THE INSOLVENCY AND BANKRUPTCY CODE, 2016

PART II SECTION I

The following Act of Parliament received the assent of the President on the 28th May, 2016, and is hereby published for general information:-

THE INSOLVENCY AND BANKRUPTCY CODE, 2016

NO. 31 OF 2016
[28th May, 2016.]


An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.


BE it enacted by Parliament in the Sixty-seventh Year of the Republic of India as follows:-

 

PART I
PRELIMINARY

1. Short title, extent and commencement.

(1) This Code may be called the Insolvency and Bankruptcy Code, 2016.

(2) It extends to the whole of India:

Provided that Part III of this Code shall not extend to the State of Jammu and Kashmir.

(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint: 

 

 

Provided that different dates may be appointed for different provisions of this Code and any reference in any such provision to the commencement of this Code shall be construed as a reference to the commencement of that provision.

Section 2 Application

Section 3 Definitions

Section 4 Application of Part II

Section 5 Definitions of Part II

Section 6 Persons who may initiate corporate insolvency resolution process

 

CHAPTER II CORPORATE INSOLVENCY RESOLUTION PROCESS

Section 7 Initiation of corporate insolvency resolution process by financial creditor

Section 8 Insolvency resolution by operational creditor

Section 9 Application for initiation of corporate insolvency resolution process by operational creditor

Section 10 Initiation of corporate insolvency resolution process by corporate applicant

Section 11 Persons not entitled to make application

Section 12 Time-limit for completion of insolvency resolution process

Section 13 Declaration of moratorium and public announcement

Section 14 Moratorium

Section 15 Public announcement of corporate insolvency resolution process

Section 16 Appointment and tenure of interim resolution professional

Section 17 Management of affairs of corporate debtor by interim resolution professional

Section 18 Duties of interim resolution professional

Section 19 Personnel to extend cooperation to interim resolution professional

Section 20 Management of operations of corporate debtor as going concern

Section 21 Committee of creditors

Section 22 Appointment of resolution professional

Section 23 Resolution professional to conduct corporate insolvency resolution process

Section 24 Meeting of committee of creditors

Section 25 Duties of resolution professional

Section 26 Application for avoidance of transactions not to affect proceedings

Section 27 Replacement of resolution professional by committee of creditors

Section 28 Approval of committee of creditors for certain actions

Section 29 Preparation of information memorandum

Section 30 Submission of resolution plan

Section 31 Approval of resolution plan

Section 32 Appeal

 

CHAPTER III LIQUIDATION PROCESS

Section 33 Initiation of liquidation

Section 34 Appointment of liquidator and fee to be paid

Section 35 Powers and duties of liquidator

Section 36 Liquidation estate

Section 37 Powers of liquidator to access information

Section 38 Consolidation of claims

Section 39 Verification of claims

Section 40 Admission or rejection of claims

Section 41 Determination of valuation of claims

Section 42 Appeal against the decision of liquidator

Section 43 Preferential transactions and relevant time

Section 44 Orders in case of preferential transactions

Section 45 Avoidance of undervalued transactions

Section 46 Relevant period for avoidable transactions

Section 47 Application by creditor in cases of undervalued transactions

Section 48 Order in cases of undervalued transactions

Section 49 Transactions defrauding creditors

Section 50 Extortionate credit transactions

Section 51 Orders of Adjudicating Authority in respect of extorionate credit transactions

Section 52 Secured creditor in liquidation proceedings

Section 53 Distribution of assets

Section 54 Dissolution of corporate debtor

 

 

CHAPTER IV FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS

Section 55 Fast track corporation insolvency resolution process

Section 56 Time period for completion of fast track corporate insolvency resolution process

Section 57 Manner of initiating fast track corporate insolvency resolution process

Section 58 Applicability of Chapter II to this Chapter

 

CHAPTER V VOLUNTARY LIQUIDATION OF CORPORATE PERSONS

Section 59 Voluntary liquidation of corporate persons

 

CHAPTER VI ADJUDICATING AUTHORITY FOR CORPORATE PERSONS

Section 60 Adjudicating Authority for corporate persons

Section 61 Appeals and Appellate Authority

Section 62 Appeal to Supreme Court

Section 63 Civil court not to have jurisdiction

Section 64 Expeditious disposal of applications

Section 65 Fraudulent or malicious initiation of proceedings

Section 66 Fraudulent trading or wrongful trading

Section 67 Proceedings under section 66

 

CHAPTER VII OFFENCES AND PENALTIES

Section 68 Punishment for concealment of property

Section 69 Punishment for transactions defrauding creditors

Section 70 Punishment for misconduct in course of corporate insolvency resolution process

