Ib Code

CAFCINTER CAFINAL CA
FINAL CA
MAY '19
REVISION NOTES
Corporate, Allied (Old)
& Economics (New) Laws
Part - IX
/ofﬁcialjksc Jkshahclasses.com/revision
J. K. SHAH CLASSES FINAL CA - LAW
THE INSOLVENCY AND BANKRUPTCY CODE, 2016
1. INTRODUCTION
The Insolvency and Bankruptcy Code, 2015 was introduced in the Lok Sabha on 21st
December, 2015 and referred to the Joint Committee on the Insolvency and Bankruptcy
Code, 2016. The Committee had presented its recommendations and a modified Bill
based on its suggestions.
Further, the Insolvency and Bankruptcy Code, 2016 was passed by both the Houses of
Parliament and notified in May 2016. Being one of the major economic reforms it paves
the way focussing on creditor driven insolvency resolution.
Concept of Insolvency and Bankruptcy

• The term insolvency is used for both individuals and organizations. For individuals, it is
known as bankruptcy and for corporate it is called corporate insolvency. Both refer to a
situation when an individual or company are not able to pay the debt in present or near
future and the value of assets held by them are less than liability.
• Insolvency in this Code is regarded as a “state” where assets are insufficient to
meet the liabilities. If untreated insolvency will lead to bankruptcy for non-
corporates and liquidation of corporates.
Term “Insolvency” can

be used for-
Individuals Organization /
Corporates
Known as Known as Corporate

Bankruptcy insolvency
State when an individual or company are not able to pay the debt and
If, untreated insolvency, it will lead to-
For non- corporates Corporates
Bankruptcy Liquidation
:1: REVISION NOTES – MAY ‘19

• While insolvency is a situation which arises due to inability to pay off the debts due to
insufficient assets, bankruptcy is a situation wherein application is made to an authority
declaring insolvency and seeking to be declared as bankrupt, which will continue until
discharge.
• From the above it is evident that insolvency is a state and bankruptcy is a conclusion.
A bankrupt would be a conclusive insolvent whereas all insolvencies will not lead to
bankruptcies. Typically insolvency situations have two options – resolution and recovery
or liquidation
Relationship between Bankruptcy, Insolvency & Liquidation

Bankruptcy is a legal proceeding involving a person or business that is unable to repay
outstanding debts. The bankruptcy process begins with a petition filed by the debtor, or
by the creditors. All of the debtor's assets are measured and evaluated, and the assets may be
used to repay a portion of outstanding debt.
In lucid language, if any person or entity is unable to pay off the debts, it owes, to their creditor,
on time or as and when they became due and payable, then such person or entity is regarded
as “insolvent”.
Liquidation is the winding up of a corporation or incorporated entity. There are many entities
that can initiate proceedings to cause the Liquidation, those being:-
• The Regulatory Bodies;
• The Directors of a Company;
• The Shareholders of a Company; and
• An Unpaid Creditor of a Company
In nut shell, insolvency is common to both bankruptcy and liquidation. Not being able to pay
debts as and when they became due and payable are the leading cause of Liquidations and is
the only way that can cause a natural person to become a bankrupt.
Need for a New Law

As per the Ease of Doing Business Report of the World Bank, it takes an average of four to
five years in insolvency resolution in India. The main reason behind such delay in the legal
process is the existence of overlapping legislations and adjudicating authorities dealing with
insolvency of companies and individuals in India.
The Government of India then formulated a plan to refurbish the prevailing bankruptcy laws
and replace them with one that will facilitate hassle-free and time-bound for revival and closure
of businesses.
Presidency Towns
Provincial Insolvency
Indian Partnership
Companies Act, 1956
Sick Industries Companies Act, 1985
Recovery of debts due to Banks & Financial instutions Act, 1993
SARFASI Act, 2002
Companies Act, 2013
Insolvency & Bankruptcy Code, 2016
The existing framework of law has failed to resolve insolvency situations.

• Financial failure – a persistent mismatch between payments by the enterprise and
receivables into the enterprise, even though the business model is generating revenues.
• Business failure – which is a breakdown in the business model of the enterprise, and it, is
unable to generate sufficient revenues to meet payments.
• Malfeasance and mismanagement by promoters
Since, the existing laws were not aligned with the market realties and had several problems
and were inadequate. There was no single window resolution available and the resolution and
jurisdiction was with the multiple agencies with overlapping powers that was leading to delays
and complexities in the process. The Companies Act deals with the corporate insolvency law
and the individual insolvency laws were being dealt by a century old two Acts, i.e., The
Provincial Towns Insolvency Act and the Presidency Towns Insolvency Act.
• Multiple laws governing Debt resolution and multiple forums
• Parallel proceedings by different parties on the same debtor in different forums and
Conflicts between laws and over jurisdictions.
• Asymmetry of information
Objectives: A sound legal framework of bankruptcy law is required for achieving the following
objectives:-
• Improved handling of conflicts between creditors and the debtor: It can provide
procedural certainty about the process of negotiation, in such a way as to reduce
problems of common property and reduce information asymmetry for all economic
participants.
• Avoid destruction of value: It can also provide flexibility for parties to arrive at the most
efficient solution to maximise value during negotiations. The bankruptcy law will create a
platform for negotiation between creditors and external financiers which can create the
possibility of such rearrangements.
• Drawing the line between malfeasance and business failure: Under a weak insolvency
regime, the stereotype of “rich promoters of defaulting entities” generates two strands of
thinking:
(a) The idea that all default involves malfeasance and
(b) The idea that promoters should be held personally financially responsible for
defaults of the firms that they control.
• Clearly allocate losses in macroeconomic downturns: With a sound bankruptcy
framework, these losses are clearly allocated to some people. Loss allocation could take
place through taxes, inflation, currency depreciation, expropriation, or wage or
consumption suppression. These could fall upon foreign creditors, small business
owners, savers, workers, owners of financial and non-financial assets, importers,
exporters.
The following benefits are expected from the new Law:-
• Asset stripping by promoters is controlled after and before default.
• The promoters can make a proposal that involves buying back the company for a certain
price, alongside a certain debt restructuring
• Others in the economy can make proposals to buy the company at a certain price,
alongside a certain debt restructuring
• All parties know that if no deal is struck within the stipulated period, the company will go
into liquidation. This will help avoid delaying tactics.
• The inability of promoters to steal from the company, owing to the supervision of the IP,
also helps reduce the incentive to have a slow lingering death.
The Code seeks to provide an effective legal framework for timely resolution of insolvency and
bankruptcy which would support development of credit markets and encourage
entrepreneurship, and facilitate more investments leading to higher economic growth and
development.
Structure of the Code

The Code is structured into 5 parts comprising of 255 sections and 11 Schedules. Each part
deals with a distinct aspect of the insolvency resolution process. Part II, Chapters I and II are
of particular significance for the students and are discussed in detail hereunder:

Part Part Content Chapters Chapter / Contents
and
Sections
I Preliminary (1-3) 1. Short title, extent & Commencement
2. Application
3. Definitions
II Insolvency I–VII 1.Preliminary (Application &
Resolutions and (4–77) Definitions)
Liquidation for 2. Corporate Insolvency Resolution
Corporate Process
Persons 3. Liquidation Process
4. Fast Track Corporate Insolvency
Resolution Process
5. Voluntary Liquidation of Corporate
Persons
6. Adjudicating Authority for Corporate
Persons
7. Offences & Penalties
III Insolvency I – VII 1. Preliminary (Application &
Resolution and (78- Definitions)
Bankruptcy 187) 2. Fresh Start Process
for 3. Insolvency Resolution Process
Individuals and 4. Bankruptcy Order for Individuals &
Partnership Partnership Firms
Firms 5. Administration & Distribution of the
Estate of the Bankrupt
6. Adjudicating Authority
7. Offences & Penalties
IV Regulation of I – VII 1. The Insolvency and Bankruptcy
Insolvency (188–223) Board of India
Professionals, 2. Powers & Functions of the Board
Agencies and 3. Insolvency Professional Agencies
Information 4. Insolvency Professionals
Utilities 5. Information Utilities
6. Inspection & Investigation
7. Finance, Accounts & Audit
V Miscellaneous (224 – 255) Miscellaneous
Extent and Commencement of the Code:

As per section 1 of the Insolvency and Bankruptcy Code, it extends to the whole of India
except Part III (Insolvency Resolution and Bankruptcy for Individuals and Partnership Firm)
which excludes the state of Jammu and Kashmir.
This Code came into an enforcement on 28th May 2016, however, the Central Government
appointed different dates 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.
Applicability of the Code

