisions of this clause shall not apply to such
resolution applicant for a period of three years from the date of approval of such resolution plan by the
Adjudicating Authority under this Code;]
4
[(d) has been convicted for any offence punishable with imprisonment—
(i) for two years or more under any Act specified under the Twelfth Schedule; or
(ii) for seven years or more under any other law for the time being in force:
Provided that this clause shall not apply to a person after the expiry of a period of two years from the
date of his release from imprisonment:
Provided further that this clause shall not apply in relation to a connected person referred to in clause
(iii) of Explanation I;]
(e) is disqualified to act as a director under the Companies Act, 2013;
2
[Provided that this clause shall not apply in relation to a connected person referred to in clause (iii)
of Explanation I;]
(f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing
the securities markets;
(g) has been a promoter or in the management or control of a corporate debtor in which a preferential
transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken
place and in respect of which an order has been made by the Adjudicating Authority under this Code;
1. Subs. by Act 26 of 2018, s. 22, for “has an account” (w.e.f. 6-6-2018).
2. Ins. by s. 22, ibid., (w.e.f. 6-6-2018).
3. Ins. by Act 1 of 2020, s. 9 (w.e.f. 28-12-2019).
4. Subs. by Act 26 of 2018, s. 22, for clause (d) (w.e.f. 6-6-2018).
40
1
[Provided that this clause shall not apply if a preferential transaction, undervalued transaction,
extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the
corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or
pursuant to a scheme or plan approved by a financial sector regulator or a court, and such resolution
applicant has not otherwise contributed to the preferential transaction, undervalued transaction,
extortionate credit transaction or fraudulent transaction;]
(h) has executed 2
[a guarantee] in favour of a creditor in respect of a corporate debtor against which an
application for insolvency resolution made by such creditor has been admitted under this Code 3
[and such
guarantee has been invoked by the creditor and remains unpaid in full or part];
(i) 4
[is] subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction
outside India; or
(j) has a connected person not eligible under clauses (a) to (i)
5
[Explanation. I] — For the purposes of this clause, the expression “connected person” means—
(i) any person who is the promoter or in the management or control of the resolution applicant; or
(ii) any person who shall be the promoter or in management or control of the business of the
corporate debtor during the implementation of the resolution plan; or
(iii) the holding company, subsidiary company, associate company or related party of a person
referred to in clauses (i) and (ii):
6
[Provided that nothing in clause (iii) of Explanation I shall apply to a resolution applicant where
such applicant is a financial entity and is not a related party of the corporate debtor:
Provided further that the expression “related party” shall not include a financial entity, regulated by
a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of
the corporate debtor solely on account of conversion or substitution of debt into equity shares or
instruments convertible into equity shares 7
[or completion of such transactions as may be prescribed,]
prior to the insolvency commencement date;]
8
[Explanation II.—For the purposes of this section, “financial entity” shall mean the following entities
which meet such criteria or conditions as the Central Government may, in consultation with the financial
sector regulator, notify in this behalf, namely:—
(a) a scheduled bank;
(b) any entity regulated by a foreign central bank or a securities market regulator or other financial
sector regulator of a jurisdiction outside India which jurisdiction is compliant with the Financial
Action Task Force Standards and is a signatory to the International Organisation of Securities
Commissions Multilateral Memorandum of Understanding;
(c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio
investor or a foreign venture capital investor, where the terms shall have the meaning assigned to them
in regulation 2 of the Foreign Exchange Management (Transfer or Issue of Security by a Person
1. Ins. by Act 26 of 2018, s. 22 (w.e.f. 6-6-2018).
2. Subs. by s. 22, ibid., for “an enforceable guarantee” (w.e.f. 6-6-2018).
3. Ins. by s. 22, ibid., (w.e.f. 6-6-2018).
4. Subs. by s. 22, ibid., for “has been” (w.e.f. 6-6-2018).
5. Explanation renumbered as Explanation I by s. 22, ibid. (w.e.f. 6-6-2018).
6. The proviso subs. by s. 22, ibid., (w.e.f. 6-6-2018).
7. Ins. by Act 1 of 2020, s. 9 (w.e.f. 28-12-2019).
8. Explanation ins. by Act 26 of 2018, s. 22 (w.e.f. 6-6-2018).
41
Resident Outside India) Regulations, 2017 made under the Foreign Exchange Management Act, 1999
(42 of 1999);
(d) an asset reconstruction company registered with the Reserve Bank of India under section 3 of
the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (54 of 2002);
(e) an Alternate Investment Fund registered with the Securities and Exchange Board of India;
(f) such categories of persons as may be notified by the Central Government.].]
30. Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan 1
[along
with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on
the basis of the information memorandum.
(2) The resolution professional shall examine each resolution plan received by him to confirm that
each resolution plan—
(a) provides for the payment of insolvency resolution process costs in a manner specified by the
Board in priority to the 2
[payment] of other debts of the corporate debtor;
3
[(b) provides for the payment of debts of operational creditors in such manner as may be
specified by the Board which shall not be less than—
(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor
under section 53; or
(ii) the amount that would have been paid to such creditors, if the amount to be distributed
under the resolution plan had been distributed in accordance with the order of priority in
sub-section (1) of section 53,
whichever is higher and provides for the payment of debts of financial creditors, who do not vote in
favour of the resolution plan, in such manner as may be specified by the Board, which shall not be
less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in
the event of a liquidation of the corporate debtor.
Explanation 1.—For the removal of doubts, it is hereby clarified that a distribution in
accordance with the provisions of this clause shall be fair and equitable to such creditors.
Explanation 2.—For the purposes of this clause, it is hereby declared that on and from the
date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the
provisions of this clause shall also apply to the corporate insolvency resolution process of a
corporate debtor—
(i) where a resolution plan has not been approved or rejected by the Adjudicating
Authority;
(ii) where an appeal has been preferred under section 61 or section 62 or such an appeal
is not time barred under any provision of law for the time being in force; or
(iii) where a legal proceeding has been initiated in any court against the decision of the
Adjudicating Authority in respect of a resolution plan;]
1. Ins. by Act 26 of 2018, s. 23 (w.e.f. 6-6-2018).
2. Subs. by s. 23, ibid., for “repayment” (w.e.f. 6-6-2018).
3. Subs. by Act 26 of 2019, s. 6, for clause (b) (w.e.f. 16-08-2019).
42
(c) provides for the management of the affairs of the Corporate debtor after approval of the
resolution plan;
(d) the implementation and supervision of the resolution plan;
(e) does not contravene any of the provisions of the law for the time being in force;
(f) conforms to such other requirements as may be specified by the Board.
1
[Explanation.—For the purposes of clause (e), if any approval of shareholders is required under
the Companies Act, 2013 or any other law for the time being in force for the implementation of actions
under the resolution plan, such approval shall be deemed to have been given and it shall not be a
contravention of that Act or law];
(3) The resolution professional shall present to the committee of creditors for its approval such
resolution plans which confirm the conditions referred to in sub-section (2).
2
[(4) The committee of creditors may approve a resolution plan by a vote of not less than 3
[sixty-six]
per cent. of voting share of the financial creditors, after considering its feasibility and viability, 4
[the
manner of distribution proposed, which may take into account the order of priority amongst creditors as
laid down in sub-section (1) of section 53, including the priority and value of the security interest of a
secured creditor] and such other requirements as may be specified by the Board:
Provided that the committee of creditors shall not approve a resolution plan, submitted before the
commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017(Ord. 7 of 2017),
where the resolution applicant is ineligible under section 29A and may require the resolution professional
to invite a fresh resolution plan where no other resolution plan is available with it:
Provided further that where the resolution applicant referred to in the first proviso is ineligible under
clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such
period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to
clause (c) of section 29A:
Provided also that nothing in the second proviso shall be construed as extension of period for the
purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process
shall be completed within the period specified in that sub-section.]
5
[Provided also that the eligibility criteria in section 29A as amended by the Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not
submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2018.]
(5) The resolution applicant may attend the meeting of the committee of creditors in which the
resolution plan of the applicant is considered:
Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of
creditors unless such resolution applicant is also a financial creditor.
1. Ins. by Act 26 of 2018, s. 23 (w.e.f. 6-6-2018).
2. Subs. by Act 8 of 2018, s. 6, for sub-section (4) (w.e.f. 23-11-2017).
3. Subs. by Act 26 of 2018, s., 23, for “seventy-five” (w.e.f. 6-6-2018).
4. Ins. by Act 26 of 2019, s. 6 (w.e.f. 16-08-2019).
5. Ins. by Act 26 of 2018, s. 23 (w.e.f. 6-6-2018).
43
(6) The resolution professional shall submit the resolution plan as approved by the committee of
creditors to the Adjudicating Authority.