Section 71 Punishment for falsification of books of corporate debtor

Section 72 Punishment for wilful and material omissions from statements relating to affairs of corporate debtor

Section 73 Punishment for false representations to creditors

Section 74 Punishment for contravention of moratorium or the resolution plan

Section 75 Punishment for false information furnished in application

Section 76 Punishment for nondisclosure of dispute or repayment of debt by operational creditor

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

 

PART III INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS

CHAPTER I PRELIMINARY

Section 78 Application

Section 79 Definitions

 

CHAPTER II FRESH START PROCESS

Section 80 Eligibility for making an application

Section 81 Application for fresh start order

Section 82 Appointment of resolution professional

Section 83 Examination of application by resolution professional

Section 84 Admission or rejection of application by Adjudicating Authority

Section 85 Effect of admission of application

Section 86 Objections by creditor and their examination by resolution professional

Section 87 Application against decision of resolution professional

Section 88 General duties of debtor

Section 89 Replacement of resolution professional

Section 90 Directions for compliances of restrictions etc

Section 91 Revocation of order admitting application

Section 92 Discharge order

Section 93 Standard of conduct

Section 94 Application by debtor to initiate insolvency resolution process

Section 95 Application by creditor to initiate insolvency resolution process

Section 96 Interim moratorium

Section 97 Appointment of resolution professional

Section 98 Replacement of resolution professional

Section 99 Submission of report by resolution professional

Section 100 Admission or rejection of application

Section 101 Moratorium

Section 102 Public notice and claims from creditors

Section 103 Registering of claims by creditors

Section 104 Preparation of list of creditors

Section 105 Repayment plan

Section 106 Report of resolution professional on repayment plan

Section 107 Summoning of meeting of creditors

Section 108 Conduct of meeting of creditors

Section 109 Voting rights in meeting of creditors

Section 110 Rights of secured creditors in relation to repayment plan

 

Section 111 Approval of repayment plan by creditors

Section 112 Report of meeting of creditors on repayment plan

Section 113 Notice of decisions taken at meeting of creditors

Section 114 Order of Adjudicating Authority on repayment plan

Section 115 Effect of order of Adjudicating Authority on repayment plan

Section 116 Implementation and supervision of repayment plan

Section 117 Completion of repayment plan

Section 118 Repayment plan coming to end prematurely

Section 119 Discharge order

Section 120 Standard of conduct

 

CHAPTER IV BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS

Section 121 Application for bankruptcy individuals partnerships

Section 122 Application by debtor

Section 123 Application by creditor

Section 124 Effect of application

Section 125 Appointment of insolvency professional as bankruptcy trustee

Section 126 Bankruptcy order

Section 127 Validity of bankruptcy order

Section 128 Effect of bankruptcy order

Section 129 Statement of financial position

Section 130 Public notice inviting claims from creditors

Section 131 Registration of claims

Section 132 Preparation of list of creditors

Section 133 Summoning of meeting of creditors

Section 134 Conduct of meeting of creditors

Section 135 Voting rights of creditors

Section 136 Administration and distribution of estate of bankrupt

Section 137 Completion of administration

Section 138 Discharge order

 

Section 139 Effect of discharge

Section 140 Disqualification of bankrupt

Section 141 Restrictions on bankrupt

Section 142 Modification or recall of bankruptcy order

Section 143 Standard of conduct

Section 144 Fees of bankruptcy trustee

Section 145 Replacement of bankruptcy trustee

Section 146 Resignation by bankruptcy trustee

Section 147 Vacancy in office of bankruptcy trustee

Section 148 Release of bankruptcy trustee

 

CHAPTER V ADMINISTRATION AND DISTRIBUTION OF THE ESTATE OF THE BANKRUPT

Section 149 Functions of bankruptcy trustee

Section 150 Duties of bankrupt towards bankruptcy trustee

Section 151 Rights of bankruptcy trustee

Section 152 General powers of bankruptcy trustee

Section 153 Approval of creditors for certain acts

Section 154 Vesting of estate of bankrupt in bankruptcy trustee

Section 155 Estate of bankrupt

Section 156 Delivery of property and documents to bankruptcy trustee

Section 157 Acquisition of control by bankruptcy trustee

Section 158 Restrictions on disposition of property

Section 159 After-acquired property of bankrupt

Section 160 Onerous property of bankrupt

Section 161 Notice to disclaim onerous property

Section 162 Disclaimer of leaseholds

Section 163 Challenge against disclaimed property

Section 164 Undervalued transactions

Section 165 Preference transactions

Section 166 Effect of order

 