The provisions of the Code shall apply for insolvency, liquidation, voluntary liquidation or
bankruptcy of the following entities:-
(a) Any company incorporated under the Companies Act, 2013 or under any previous law.
(b) Any other company governed by any special act for the time being in force, except in
so far as the said provision is inconsistent with the provisions of such Special Act.
(c) Any Limited Liability Partnership under the LLP Act 2008.
(d) Any other body incorporated under any law for the time being in force, as the Central
Government may by notification specify in this behalf.
(e) Personal guarantors to corporate debtors
(f) Partnership firms and proprietorship firms and
(g) Individuals, other than persons referred to in clause (e)
Exceptions: There is an exception to the applicability of the Code that it shall not apply to
corporate persons who are regulated financial service providers like Banks, Financial
Institutions and Insurance companies.
Features of the Insolvency and Bankruptcy Code:
The Insolvency and Bankruptcy Code, 2016 has following distinguishing features:-
(i) Comprehensive Law: Insolvency Code is a comprehensive law which envisages and
regulates the process of insolvency and bankruptcy of all persons including corporates,
partnerships, LLP’s and individuals.
(ii) No Multiplicity of Laws: The Code has withered away the multiple laws covering the
recovery of debts and insolvency and liquidation process and presents singular platform
for all the reliefs relating to recovery of debts and insolvency.
(iii) Low Time Resolution: The Code provides a low time resolution and defines fixed time
frames for insolvency resolution of companies and individuals. The process is mandated
to be completed within 180 days, extendable to maximum of 90 days. Further, for a
speedier process there is provision for fast-track resolution of corporate insolvency within
90 days. If insolvency cannot be resolved, the assets of the borrowers may be sold to
repay creditors.
(iv) One Window Clearance: It has been drafted to provide one window clearance to the
applicant whereby he gets the appropriate relief at the same authority unlike the earlier
position of law where in case the company is not able to revive the procedure for winding
up and liquidation has to be initiated under separate laws governed by separate
authorities.
(v) One Chain of Authority: There is one chain of authority under the Code. It does not
even allow the civil courts to interfere with the application pending before the adjudicating
authority, thereby reducing the multiplicity of litigations. The National Company Law
Tribunal (NCLT) will adjudicate insolvency resolution for companies. The Debt Recovery
Tribunal (DRT) will adjudicate insolvency resolution for individuals.
(vi) Priority to the interests of workman and employees: The Code also protects the
interests of workman and employees. It excludes dues payable to workmen under
provident fund, pension fund and gratuity fund from the debtor’s assets during liquidation.
(vii) New Regulatory Authority: It provides for constitution of a new regulatory authority
‘Insolvency and Bankruptcy Board of India’ to regulate professionals, agencies and
information utilities engaged in resolution of insolvencies of companies, partnership firms
and individuals. The Board has already been established and started functioning.
Key Objectives of the Code

The Insolvency and Bankruptcy Code, 2016 is intended to strike the right balance of interests
of all stakeholders of the business enterprise so that the corporates and other business entities
enjoy availability of credit and at the same time the creditor do not have to bear the losses on
account of default. The purpose of enactment of the Insolvency and Bankruptcy Code, 2016 is
as follows:
(a) To consolidate and amend the laws relating to re-organization and insolvency resolution
of corporate persons, partnership firms and individuals.
(b) To fix time periods for execution of the law in a time bound manner.
(c) To maximize the value of assets of interested persons.
(d) To promote entrepreneurship
(e) To increase availability of credit.
(f) To balance the interests of all the stakeholders including alteration in the order of priority
of payment of Government dues.
(g) To establish an Insolvency and Bankruptcy Board of India as a regulatory body for
insolvency and bankruptcy law.
Regulatory Mechanism
The Insolvency and Bankruptcy Code, 2016 provides a new regulatory mechanism with an
institutional set-up comprising of five pillars:-
• Insolvency and Bankruptcy Board of India
• Insolvency Professional Agencies
• Insolvency Professionals
• Information Utilities
• Adjudicating Authority
1. Insolvency and Bankruptcy Board of India-The Code provides for establishment of a

Regulator who will oversee these entities and to perform legislative, executive and quasi-
judicial functions with respect to the Insolvency Professionals, Insolvency Professional
Agencies and Information Utilities. The Insolvency and Bankruptcy Board of India was
established on October 1, 2016. The head office of the Board is located at New Delhi.
The Board is a body corporate, having perpetual succession and a common seal, with
power, subject to the provisions of this Code, to acquire, hold and dispose of property,
both movable and immovable, and to contract, and shall, by the said name, sue or be
sued.
Composition of the Board
(a) A Chairperson;
(b) three members from amongst the officers of the Central Government not below the
rank of Joint Secretary or equivalent, one each to represent the Ministry of
Finance, the Ministry of Corporate Affairs and Ministry of Law, ex-officio;
(c) One member to be nominated by the Reserve Bank of India, ex officio ;
(d) Five other members to be nominated by the Central Government, of whom at least
three shall be the whole-time members
2. Insolvency Professional Agencies-The Code provides for establishment of insolvency

professionals agencies to enroll and regulate insolvency professionals as its members in
accordance with the Insolvency and Bankruptcy Code 2016 and read with regulations.
Principles governing registration of Insolvency Professional Agency
- to promote the professional development of and regulation of insolvency
professionals
- to promote the professional development of and regulation of insolvency
professionals
- to promote good professional and ethical conduct amongst insolvency professionals
- to protect the interests of debtors, creditors and such other persons as may be
specified
- to promote the growth of insolvency professional agencies for the effective
resolution of insolvency and bankruptcy processes under this Code
Functions of Insolvency professional agencies (IPA): It will perform three key
functions:
Functions of IPA
Regulatory functions
- drafting detailed standards and codes of conduct through bye-laws, that are made
public and are binding on all members
Executive functions
- monitoring, inspecting and investigating members on a regular basis
- gathering information on their performance, with the over-arching objective of
preventing frivolous behaviour, and
- malfeasance in the conduct of IP duties
Quasi-judicial functions
- addressing grievances of aggrieved parties, hearing complaints against members
and taking suitable actions
3. Insolvency Professionals: The Code provides for insolvency professionals as

intermediaries who would play a key role in the efficient working of the bankruptcy
process. The role of the IP encompasses a wide range of functions, which include
adhering to procedure of the law, as well as accounting and finance related functions.
He shall have the power and responsibility to monitor and manage the operations and
assets of the enterprise.
In the resolution process, the insolvency professional verifies the claims of the creditors,
constitutes a creditors committee, runs the debtor's business during the moratorium
period and helps the creditors in reaching a consensus for a revival plan. In liquidation,
the insolvency professional acts as a liquidator and bankruptcy trustee.
An Insolvency Professional if appointed as a Resolution Professional shall act as a as a
neutral trustee of the assets of the organization.
Every insolvency professional shall abide by the following code of conduct:—
• to take reasonable care and diligence while performing his duties;
• to comply with all requirements and terms and conditions specified in the bye-laws
of the insolvency professional agency of which he is a member;
• to allow the insolvency professional agency to inspect his records;
• to submit a copy of the records of every proceeding before the Adjudicating
Authority to the Board as well as to the insolvency professional agency of which he
is a member; and
• to perform his functions in such manner and subject to such conditions as may be
specified.
4. Information Utilities – The Code envisages creation of information utility to collect,

collate, authenticate and disseminate financial information of debtors in centralized
electronic databases, at all times.
The Code requires creditors to provide financial information of debtors to multiple
utilities on an ongoing basis. Such information would be available to creditors, resolution
professionals, liquidators and other stakeholders in insolvency and bankruptcy
proceedings. The purpose of this is to remove information asymmetry and dependency
on the debtor's management for critical information that is needed to swiftly resolve
insolvency.
Obligations of Information Utility:
An information utility shall provide such services as may be specified including core
services to any person if such person complies with the terms and conditions as may be
specified by regulations.
For the purposes of providing core services to any person, every information
utility shall—
(a) Create and store financial information in a universally accessible format;
(b) Accept electronic submissions of financial information from persons who are under
obligations to submit financial information
(c) Accept, in specified form and manner, electronic submissions of financial
information from persons who intend to submit such information;
(d) Meet such minimum service quality standards as may be specified by regulations;
(e) Get the information received from various persons authenticated by all concerned
parties before storing such information;
(f) Provide access to the financial information stored by it to any person who intends to
access such information in such manner as may be specified by regulations;
(g) Publish such statistical information as may be specified by regulations;
(h) Have inter-operability with other information utilities.
5. Adjudicating Authority-The Adjudicating Authority for corporate insolvency and

liquidation is the National Company Law Tribunal (NCLT). Appeals against NCLT orders
shall lie with National Company Law Appellate Tribunal (NCLAT) and thereafter to the
Supreme Court of India.
The Code has created one chain of authority for adjudication under the Code. Civil
Courts have been prohibited to interfere in the matters related with application pending
before the Adjudicating Authority. No injunction shall be granted by any Court, Tribunal or
Authority in respect of any action taken by the NCLT.
For individuals and other persons, the Adjudicating Authority is the Debt Recovery
Tribunal (DRT), appeals lie to the Debt Recovery Appellate Tribunal (DRAT) and
thereafter to the Supreme Court.
Example : XY & Co., a firm applied to NCLT to be declared insolvent as the firm is not
able to pay off debts to his creditors in present and in coming future. State whether the
act of the firm is valid as to the filing of application in terms of jurisdiction.
Answer: No, as per the Code, individual & firms in relation to Insolvency matters shall
apply to the DRT not to NCLT. Here there is violation of jurisdiction in relation to
adjudicating authority.