31. Approval of resolution plan.—(1) If the Adjudicating Authority is satisfied that the resolution
plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements
as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be
binding on the corporate debtor and its employees, members, creditors, 1
[including the Central
Government, any State Government or any local authority to whom a debt in respect of the payment of
dues arising under any law for the time being in force, such as authorities to whom statutory dues are
owed,] guarantors and other stakeholders involved in the resolution plan.
2
[Provided that the Adjudicating Authority shall, before passing an order for approval of resolution
plan under this sub-section, satisfy that the resolution plan has provisions for its effective
implementation.]
(2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the
requirements referred to in sub-section (1), it may, by an order, reject the resolution plan.
(3) After the order of approval under sub-section (1),—
(a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to
have effect; and
(b) the resolution professional shall forward all records relating to the conduct of the corporate
insolvency resolution process and the resolution plan to the Board to be recorded on its database.
2
[(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1),
obtain the necessary approval required under any law for the time being in force within a period of one
year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1)
or within such period as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for combination, as referred to in section
5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the
Competition Commission of India under that Act prior to the approval of such resolution plan by the
committee of creditors.]
32. Appeal.—Any appeal from an order approving the resolution plan shall be in the manner and on
the grounds laid down in sub-section (3) of section 61.
3
[32A. Liability for prior offences, etc.—(1) Notwithstanding anything to the contrary contained in
this Code or any other law for the time being in force, the liability of a corporate debtor for an offence
committed prior to the commencement of the corporate insolvency resolution process shall cease, and the
corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been
approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in
the management or control of the corporate debtor to a person who was not—
(a) a promoter or in the management or control of the corporate debtor or a related party of such a
person; or
(b) a person with regard to whom the relevant investigating authority has, on the basis of material
in its possession, reason to believe that he had abetted or conspired for the commission of the offence,
and has submitted or filed a report or a complaint to the relevant statutory authority or Court:
1. Ins. by Act 26 of 2019, s. 7 (w.e.f. 16-08-2019).
2. Ins. by Act 26 of 2018, s. 24 (w.e.f. 6-6-2018).
3. Ins. by Act 1 of 2020, s. 10 (w.e.f. 28-12-2019).
44
Provided that if a prosecution had been instituted during the corporate insolvency resolution
process against such corporate debtor, it shall stand discharged from the date of approval of the
resolution plan subject to requirements of this sub-section having been fulfilled:
Provided further that every person who was a “designated partner” as defined in clause (j) of
section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or an “officer who is in default”,
as defined in clause (60) of section 2 of the Companies Act, 2013 (18 of 2013), or was in any manner
incharge of, or responsible to the corporate debtor for the conduct of its business or associated with
the corporate debtor in any manner and who was directly or indirectly involved in the commission of
such offence as per the report submitted or complaint filed by the investigating authority, shall
continue to be liable to be prosecuted and punished for such an offence committed by the corporate
debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section.
(2) No action shall be taken against the property of the corporate debtor in relation to an offence
committed prior to the commencement of the corporate insolvency resolution process of the corporate
debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority
under section 31, which results in the change in control of the corporate debtor to a person, or sale of
liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not—
(i) a promoter or in the management or control of the corporate debtor or a related party of such a
person; or
(ii) a person with regard to whom the relevant investigating authority has, on the basis of material
in its possession reason to believe that he had abetted or conspired for the commission of the offence,
and has submitted or filed a report or a complaint to the relevant statutory authority or Court.
Explanation.—For the purposes of this sub-section, it is hereby clarified that,—
(i) an action against the property of the corporate debtor in relation to an offence shall include
the attachment, seizure, retention or confiscation of such property under such law as may be
applicable to the corporate debtor;
(ii) nothing in this sub-section shall be construed to bar an action against the property of any
person, other than the corporate debtor or a person who has acquired such property through
corporate insolvency resolution process or liquidation process under this Code and fulfils the
requirements specified in this section, against whom such an action may be taken under such law
as may be applicable.
(3) Subject to the provisions contained in sub-sections (1) and (2), and notwithstanding the immunity
given in this section, the corporate debtor and any person who may be required to provide assistance
under such law as may be applicable to such corporate debtor or person, shall extend all assistance and
co-operation to any authority investigating an offence committed prior to the commencement of the
corporate insolvency resolution process.]