Section 167 Extortionate credit transactions

Section 168 Obligations under contracts

Section 169 Continuance of proceedings on death of bankrupt

Section 170 Administration of estate of deceased bankrupt

Section 171 Proof of debt

Section 172 Proof of debt by secured creditors

Section 173 Mutual credit and set-off

Section 174 Distribution of interim dividend

Section 175 Distribution of property

Section 176 Final dividend

Section 177 Claims of creditors

Section 178 Priority of payment of debts

 

CHAPTER VI ADJUDICATING AUTHORITY FOR INDIVIDUALS AND PARTNERSHIP FIRMS

Section 179 Adjudicating Authority for individuals and partnership firms

Section 180 Civil court not to have jurisdiction

Section 181 Appeal to Debt Recovery Appellate Tribunal

Section 182 Appeal to Supreme Court

Section 183 Expeditious disposal of applications

 

CHAPTER VII OFFENCES AND PENALTIES

Section 184 Punishment for false information, etc., by creditor in insolvency resolution process

Section 185 Punishment for contravention of provisions

Section 186 Punishment for false information, concealment, etc., by bankrupt

Section 187 Punishment for certain actions

 

PART IV REGULATION OF INSOLVENCY PROFESSIONALS, AGENCIES AND INFORMATION UTILITIES

 

CHAPTER I THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

Section 188 Establishment and incorporation of Board

Section 189 Constitution of Board

Section 190 Removal of member from office

Section 191 Powers of Chairperson

Section 192 Meetings of Board

Section 193 Member not to participate in meetings in certain cases

Section 194 Vacancies, etc., not to invalidate proceedings of Board, Officers and employees of Board

Section 195 Power to designate financial sector regulator

 

CHAPTER II POWERS AND FUNCTIONS OF THE BOARD

Section 196 Powers and functions of Board

Section 197 Constitution of advisory committee, executive committee or other committee

Section 198 Condonation of delay

 

CHAPTER III INSOLVENCY PROFESSIONAL AGENCIES

Section 199 No person to function as insolvency professional agency without valid certificate of registration

Section 200 Principles governing registration of insolvency professional agency

Section 201 Registration of insolvency professional agency

Section 202 Appeal to National Company Law Appellate Tribunal

Section 203 Governing Board of insolvency professional agency

Section 204 Functions of insolvency professional agencies

Section 205 Insolvency professional agencies to make bye-laws

 

CHAPTER IV INSOLVENCY PROFESSIONALS

Section 206 Enrolled and registered persons to act as insolvency professionals

Section 207 Registration of insolvency professionals

Section 208 Functions and obligations of insolvency professionals

 

CHAPTER V INFORMATION UTILITIES

Section 209 No person to function as information utility without certificate of registration

Section 210 Registration of information utility

Section 211 Appeal to National Company Law Appellate Tribunal

Section 212 Governing Board of information utility

Section 213 Core services, etc., of information utilities

Section 214 Obligations of information utility

Section 215 Procedure for submission, etc., of financial information

Section 216 Rights and obligations of persons submitting financial information

 

CHAPTER VI INSPECTION AND INVESTIGATION

Section 217 Complaints against insolvency professional agency or its member or information utility

Section 218 Investigation of insolvency professional agency or its member or information utility

Section 219 Show cause notice to insolvency professional agency or its member or information utility

Section 220 Appointment of disciplinary committee

 

CHAPTER VII FINANCE, ACCOUNTS AND AUDIT

Section 221 Grants by Central Government

Section 222 Boards Fund

Section 223 Accounts and audit

 

PART V MISCELLENEOUS

Section 224 Insolvency and Bankruptcy Fund

Section 225 Power of Central Government to issue directions

Section 226 Power of Central Government to supersede Board

Section 227 Power of Central Government to notify financial service providers, etc

Section 228 Budget

Section 229 Annual report

Section 230 Delegation

Section 231 Bar of jurisdiction

Section 232 Members, officers and employees of Board to the public servants

Section 233 Protection of action taken in good faith

Section 234 Agreements with foreign countries

Section 235 Letter of request to a country outside India in certain cases

Section 236 Trial of offences by Special Court

Section 237 Appeal and revision

Section 238 Provisions of this Code to override other laws

Section 239 Power to make rules

Section 240 Power to make regulations

Section 241 Rules and regulations to be laid before Parliament

Section 242 Power to remove difficulties

Section 243 Repeal of certain enactments and savings

Section 244 Transitional provisions

Section 245-255 Amendment to other Acts