2. IMPORTANT DEFINITIONS [SECTIONS 3 AND 5]
(1) Claim means a right to payment or right to remedy for breach of contract if such
breach gives rise to a right to payment whether or not such right is reduced to
judgment, fixed, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured. [Section 3(6)]
(2) Corporate Person means
(a) A company as defined under section 2(20) of the Companies Act, 2013;
(b) A Limited Liability Partnership as defined in 2(1)(n) of Limited Liability Act,
2008; or,
(c) Any other person incorporated with limited liability under any law for the time
being in force but shall not include any financial service provider. [Section 3(7)]
(3) Corporate Debtor means a corporate person who owes a debt to any person.
[Section 3(8)]
(4) Creditor means any person to whom a debt is owed and includes a financial
creditor, an operational creditor, a secured creditor, an unsecured creditor and a
decree holder. [Section 3(10)]
(5) Debt means a liability or obligation in respect of a claim which is due from any
person and includes a financial debt and operational debt. [Section 3(11)]
(6) Default means non-payment of debt when whole or any part or instalment of the
amount of debt has become due and payable and is not repaid by the debtor or the
corporate debtor, as the case may be. [Section 3(12)]
(7) Financial information, in relation to a person, means one or more of the following
categories of information, namely:—
(a) Records of the debt of the person;
(b) Records of liabilities when the person is solvent;
(c) Records of assets of person over which security interest has been created;
(d) Records, if any, of instances of default by the person against any debt;
(e) Records of the balance sheet and cash-flow statements of the person; and
(f) Such other information as may be specified. [Section 3(13)]
(8) A person includes:-
• an individual
• a Hindu Undivided Family
• a company
• a trust
• a partnership
• A limited liability partnership, and
• any other entity established under a Statute.
And includes a person resident outside India [Section 3(23)]
(9) Secured creditor means a creditor in favour of whom security interest is created;
[Section 3(30)]
(10) Security Interest means right, title or interest or a claim to property, created in
favour of, or provided for a secured creditor by a transaction which secures
payment or performance of an obligation and includes mortgage, charge,
hypothecation, assignment and encumbrance or any other agreement or
arrangement securing payment or performance of any obligation of any person.
[Section 3(31)]
(11) A transaction includes an agreement or arrangement in writing for transfer of
assets, or funds, goods or services, from or to the corporate debtor. [Section 3(33)]
(12) Transfer includes sale, purchase, exchange, mortgage, pledge, gift, loan or any
other form of transfer of right, title, possession or lien. In case of property- transfer
of property means transfer of any property. [Section 3(34)]

(13) Transfer of property means transfer of any property and includes a transfer of any
interest in the property and creation of any charge upon such property; [Section
3(35)].
(14) Adjudicating Authority, for the purposes of this Part II (Insolvency Resolution and
Liquidation for corporate persons), means National Company Law Tribunal
constituted under section 408 of the Companies Act, 2013. [Section 5(1)]
(15) Corporate applicant means—
(a) Corporate debtor; or
(b) A member or partner of the corporate debtor who is authorised to make an
application for the corporate insolvency resolution process under the
constitutional document of the corporate debtor; or
(c) An individual who is in charge of managing the operations and resources of
the corporate debtor; or
(d) A person who has the control and supervision over the financial affairs of the
corporate debtor; [Section 5(5)]
(16) Dispute includes a suit or arbitration proceedings relating to—
(a) The existence of the amount of debt;
(b) The quality of goods or service; or
(c) The breach of a representation or warranty; [Section 5(6)]
(17) Financial creditor means any person to whom a financial debt is owed and includes
a person to whom such debt has been legally assigned or transferred to;[ section
5(7)]
(18) Financial position, in relation to any person, means the financial information of a
person as on a certain date; [Section 5(9)]
(19) Initiation date means the date on which a financial creditor, corporate applicant or
operational creditor, as the case may be, makes an application to the
Adjudicating Authority for initiating corporate insolvency resolution process; [
Section 5(11)]
(20) Insolvency commencement date means the date of admission of an application for
initiating corporate insolvency resolution process by the Adjudicating Authority
under sections 7, 9 or section 10, as the case may be;[ Section 5(12)]
(21) Insolvency resolution process period means the period of one hundred and eighty
days beginning from the insolvency commencement date and ending on one
hundred and eightieth day;[ Section 5(14)]
(22) Liquidation commencement date means the date on which proceedings for
liquidation commence in accordance with section 33 or section 59, as the case may
be; [Section 5(17)]
(23) Operational creditor means a person to whom an operational debt is owed and
includes any person to whom such debt has been legally assigned or transferred;[
Section 5(20)]
(24) Related party, in relation to a corporate debtor, means—
(a) a director or partner or a relative of a director or partner of the corporate
debtor
(b) a key managerial personnel or a relative of a key managerial personnel of the
corporate debtor;
(c) a limited liability partnership or a partnership firm in which a director, partner,
or manager of the corporate debtor or his relative is a partner;
(d) a private company in which a director, partner or manager of the corporate
debtor is a director and holds along with his relatives, more than two per cent.
of its share capital;
: 10 : REVISION NOTES – MAY ‘19

(e) a public company in which a director, partner or manager of the corporate
debtor is a director and holds along with relatives, more than two per cent. of
its paid-up share capital;
(f) anybody corporate whose board of directors, managing director or manager, in
the ordinary course of business, acts on the advice, directions or instructions
of a director, partner or manager of the corporate debtor;
(g) any limited liability partnership or a partnership firm whose partners or
employees in the ordinary course of business, acts on the advice, directions
or instructions of a director, partner or manager of the corporate debtor;
(h) any person on whose advice, directions or instructions, a director, partner or
manager of the corporate debtor is accustomed to act;
(i) a body corporate which is a holding, subsidiary or an associate company of
the corporate debtor, or a subsidiary of a holding company to which the
corporate debtor is a subsidiary;
(j) any person who controls more than twenty per cent. of voting rights in the
corporate debtor on account of ownership or a voting agreement;
(k) any person in whom the corporate debtor controls more than twenty per cent.
of voting rights on account of ownership or a voting agreement;
(l) any person who can control the composition of the board of directors or
corresponding governing body of the corporate debtor;
(m) any person who is associated with the corporate debtor on account of—
(i) participation in policy making processes of the corporate debtor; or
(ii) having more than two directors in common between the corporate debtor
and such person; or
(iii) interchange of managerial personnel between the corporate debtor and
such person; [ Section 5(24)]
(25) Resolution plan means a plan proposed by resolution applicant for insolvency
resolution of the corporate debtor as a going concern in accordance with Part II;
[Section 5(26)]
(26) Resolution professional, for the purposes of this Part, means an insolvency
professional appointed to conduct the corporate insolvency resolution process and
includes an interim resolution professional; [Section 5(27)]
(27) Voting share means the share of the voting rights of a single financial creditor in the
committee of creditors which is based on the proportion of the financial debt owed
to such financial creditor in relation to the financial debt owed by the corporate
debtor. [Section 5(28)]
3. CORPORATE INSOLVENCY RESOLUTION PROCESS [SECTIONS 4, 6-32]

Provisions related to Insolvency Resolution and Liquidation process for Corporate
Persons are covered in Part II of the Code.
Corporate Insolvency Resolution is a process during which financial creditors assess
whether the debtor's business is viable to continue and the options for its rescue and
revival, if any. If the insolvency resolution process fails or financial creditors decide that
the business of debtor cannot be carried on in a profitable manner and it should be
wound up, the debtor will undergo liquidation process and the assets of the debtor shall
be realized and distributed by the liquidator.
The Insolvency Resolution Process provides a collective mechanism to lenders to deal
with the overall distressed position of a corporate debtor. This is a significant departure
from the existing legal framework under which the primary onus to initiate a re-

organization process lies with the debtor, and lenders may pursue distinct actions for
recovery, security enforcement and debt restructuring.
The Code creates time-bound processes for insolvency resolution of companies and
individuals. These processes will be completed within 180 days, extendable by 90 days.
It also provides for fast-track resolution of corporate insolvency within 90 days. If
insolvency cannot be resolved, the assets of the borrowers may be sold to repay
creditors.
i. Process Flow
A comprehensive process that covers the gamut of insolvency resolution framework
for Corporates and includes processes relating to:-
• Filing of application before NCLT
• Adjudication: Admission or Rejection of application
• Moratorium and Public Announcement
• Appointment of Interim Resolution Professional
• Formation of the Committee of Creditors
• Preparation and approval of the Resolution Plan
• Consequences of non-submission of the Resolution Plan
ii. Application to National Company Law Tribunal Commitment of Default

The process of insolvency is triggered by occurrence of default. As per Section 3
(12) of the Code, default means non-payment of debt when whole or any part or
installment of the amount of debt has become due and payable and is not repaid
by the debtor or the corporate debtor.
The provisions relating to the insolvency and liquidation of corporate debtors shall
be applicable only when the amount of the default is one lakh rupees or more.
However, the Central Government may, by notification, specify the minimum
amount of default of higher value which shall not be more than one crore rupees.[
Section 4]
Filing of application before NCLT
The corporate insolvency process may be initiated against any defaulting corporate
debtor by making an application for corporate insolvency resolution. The
application may be made by:-
(a) Financial creditor
(b) Operational creditor
(c) Corporate debtor

• Filling of an application by a financial creditor: A financial creditor either itself

or along with other financial creditors may lodge an application before the
Adjudicating Authority (National Company Law Tribunal) for initiating corporate
insolvency resolution process against a corporate debtor who commits a
default in payment of its dues.
• Evidence in support of default and name of the Interim resolution professional
by financial creditor: The Financial Creditor shall along with the application
give evidence in support of the default committed by the corporate debtor. He
shall also give the name of the Interim Resolution Professional.
• Filling of an application by an operational creditor: An operational creditor shall
on the occurrence of default, shall :
o first send a demand notice and a copy of invoice to the corporate debtor.
o The corporate debtor shall within a period of ten days of receipt of
demand notice notify the operational creditor about the existence of a
dispute, if there is any and record of pendency of any suit or arbitration
proceedings.
o He shall also provide the details of repayment of unpaid operational
debt in case the debt has or is being paid.
o After the expiry of ten days, if the operational creditor does not receive
his payment or the confirmation of a dispute that existed even before the
demand notice was sent, he may file an application before the
Adjudicating Authority for initiating a corporate insolvency resolution
process.
• Filing of an application by corporate applicant: Where a corporate debtor has
committed a default, a corporate applicant thereof may file an application for
initiating corporate insolvency resolution process with the Adjudicating
Authority. The corporate applicant shall furnish the information relating to
books of account and other documents and name of a resolution professional
proposed to be appointed as interim resolution professional.
• Persons not entitled to initiate insolvency process: As per Section 11 of the
Code the following persons shall not be entitled to initiate the corporate
insolvency process:-
(a) A corporate debtor already undergoing an insolvency resolution process;
or
(b) A corporate debtor having completed corporate insolvency resolution
process 12 (twelve) months preceding the date of making of the
application; or
(c) A corporate debtor or a financial creditor who has violated any of the
terms of resolution plan which was approved 12 (twelve) months before
the date of making of an application;
(d) A corporate debtor in respect of whom a liquidation order has been
made.
In this section, a corporate debtor includes a corporate applicant in respect of such
corporate debtor. [Section 11]
Example: State the circumstances when persons are not entitled to make an
application to initiate corporate insolvency resolution process.
Suppose a corporate debtor has committed a default and is undergoing a corporate
insolvency resolution process. A corporate applicant Mr. X thereof files an
application for initiating corporate insolvency resolution process with the
Adjudicating Authority, State whether he is entitled to make an application to initiate
corporate insolvency resolution process?
Answer: The following persons shall not be entitled to make an application to

initiate corporate insolvency resolution process -
(a) a corporate debtor undergoing a corporate 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
(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.
In this section, a corporate debtor includes a corporate applicant in respect of such
corporate debtor. [Section 11]
As per the facts, corporate applicant Mr. X is a corporate debtor who is undergoing
a corporate insolvency resolution process, he shall not be entitled to make
application to initiate corporate insolvency resolution process.
iii. Adjudication: Admission or Rejection of Application

The Adjudicating Authority may either accept or reject the application within
fourteen days of receipt of application. However, applicant should be allowed to
rectify the defect within seven days of receipt of notice of such rejection.
The insolvency resolution process shall commence from the date of admission of
application by the Adjudicating Authority. It is referred to as the Corporate
Insolvency Resolution Date.
The chart below explains the process flow for insolvency resolution process:

Application before NCLT with proof and name of

proposed Resolution Professional
Rejection of Application (14 days from Admission of Application

(14 days from the date of receipt of
the date of receipt of application)
application)
Declaration of moratium and appointment

of interim resolution professional (IRP)
IRP to be appointed within 14 days from
insolvency commencement date
Vesting of powers of Board &

Management of affairs by IRP
Collection of all claims and

constitution of Committee of Creditors
Appointment of RP and vesting of

powers in RP
iv. Moratorium
After the commencement of corporate insolvency resolution a calm period for 180 days
is declared, during which all suits and legal proceedings etc. against the Corporate
Debtor are held in abeyance to give time to the entity to resolve its status. It is called
the Moratorium Period. [Section 14]
Section 14 of the Code provides that the following acts shall be prohibited during the
moratorium period:-
(a) The institution of suits or continuation of any pending suits or proceedings against
the corporate debtor including execution of any judgment, decree or order in any
court of law, tribunal, arbitration panel or other authority;
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any
of its assets or any legal right or beneficial interest therein;
(c) Any action to foreclose, recover or enforce any security interest created by the
corporate debtor in respect of its property including any action under the
SARFAESI Act, 2002
(d) The recovery of any property by an owner or lessor where such property is
occupied by or in the possession of the corporate debtor. [Section 14]
Example: After commencement of Corporate Insolvency Resolution, NCLT declared
Moratorium against the corporate debtor. Within a month of declaration, corporate debtor
disposed of his property. State validity of the act of corporate debtor.
Answer: As per section 14 of the Code, any transaction/disposal/ of any assets of
Corporate Debtor during the moratorium period which is 180 days from date of
commencement of corporate insolvency resolution, is prohibited. So such an act of
corporate debtor is not valid.

v. Appointment, Term and Powers of Interim Resolution Professional (IRP)
Appointment of IRP: Adjudicating authority shall appoint an Interim Resolution
Professional within 14 days from the commencement date. Section16 of the Code lays
down the procedure for appointment of an Interim Resolution Professional.
Where the application for corporate insolvency resolution process is made by a financial
creditor or the corporate debtor, the resolution professional as proposed in the
application shall be appointed as the interim resolution professional, if no disciplinary
proceedings are pending against him.
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 the proposed resolution
professional shall be appointed as the interim resolution professional, if no
disciplinary proceedings are pending against him.
The Board shall recommend the name of an insolvency professional to the Adjudicating
Authority against whom no disciplinary proceedings are pending, within ten days of the
receipt of a reference from the Adjudicating Authority.
Period of appointment of IRP: The term of Interim Resolution Professional shall not
exceed 30 days from the date of appointment.
Powers of IRP: As Per Section 17 of the Code, the interim resolution professional shall
have following powers:-
(a) Management of Affairs: The management of the affairs of the corporate debtor shall
vest in the interim resolution professional from the date of his appointment.
(b) Exercise of Power of BoD/ partners: 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) Reporting of officers/managers: 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.
(d) Instructions to financial institutions: 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.
The key roles to be performed by the Interim Resolution Professional are:-

(a) Issuance of public notice of the Corporate Insolvency Resolution process
(b) Collation of claims received
(c) Constitution of the Committee of Creditors
(d) Conduct of the first meeting of the Committee of Creditors
vi. Appointment of Resolution Professional (RP)

The Committee of Creditors in the first meeting by majority vote of not less than 66% 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.
If the Board does not confirm the name of the proposed resolution professional within
ten days of the receipt of the name of the proposed resolution professional, the
Adjudicating Authority shall direct the interim resolution professional to continue as the

resolution professional until such time as the Board confirms the Appointment of the
proposed resolution professional.
Role of a Resolution Professional
The Resolution Professional's primary function is to take over the management of the
corporate borrower and operate its business as a going concern under the broad
directions of a committee of creditors.
The thrust of the Code is to allow a shift of control from the defaulting debtor's
management to its creditors, where the creditors drive the business of the debtor with the
Resolution Professional acting as their agent. The following are the key tasks to be
performed by a resolution professional:-
(a) Obtaining Valuation of the entity
(b) Preparation of Information Memorandum
(c) Preparation of Resolution plan
(d) Obtaining consent of the Committee of Creditors for the Resolution plan Periodic
reporting to the Board
Eligibility of an insolvency Professional to be appointed as a Resolution Professional
As per Regulation 3 of Insolvency and Bankruptcy (Insolvency Resolution) Regulation,

2016, an insolvency professional shall be eligible for appointment as a resolution
professional for a corporate insolvency process if he and all partners and directors of
the insolvency professional entity of which he is partner or director are independent of
the corporate debtor:-
(a) He is eligible to be appointed as an independent director on the board of the
corporate debtor under section 149 of the Companies Act, 2013, where the
corporate debtor is a company.
(b) He is not a related party of the corporate debtor.
(c) He is not an employee or proprietor or a partner of a firm of auditors or company
secretaries in practice or cost auditors of the corporate debtor in the last three
financial years.
(d) He is not an employee or proprietor or a partner of a legal or consulting firm that has
or had any transaction with the corporate debtor amounting to ten per cent or
more of the gross turnover of such firm in the last three financial years.
Fees of Resolution Professional

As per Section 5(13) of the Code, the fees payable to any person acting as a resolution
professional and any costs incurred by the resolution professional in running the
business of the corporate debtor as a going concern shall be included in the insolvency
resolution process costs. It shall have priority over other costs in the event of winding up
of the corporate debtor.
Replacement of Resolution Professional

• If a debtor or a creditor is of the opinion that the resolution professional appointed is
required to be replaced, he may apply to the Adjudicating Authority for replacement
of such professional.
• The Adjudicating Authority within seven days of receipt of the application may make
reference to the Board for Replacement of Resolution Professional.
• As per Section 27 of the Code, the Committee of Creditors may replace the
insolvency Resolution Professional with another resolution professional by passing
a resolution for the same to be approved by a vote of 66% per cent of voting shares
of the creditors.
• The Committee of Creditors shall forward the name of the new proposed Insolvency
Professional to the Adjudicating Authority, and

• After the confirmation of the proposed insolvency resolution professional by the
Board he shall be appointed in the same manner as laid down in Section 16 which
deals with the Appointment of IRP.
Example: Mr. Z was continuing as Interim resolution professional (IRP) in XY company.

The committee of creditors by majority vote of financial creditors proposed to appoint Mr.
Final as Resolution professional (RP) of the XY & Co. The said proposal was confirmed
by the Board after the 10 days. State whether Mr. Final is appointed as Resolution
professional.
Answer: No, as per the Code, if Board does not confirm the proposed name as RP
within 10 days of receipt of proposal, the Adjudicating authority shall direct IRP to
continue as RP for such time as the Board would have confirmed for the appointment
of Proposed RP.
vii. Public Announcement

Interim Resolution Professional shall make the Public Announcement immediately after
his appointment. “Immediately” here means not more than three days from the date of
appointment of the Interim Resolution Professional.
As per Section 15 of the Code, public announcement shall include the following:-
(a) Name & Address of Corporate Debtor under the Corporate Insolvency Resolution
Process.
(b) Name of the authority with which the corporate debtor is incorporated or registered.
(c) Details of interim resolution Professional who shall be vested with the management
of the Corporate Debtor and be responsible for receiving claims.
(d) Penalties for false or misleading Claims.
(e) The last date for the submission of the claims.
(f) The date on which the Corporate Insolvency Resolution Process ends.
The expenses of public announcement shall be borne by the applicant which may be
reimbursed by the Committee of Creditors, to the extent it ratifies them.
viii. Committee of Creditors

After the collation of all claims received against the corporate debtor and determination of
the financial position of the corporate debtor, the interim resolution professional shall
constitute a committee of creditors.
The composition of the committee shall be as follows:-
1. Where Financial Creditors exist: The Committee of creditors shall comprise of all
financial creditors of a corporate debtor. The Resolution Professional shall identify
the financial creditors and constitutes a creditors committee. The resolution
professional shall conduct all the meetings of the Committee of Creditors.
After the constitution of committee of creditors, the interim resolution professional is
required to file a report certifying the constitution of the committee to the
Adjudicating Authority. The report shall be filed on or before the expiry of thirty days
from the date of appointment of the interim resolution professional.
2. Where Financial Creditors don’t exist: As per Regulation 16 of the Insolvency
and Bankruptcy (Insolvency Resolution) Regulations, 2016, where the corporate
debtor has no financial debt or where all financial creditors are related parties of the
corporate debtor, the committee shall be formed comprising of following members:-
(a) 18 largest operational creditors by value.
(b) 1 representative elected by all workmen
(c) 1 representative elected by all employees.
Where the number of operational creditors is less than 18, the committee shall
include all such operational creditors.

Voting in the Meeting

All the decisions of the committee of creditors shall be taken by vote of minimum seventy
five percent of the voting share of the financial creditors. The voting share is determined
based on the value of the debt of the creditor in proportion to the total debt.
Where a corporate debtor does not have any financial creditors, the committee of
creditors shall be constituted and comprise of such persons to exercise such functions in
such manner as may be specified by the Board.
First Meeting of Creditors

• The first meeting of the committee of creditors shall be held within seven days of the
constitution of the committee of creditors.
• The committee of creditors in the first meeting may by a majority vote of not less
than 66% per cent. Of the voting share of the financial creditors, either resolves to
appoint the interim resolution professional as a resolution professional or to replace
the interim resolution professional by another resolution professional.
Notice of the Meeting

The resolution professional shall give notice of each meeting of the committee of
creditors to:-
(a) Members of Committee of creditors;
(b) Members of the suspended Board of Directors or the partners of the corporate
persons, as the case may be;
(c) Operational creditors or their representatives if the amount of their aggregate dues
is not less than ten per cent. of the debt.
The Operational Creditors do not have right to vote in the meeting of Committee of
Creditors, however, they may attend the meetings of Committee of Creditors.
Further, as defined in section 5(24) of the Code, a Related Party to whom a Corporate
Debtor owes a financial debt shall not have any right of Representation, Participation or
Voting in a meeting of the Committee of Creditors.
Quorum for the Meeting

• A meeting of committee of creditors shall quorate if members of the committee of
creditors representing at least thirty three percent of the voting rights are present
either in person or by video/audio means.
• If the requisite quorum for committee of creditors is not fulfilled the meeting cannot
be held and the meeting shall automatically stand adjourned at the same time and
place on the next day.
• The adjourned meeting shall quorate with the members of the committee attending
the meeting.
Example: Committee of creditors approved the resolution plan with respect to the
management of affairs of the company by more than 50% of voting share of the financial

creditors. State whether decision given on the resolution plan is binding on the corporate
debtors and all its creditors?
Answer: No, as per the Code, the resolution plan shall be approved by the committee of
creditors by vote of not less than 75% of voting share of the financial creditors.
Resolution plan was not passed by majority.
ix. Resolution Plan (Section 22- 31)

A resolution plan is a proposal agreed to by the Debtors and Creditors of an entity in a
collective mechanism to propose a time bound solution to resolve the situation of
insolvency.
Formulation of Resolution Plan
• The Resolution Professional shall prepare an Information Memorandum which shall
contain information for preparing resolution plan.
• Resolution Professional shall provide access of the following to a Resolution
applicant in order to prepare the Resolution Plan:
o Financial position of corporate debtor
o Information required by applicant for resolution plan
o Other matters pertaining to corporate debtor
• Resolution Professional shall examine the Resolution Plan and submit the same to
Committee of Creditors for its approval.
Submission of Resolution Plan

• The committee of creditors may approve a resolution plan by a vote of not
less than 66% per cent. of voting share of the financial creditors, after
considering its feasibility and viability, 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 Ord.
7of (Amendment) Ordinance, 2017, where the resolution applicant is ineligible
under 2017. 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.”
• The creditors committee considers proposals for the revival of the debtor and must
decide whether to proceed with a revival plan or liquidation within a period of 180
days (subject to a one-time extension by 90 days). Anyone can submit a revival
proposal, but it must necessarily provide for payment of operational debts to the
extent of the liquidation waterfall.
• Subsequently, the Resolution Professional shall submit the Resolution Plan as
approved by Committee of Creditors to the Adjudicating Authority.

Formulation and submission of Resolution Plan
Rejection of Resolution Plan Approval of Resolution plan
Liquidation process Moratorium ceases
Appointment of liquidator Implementation of Resolution Plan
Formation of liquidation Trust
Consolidation and valuation of claims
Distribution of Assets
Appeal against Approval of Resolution Plan

As per Section 61(3) of the Code, an appeal against an order of Adjudicating Authority
for approving the resolution plan may be filed on the following grounds:-
(a) The approved resolution plan is in contravention of the provisions of any law for
the time being in force.
(b) There has been material irregularity in exercise of the powers by the resolution
professional during the corporate insolvency resolution period.
(c) The debts owed to operational creditors of the corporate debtor have not been
provided for in the resolution plan in the manner specified by the Board.
(d) The insolvency resolution process costs have not been provided for repayment in
priority to all other debts.
(e) The resolution plan does not comply with any other criteria specified by the Board.
x. Consequences of non-submission of a Resolution Plan

When the Resolution Plan is not filed within 180 days of the Commencement date or
such other extended period the Adjudicating Authority may pass orders for the liquidation
of the corporate debtor.
xi. Order of Liquidation

As per Section 33 of the Code, the Adjudicating Authority may order for liquidation of
the Corporate Debtor in the following cases:-
a) Where before the expiry of the Insolvency Resolution Process or within 180 days of
the initiation of Insolvency Resolution, the Adjudicating Authority does not receive
the Resolution Plan.
b) If the Committee of Creditors before the expiry of the resolution process intimate the
Adjudicating Authority of their decision that they have passed an order for
liquidation of the Corporate Debtor.
c) Where the resolution plan approved by the Adjudicating Authority is contravened by
the concerned corporate debtor, any person other than the corporate debtors,
whose interests are prejudicially affected by such contravention, may make an
application to the Adjudicating Authority for a liquidation order
Once the Adjudicating Authority passes an order of liquidation, a moratorium is imposed
on the pending legal proceedings against the corporate debtor, and the assets of the
debtor (including the proceeds of liquidation) vest in the liquidation estate.
xii. Priority of Claims

The Code has significantly changed the priority waterfall for distribution of liquidation
proceeds. It may be as follows:
Costs and Expenses of Insolvency
Workmen's dues for the period of 24 months & dues of secured creditors
Wages and any unpaid owned to employees, other than workmen, for the period of 12 months
Dues to Central Government & State Government
Unsecured Financial creditors
Other debts and dues
The proceeds from the sale of the liquidation assets shall be distributed in the following
order of priority and within such period and in such manner as may be specified, namely:-
(a) the insolvency resolution process costs and the liquidation costs paid in full;
(b) the following debts which shall rank equally between and among the following:
(i) workmen's dues for the period of twenty-four months preceding the liquidation
commencement date; and
(ii) debts owed to a secured creditor in the event such secured creditor has
relinquished security in the manner set out in section 52;
(c) wages and any unpaid dues owed to employees other than workmen for the period
of twelve months preceding the liquidation commencement date;
(d) financial debts owed to unsecured creditors;
(e) the following dues shall rank equally between and among the following:—
(i) any amount due to the Central Government and the State Government
including the amount to be received on account of the Consolidated Fund of
India and the Consolidated Fund of a State, if any, in respect of the whole or
any part of the period of two years preceding the liquidation commencement
date;
(ii) debts owed to a secured creditor for any amount unpaid following the
enforcement of security interest;
(f) any remaining debts and dues;
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case may be.
4. FAST TRACK INSOLVENCY RESOLUTION FOR CORPORATE PERSONS

A fast track insolvency resolution, as the name suggests, is a process wherein the
insolvency resolution process shall be completed in an expeditious manner i.e., with 90
(ninety) days from the insolvency commencement date. The provisions of the Insolvency
and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)

Regulations, 2016 shall, mutatis mutandis, apply to the conduct of a fast track corporate
insolvency resolution process.
Who may apply?
An application under this category can be made by any corporate debtor falling under
any of the below mentioned category:-
(a) a corporate debtor with assets and income below a level as may be notified by the
Central Government; or
(b) a corporate debtor with such class of creditors or such amount of debt as may be
notified by the Central Government; or
(c) such other category of corporate persons as may be notified by the Central
Government.
Time period for completion of fast track corporate insolvency resolution process
The fast track corporate insolvency resolution process shall be completed within a period
of ninety days from the insolvency commencement date.
Extension: The Adjudicating Authority may extend time period for fast track corporate
insolvency resolution process. The aggrieved may make an application to the
Adjudicating Authority and it is satisfied that the fast track corporate insolvency resolution
process cannot be completed within a period of ninety days, it may, by order; extend the
duration of such process to a further period which shall not be exceeding forty-five days.
The extension of the fast track corporate insolvency resolution process under this section
shall not be granted more than once.
5. VOLUNTARY LIQUIDATION OF CORPORATE PERSONS [SECTION 59]

(1) Person who may initiate voluntary liquidation proceeding: A corporate person who
intends to liquidate itself voluntarily and has not committed any default may initiate
voluntary liquidation proceedings under the provisions of this Chapter V of Part II of
the Code.
(2) The voluntary liquidation of a corporate person shall meet such conditions and
procedural requirements as may be specified by the Board.
(3) Conditions of initiation of voluntary liquidation proceedings: Voluntary liquidation
proceedings of a corporate person registered as a company shall meet the
following conditions, namely:—
(a) a declaration from majority of the directors of the company verified by an
affidavit stating that—
(i) they have made a full inquiry into the affairs of the company and they
have formed an opinion that either the company has no debt or that it
will be able to pay its debts in full from the proceeds of assets to be
sold in the voluntary liquidation; and
(ii) the company is not being liquidated to defraud any person;
(b) the declaration given above shall be accompanied with the following
documents, namely:—
(i) audited financial statements and record of business operations of the
company for the previous two years or for the period since its
incorporation, whichever is later;
(ii) a report of the valuation of the assets of the company, if any prepared by
a registered valuer;
(c) within four weeks of a declaration, there shall be—
(i) a special resolution of the members of the company in a general meeting
requiring the company to be liquidated voluntarily and appointing an
insolvency professional to act as the liquidator; or
(ii) a resolution of the members of the company in a general meeting
requiring the company to be liquidated voluntarily as a result of expiry of
the period of its duration, if any, fixed by its articles, or

(iii) on the occurrence of any event in respect of which the articles provide
that the company shall be dissolved, as the case may be and appointing
an insolvency professional to act as the liquidator:
Provided that the company owes any debt to any person, creditors representing two
thirds in value of the debt of the company shall approve the resolution passed under
sub-clause (c) within seven days of such resolution.
(4) Notification to Registrar of company and the Board: The Company shall notify the
Registrar of Companies and the Board about the resolution to liquidate the
company within seven days of such resolution or the subsequent approval by the
creditors, as the case may be.
(5) Commencement of liquidation proceeding: The voluntary liquidation proceedings
in respect of a company shall be deemed to have commenced from the date of
passing of the resolution.
(6) Application of provisions of this Code: The provisions of sections 35 to 53 of
Chapter III and Chapter VII shall apply to voluntary liquidation proceedings for
corporate persons with such modifications as may be necessary.
(7) Application to adjudicating authority on complete wound up of the corporate person:
Where the affairs of the corporate person have been completely wound up, and its
assets completely liquidated, the liquidator shall make an application to the
Adjudicating Authority for the dissolution of such corporate person.
(8) Passing of an order of dissolution: The Adjudicating Authority shall on an application
filed by the liquidator, pass an order that the corporate debtor shall be dissolved
from the date of that order and the corporate debtor shall be dissolved
accordingly.
(9) Forward of copy of order: A copy of an order shall within fourteen days from the
date of such order, be forwarded to the authority with which the corporate person is
registered.

THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ACT, 2017
1. In section 25 of the principal Act, in sub-section (2), for clause (h), the following
clause shall be substituted, namely: —
"(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.".
2. After section 29 of the principal Act, the following section shall be inserted,
namely: —
"29A. 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—
(a) Is an undercharged 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) 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 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;
(d) Has been convicted for any offence punishable with imprisonment for two years or
more;
(e) Is disqualified to act as a director under the Companies Act, 2013;
(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;
(h) Has executed an enforceable 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;
(i) Has been 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).
Explanation. — 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):
Provided that nothing in clause (iii) of this Explanation shall apply to—
(A) a scheduled bank; or
(B) 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; or
(C) an Alternate Investment Fund registered with the Securities and Exchange Board of
India.".
3. In section 35 of the principal Act, in sub-section (1), in clause (f), the following
proviso shall be inserted, namely: —
"Provided that the liquidator shall not sell the immovable and movable property or
actionable claims of the corporate debtor in liquidation to any person who is not eligible to
be a resolution applicant.".
4. After section 235 of the principal Act, the following section shall be inserted,
namely: —
"235A. If any person contravenes any of the provisions of this Code or the rules or
regulations made thereunder for which no penalty or punishment is provided in this Code,
such person shall be punishable with fine which shall not be less than one lakh rupees
but which may extend to two crore rupees.".

THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL
ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002
1. STRUCTURE
The Act is divided into six chapters and 42 sections: -
Chapters Matters Sections
I Preliminary 1–2
II Regulation of securitisation and 3 – 12A
reconstruction of financial assets
of banks and financial institutions
III Enforcement of security interest 13 – 19
IV Central registry 20 – 26A
IV A Registration by secured creditors 26B – 26E
and other creditors
V Offences and penalties 27 – 30
VI Miscellaneous 37 – 42
2. IMPORTANT CONCEPTS
The Act introduced multiple new concepts and infrastructures to support ease of
recovery actions such as:
• Formation of Securitisation or reconstruction companies
• Recovery without interference of courts
• Framework for revival or reconstruction of the borrowers’ business
• Central registry
• Qualified buyers
• Security receipts
3. ROLE OF THE ACT

4. FUNCTIONING OF ARC IN A NUT SHELL
Alternative presentation (simpler version):
5. DEFINITIONS
Some key definitions are explained below:
• "Asset reconstruction" means acquisition by any securitisation company (SC) or
reconstruction company (RC) of any right or interest of any bank or financial
institution in any financial assistance for the purpose of realisation of such financial
assistance [Section 2(b)].
• The term "financial assistance" means any loan or advance granted or any
debentures or bonds subscribed or any guarantees given or letters of credit
established or any other credit facility extended by any bank or financial institution;
[Section 2(k)]
• The purpose of acquisition by securitisation company (SC) or reconstruction
company (RC) is to realise such assets and not to stay invested by becoming the
shareholders of the company. However it has the right to take over the
management of the business, subject to RBI’s guidelines from time to time. Such
realised amount should be held and applied towards redemption of investments and
payment of returns assured to the QIBs

• "Asset reconstruction company (ARC)" means a company registered with
Reserve Bank under section 3 for the purposes of carrying on the business of asset
reconstruction or securitisation, or both. [Section 2(ba)]
An ARC is not a banking company although it is regulated by RBI. Such company

cannot carry out any other business other than securitisation or reconstruction.
• "Borrower" means any person who has been granted financial assistance by any
bank or financial institution or who has given any guarantee or created any
mortgage or pledge as security for the financial assistance granted by any bank or
financial institution and includes a person who becomes borrower of a securitisation
company or reconstruction company consequent upon acquisition by it of any rights
or interest of any bank or financial institution in relation to such financial
assistance or who has raised funds through issue of debt securities. [Section 2(f)]
• "Default" means:
(a) non-payment of any debt or any other amount payable by the borrower to any
secured creditor consequent upon which the account of such borrower is
classified as non- performing asset in the books of account of the secured
creditor; or
(b) non-payment of any debt or any other amount payable by the borrower with
respect to debt securities after notice of ninety days demanding payment of
dues served upon such borrower by the debenture trustee or any other
authority in whose favour security interest is created for the benefit of holders
of such debt securities. [Section 2(j)]
Conditions for calling default under this act is:
debt or any other amount- The amount due should be in the nature of debt.
Secured creditor- An unsecured creditor doesn’t have recourse to this act
Classification of NPA- A stressed asset which is yet to be classified as NPA
cannot be resolved through this act.
For non-payment of debenture or bonds to be called default, a notice of 90
days is a pre-requisite by the debenture trustee or beneficiary of the security
• "Debt" shall have the meaning assigned to it in clause (g) of section 2 of the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and includes—
(a) Unpaid portion of the purchase price of any tangible asset given on hire or
financial lease or conditional sale or under any other contract;
(b) any right, title or interest on any intangible asset or licence or assignment of
such intangible asset, which secures the obligation to pay any unpaid portion
of the purchase price of such intangible asset or an obligation incurred or
credit otherwise extended to enable any borrower to acquire the intangible
asset or obtain licence of such asset; [Section 2(ha)]
• "Financial asset" means debt or receivables and includes-

(i) A claim to any debt or receivables or part thereof, whether secured or
unsecured; or
(ii) Any debt or receivables secured by, mortgage of, or charge on, immovable
property; or
(iii) A mortgage, charge, hypothecation or pledge of movable property; or
(iv) Any right or interest in the security, whether full or part underlying such debt
or receivables; or

(v) any beneficial interest in property, whether movable or immovable, or in such
debt, receivables, whether such interest is existing, future, accruing,
conditional or contingent; or
(va) any beneficial right, title or interest in any tangible asset given on hire or
financial lease or conditional sale or under any other contract which secures
the obligation to pay any unpaid portion of the purchase price of such asset or
an obligation incurred or credit otherwise provided to enable the borrower to
acquire such tangible asset; or
(vb) any right, title or interest on any intangible asset or licence or assignment of
such intangible asset, which secures the obligation to pay any unpaid portion
of the purchase price of such intangible asset or an obligation incurred or
credit otherwise extended to enable the borrower to acquire such intangible
asset or obtain licence of the intangible asset;
(vi) any financial assistance; [Section 2(l)]
An asset which is not a financial asset cannot be securitised, acquired or
transferred under this Act.
Example: Value of an unsecured land in the balance sheet of the borrower
cannot be acquired by an ARC by way of issuing security receipts.
• "Non-performing asset (NPA)" means an asset or account of a borrower, which has

been classified by a bank or financial institution as sub-standard, doubtful or loss
asset,
(a) In case such bank or financial institution is administered or regulated by an
authority or body established, constituted or appointed by any law for the time
being in force, in accordance with the directions or guidelines relating to
assets classifications issued by such authority or body;
(b) In any other case, in accordance with the directions or guidelines relating to
assets classifications issued by the Reserve Bank. [Section 2(o)]
• "Qualified buyer" means a financial institution, insurance company, bank, state

financial corporation, state industrial development corporation, trustee or asset
reconstruction company which has been granted a certificate of registration under
sub-section (4) of section 3 or any asset management company making investment
on behalf of mutual fund or pension fund or a foreign institutional investor registered
under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or
regulations made thereunder, any category of non-institutional investors as may be
specified by the Reserve Bank under sub-section (1) of section 7 or any other body
corporate as may be specified by the Board; [Section 2(u)] An ARC cannot raise
funds from investors which is not a qualified buyer (QB) as defined above.
For example, a manufacturing company looking to invest surplus cash by investing
in the ARC, or a Public sector unit, or a strategic investor who wish to acquire the
assets of the borrower company etc.
• "Securitisation" means acquisition of financial assets by any asset reconstruction

company from any originator, whether by raising of funds by such asset
reconstruction company from qualified buyers by issue of security receipts
representing undivided interest in such financial assets or otherwise [Section 2(z)];
The process of securitisation helps the ARC to acquire financial assets like Loans
from banks due to which the ARC shall be deemed to be the lender and all the
rights of such bank or financial institution shall vest in such company in relation to
such financial assets.

• “Secured creditor” means-
(a) any bank or financial institution or any consortium or group of banks or
financial institutions holding any right, title or interest upon any tangible asset
or intangible asset as specified in clause (l);
(b) Debenture trustee appointed by any bank or financial institution; or
(c) an asset reconstruction company whether acting as such or managing a trust
set up by such asset reconstruction company for the securitisation or
reconstruction, as the case may be; or
(d) Debenture trustee registered with the Board appointed by any company for
secured debt securities; or
(e) any other trustee holding securities on behalf of a bank or financial institution,
in whose favour security interest is created by any borrower for due repayment
of any financial assistance [section 2 (zd)]
• "Security interest" means right, title and interest of any kind, other than those
specified in section 31, upon property created in favour of any secured creditor and
includes—
(a) any mortgage, charge, hypothecation, assignment or any right, title or interest
of any kind, on tangible asset, retained by the secured creditor as an owner
of the property, given on hire or financial lease or conditional sale or under
any other contract which secures the obligation to pay any unpaid portion of
the purchase price of the asset or an obligation incurred or credit provided to
enable the borrower to acquire the tangible asset; or
(b) such right, title or interest in any intangible asset or assignment or licence of
such intangible asset which secures the obligation to pay any unpaid portion of
the purchase price of the intangible asset or the obligation incurred or any
credit provided to enable the borrower to acquire the intangible asset or
licence of intangible asset [Section 2(zf)];
A creditor shall not be called as secured creditor unless its interest over the
assets of the debtor or borrower is covered under the above definition. Refer
section 31 (Provisions of this Act not to apply in certain cases) for specific
exclusions of rights that shall not be treated as security interest.
6. REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL

ASSETS OF BANKS AND FINANCIAL INSTITUTIONS
This part of the Act is covered in chapter II of the Act, comprising of Sections 3 – 12. This
chapter provides for regulation of securitisation and reconstruction of financial assets of
banks and financial institutions.
(I) Registration of ARCs (Section 3)
• Commencement of business of securitisation or asset reconstruction:
Such a company can commence or carry on the business of securitisation or
asset reconstruction only after obtaining a certificate of registration granted
under this section and having the net owned fund of not less than one hundred
crore rupees or such other higher amount as the Reserve Bank, may, by
notification, specify.
However, the term “net owned fund” is not defined in the Act and hence we
have to refer to the definition of “net owned fund” as mentioned in the
explanation to Section 45I of the Reserve Bank of India Act.

• Conditions: The Reserve Bank may, for the purpose of considering to grant
its approval for the application for registration of an ARC to commence or
carry on the business of securitisation or asset reconstruction, as the case
may be, require to be satisfied, by an inspection of records or books of such
ARC, or otherwise, that the following conditions are fulfilled, namely:-
(a) That the ARC has not incurred losses in any of the three preceding
financial years;
(b) That such ARC has made adequate arrangements for realisation of the
financial assets acquired for the purpose of securitisation or asset
reconstruction and shall be able to pay periodical returns and redeem
on respective due dates on the investments made in the company by the
qualified buyers or other persons;
(c) That the directors of ARC have adequate professional experience in
matters related to finance, securitisation and reconstruction;
(d) That any of its directors has not been convicted of any offence involving
moral turpitude;
(e) That a sponsor of an ARC is a fit and proper person in accordance with
the criteria as may be specified in the guidelines issued by the Reserve
Bank for such persons;
(f) That ARC has complied with or is in a position to comply with prudential
norms specified by the Reserve Bank.
(g) That ARC has complied with one or more conditions specified in the
guidelines issued by the Reserve Bank for the said purpose.
• Issue of certificate of registration to ARC: A certificate of registration is
thereafter granted to the ARC to commence or carry on business of
securitisation or asset reconstruction, and it must be noted that the Reserve
Bank may also prescribe any other conditions, which it may consider, fit to
impose. In case the Reserve Bank is of the opinion that the above conditions
are not satisfied then it may reject the application, after the applicant is given a
reasonable opportunity of being heard.
• Requirement of prior approval of RBI : Once a company is registered as an
ARC, it must obtain prior approval of the Reserve Bank for the following
purposes:-
(a) Any substantial change in its management, including appointment of any
director managing director or chief executive officer
(b) Change of location of its registered office
(c) Change in its name
• Decision of RBI shall be final & binding: The decision of the Reserve Bank,
whether the change in management of an ARC is a substantial change in its
management or not, shall be final and binding. The expression "substantial
change in management" means the change in the management by way of
transfer of shares or change affecting the sponsorship in the company by way
of transfer of shares or amalgamation or transfer of the business of the
company.
(II) Cancellation of certificate of registration (Section 4)

• The Reserve Bank may cancel a certificate of registration granted to an ARC,
if such company-
(i) Ceases to carry on the business of securitisation or asset reconstruction;
or
(ii) Ceases to receive or hold any investment from a qualified buyer; or
(iii) Has failed to comply with any conditions subject to which the certificate
of registration has been granted to it; or

(iv) at any time fails to fulfil any of the conditions referred to in clauses (a) to
(g) of sub- section (3) of section 3; or
(v) Fails to-
(a) Comply with any direction issued by the Reserve Bank under the
provisions of this Act; or
(b) maintain accounts in accordance with the requirements of any law
or any direction or order issued by the Reserve Bank under the
provisions of this Act; or
(c) submit or offer for inspection its books of account or other relevant
documents when so demanded by the Reserve Bank; or
(d) obtain prior approval of the Reserve Bank required under sub-
section (6) of section 3:
• Before cancelling a certificate of registration on the ground that the ARC has
failed to comply with the provisions of clause (c) or has failed to fulfil any of
the conditions referred to in clause (d) or sub-clause (iv) of clause (e), the
Reserve Bank, unless it is of the opinion that the delay in cancelling the
certificate of registration granted under sub-section (4) of section 3 shall be
prejudicial to the public interest or the interests of the investors or the ARC,
shall give an opportunity to such company on such terms as the Reserve
Bank may specify for taking necessary steps to comply with such provisions
or fulfilment of such conditions.
• Appeal to an order of cancellation: In case the ARC is aggrieved by the order
of cancellation of certificate of registration by the Reserve Bank, then it may
prefer an appeal, within a period of thirty days from the date on which such
order of cancellation is communicated to it, to the Central Government
(Secretary, Ministry of Finance, and Government of India). The Central
Government must also give such company a reasonable opportunity of being
heard before rejecting the appeal.
• It must be noted that an ARC, which is holding investments of qualified buyers
and whose application for grant of certificate of registration has been rejected
or certificate of registration has been cancelled shall, notwithstanding such
rejection or cancellation be deemed to be an ARC until it repays the entire
investments held by it (together with interest, if any) within such period as
specified by the Reserve Bank.
(III) Acquisition of rights or interest in financial assets (Section 5)

• Acquiring of financial assets of any bank or financial institution:
Notwithstanding anything contained in any agreement or any other law for
the time being in force, any ARC may acquire financial assets of any bank or
financial institution-
(i) By issuing a debenture or bond or any other security in the nature of
debenture, for consideration agreed upon between such company and
the bank or financial institution, incorporating therein such terms and
conditions as may be agreed upon between them; or
(ii) By entering into an agreement with such bank or financial institution for
the transfer of such financial assets to such company on such terms and
conditions as may be agreed upon between them.
• Any document executed by any bank or financial institution as mentioned
above, in favour of the ARC acquiring financial assets for the purposes of
asset reconstruction or securitisation shall be exempted from stamp duty in
accordance with the provisions of section 8F of the Indian Stamp Act, 1899.

Provided that the provisions of this sub-section shall not apply where the
acquisition of the financial assets by the asset reconstruction company is for
the purposes other than asset reconstruction or securitisation.
Such exemption is provided in order to encourage banks or FIs to resolve
nonperforming assets (NPA) issues by offloading it to ARCs.
• Debenture as we commonly known, is an acknowledgement of debt. Bond

also refers to the same nature of instrument as a debenture. Both of them
acknowledge a debt and hence an obligation to pay.
• In case where bank or financial institution is a lender in relation to any

financial assets acquired by the ARC: Then such ARC shall, on such
acquisition, be deemed to be the lender and all the rights of such bank or
financial institution shall vest in such company in relation to the subject
financial assets.
If the bank or financial institution is holding any right, title or interest upon
any tangible asset or intangible asset to secure payment of any unpaid
portion of the purchase price of such asset or an obligation incurred or credit
otherwise provided to enable the borrower to acquire the tangible asset or
assignment or licence of intangible asset, such right, title or interest shall
vest in the asset reconstruction company on acquisition of such assets.
• All contracts, deeds, bonds, agreements, powers-of-attorney, grants of legal

representation, permissions, approvals, consents or no-objections under any
law or otherwise and other instruments of whatever nature which relate to the
said financial asset and which are subsisting or having effect immediately
before the acquisition of financial asset and to which the concerned bank or
financial institution is a party or which are in favour of such bank or financial
institution shall, after the acquisition of the financial assets, be of as full force
and effect against or in favour of the ARC, as the case may be, and may be
enforced or acted upon as fully and effectually as if, in the place of the said
bank or financial institution, securitisation company or reconstruction
company, as the case may be, had been a party thereto or as if they had been
issued in favour of ARC, as the case may be.
• If, on the date of acquisition of financial asset, any suit, appeal or other
proceeding of whatever nature relating to the said financial asset is pending
by or against the bank or financial institution, save as provided in the third
proviso to sub-section (1) of section 15 of the Sick Industrial Companies
(Special Provisions) Act, 1985 the same shall not abate, or be discontinued or
be, in any way, prejudicially affected by reason of the acquisition of financial
asset by the ARC, as the case may be, but the suit, appeal or other
proceeding may be continued, prosecuted and enforced by or against the
ARC, as the case may be.
• On acquisition of financial assets , the ARC, may with the consent of the
originator, file an application before the Debts Recovery Tribunal or the
Appellate Tribunal or any court or other Authority for the purpose of
substitution of its name in any pending suit, appeal or other proceedings and
on receipt of such application, such Debts Recovery Tribunal or the Appellate
Tribunal or court or Authority shall pass orders for the substitution of the ARC
in such pending suit, appeal or other proceedings

(IV) Transfer of pending applications to any one of Debts Recovery Tribunals in
certain cases (Section 5A)
• If any financial asset, of a borrower acquired by an ARC, comprise of secured
debts or more than one bank or financial institution for recovery of which such
banks or financial institutions has filed applications before two or more Debts
Recovery Tribunals, the ARC may file an application to the Appellate Tribunal
having jurisdiction over any of such Tribunals in which such applications are
pending for transfer of all pending applications to any one of the Debts
Recovery Tribunals as it deems fit.
• On receipt of such application for transfer of all pending applications under

sub-section (1), the Appellate Tribunal may, after giving the parties to the
application an opportunity of being heard, pass an order for transfer of the
pending applications to any one of the Debts Recovery Tribunals.
• Notwithstanding anything contained in the Recovery of Debts Due to Banks

and Financial Institutions Act, 1993, any order passed by the Appellate
Tribunal under sub-section (2) shall be binding on all the Debts Recovery
Tribunals referred to in sub-section (1) as if such order had been passed by
the Appellate Tribunal having jurisdiction on each such Debts Recovery
Tribunal.
• Any recovery certificate, issued by the Debts Recovery Tribunal to which all
the pending applications are transferred under sub-section (2), shall be
executed in accordance with the provisions contained in sub-section (23) of
section 19 and other provisions of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 shall, accordingly, apply to such execution.
(V) Notice to obligor and discharge of obligation of such obligor (Section 6)

• The bank or financial institution may give a notice of acquisition of financial
assets by any ARC to the concerned obligor and any other concerned person
and to the concerned registering authority.
• The obligor shall make payment to the concerned ARC in discharge of any of
the obligations in relation to the financial asset specified in the notice
(VI) Issue of security by raising of receipts or funds by ARC (Section 7)

• Any ARC, may, after acquisition of any financial asset under section 5(1), offer
security receipts to qualified buyers (or such other category of investors
including non-institutional investors as may be specified by the Reserve Bank
in consultation with the Board, from time to time) for subscription in
accordance with the provisions of those Acts.
• An ARC may raise funds from the qualified buyers by formulating schemes for
acquiring financial assets and shall keep and maintain separate and distinct
accounts in respect of each such scheme for every financial asset acquired
out of investments made by a qualified buyer and ensure that realisations of
such financial asset is held and applied towards redemption of investments
and payment of returns assured on such investments under the relevant
scheme

(VII) Exemption from registration of security receipt (Section 8)
• any security receipt issued by the ARC and not creating, declaring, assigning,
limiting or extinguishing any right, title or interest, to or in immovable property
except in so far as it entitles the holder of the security receipt to an undivided
interest afforded by a registered instrument, or any transfer of security
receipts, shall not require compulsory registration under section 17 of the
Registration Act, 1908.
(VIII) Measures for assets reconstruction (Section 9)

• AN ARC may, provide for any one or more of the following measures, for
the purposes of asset reconstruction-
a) the proper management of the business of the borrower, by change in,
or takeover of, the management of the business of the borrower;
b) the sale or lease of a part or whole of the business of the borrower;
c) rescheduling of payment of debts payable by the borrower;
d) enforcement of security interest in accordance with the provisions of this
Act;
e) settlement of dues payable by the borrower;
f) taking possession of secured assets in accordance with the provisions of
this Act;
g) conversion of any portion of debt into shares of a borrower company:
Provided that conversion of any part of debt into shares of a borrower company
shall be deemed always to have been valid, as if the provisions of this clause were
in force at all material times.
• The Reserve Bank shall, for the purposes as given above, determine the
policy and issue necessary directions including the direction for regulation of
management of the business of the borrower and fees to be charged.
• The asset reconstruction company shall take measures in accordance with
policies and directions of the Reserve Bank determined under section 9(2).
Change /take
over
of debt into Sale or lease
shares of business
Measures for
assets
possession reconstruction rescheduling of
of secured debts
assets repayment
settlement of enforcement of
dues security interest
(IX) Other functions of ARC (Section 10)

• Any ARC may-
(a) act as an agent for any bank or financial institution for the purpose of
recovering their dues from the borrower on payment of such fees or
charges as may be mutually agreed upon between the parties;
(b) act as a manager referred to section 13(4)(c) on such fee as may be
mutually agreed upon between the parties;
(c) act as receiver if appointed by any court or tribunal
Provided that no ARC shall act as a manager if acting as such gives rise to
any pecuniary liability.
• No ARC which has been granted a certificate of registration section 3(4), shall
commence or carry on, without prior approval of the Reserve Bank, any
business other than that of securitisation or asset reconstruction.
Provided that an ARC which is carrying on, on or before the commencement
of this Act, any business other than the business of securitisation or asset
reconstruction or business referred to in sub-section (1), shall cease to carry
on any such business within one year from the date of commencement of this
Act.
• For the purposes of this section, ARC does not include its subsidiary.
(X) Resolution of disputes (Section 11)

Where any dispute relating to securitisation or reconstruction or non-payment of any
amount due including interest arises amongst any of the parties, namely,
(a) The bank, or
(b) Financial institution, or
(c) ARC or
(d) Qualified buyer,
Such dispute shall be settled by conciliation or arbitration as provided in the
Arbitration and Conciliation Act, 1996, as if the parties to the dispute have
consented in writing for determination of such dispute by conciliation or arbitration
and the provisions of that Act shall apply accordingly.
(XI) Power of Reserve Bank to determine policy and issue directions (Section 12)
• In the public interest, Reserve bank may determine the policy and give
directions to any ARC in matters relating to income recognition, accounting
standards, making provisions for bad and doubtful debts, capital adequacy
based on risk weights for assets and also relating to deployment of funds by
the ARC.
• Without prejudice to the generality as above, the Reserve bank may give
directions to any ARC in particular as to:
(a) The type of financial asset of a bank or financial institution which can be
acquired and procedure for acquisition of such assets and valuation
thereof;
(b) The aggregate value of financial assets which may be acquired by any
securitisation company or reconstruction company.
(c) The fee and other charges which may be charged or incurred for
management of financial assets acquired by any asset reconstruction
company;
(d) Transfer of security receipts issued to qualified buyers
(XII) Power of Reserve Bank to Call for Statements and information (Section 12 A)
The Reserve Bank may direct ARC to furnish it within such time as may be
specified by the Reserve Bank, with such statements and information relating to the
business or affairs of such securitisation company or reconstruction company
(including any business or affairs with which such company is concerned) as the
Reserve Bank may consider necessary or expedient to obtain for the purpose of this
Act.

(XIII) Power of Reserve Bank to carry out audit and inspection (Section 12 B)
• The Reserve Bank may, for the purposes of this Act, carry out or caused to
be carried out audit and inspection of an asset reconstruction company from
time to time.
• It shall be the duty of an asset reconstruction company and its officers to

provide assistance and cooperation to the Reserve Bank to carry out audit or
inspection.
• Where on audit or inspection or otherwise, the Reserve Bank is satisfied that

business of an asset reconstruction company is being conducted in a manner
detrimental to public interest or to the interests of investors in security receipts
issued by such asset reconstruction company, the Reserve Bank may, for
securing proper management of an asset reconstruction company, by an
order—
(a) Remove the Chairman or any director or appoint additional directors on
the board of directors of the asset reconstruction company; or
(b) Appoint any of its officers as an observer to observe the working of the
board of directors of such asset reconstruction company:
Provided that no order for removal of Chairman or director under clause (a) shall be
made except after giving him an opportunity of being heard.
• It shall be the duty of every director or other officer or employee of the asset
reconstruction company to produce before the person, conducting an audit or
inspection under sub-section (1), all such books, accounts and other documents in
his custody or control and to provide him such statements and information
relating to the affairs of the asset reconstruction company as may be required by
such person within the stipulated time specified by him.
7. ENFORCEMENT OF SECURITY INTEREST

Provisions dealing with enforcement of security interest are contained in Chapter III of the
Act, comprising of Sections 13 – 19.
(I) Enforcement of security interest (Section 13)
• Notwithstanding anything contained in section 69 or section 69A of the
Transfer of Property Act, 1882, any security interest created in favour of any
secured creditor may be enforced, without the intervention of the court or
tribunal, by such creditor in accordance with the provisions of this Act.
• Where borrower makes a default payment of debt: Where any borrower,

who is under a liability to a secured creditor under a security agreement,
makes any default in repayment of secured debt or any instalment thereof,
and his account in respect of such debt is classified by the secured creditor as
non-performing asset, then, the secured creditor may require the borrower by
notice in writing to discharge in full his liabilities to the secured creditor within
sixty days from the date of notice failing which the secured creditor shall be
entitled to exercise all or any of the rights under sub-section (4) of Section
13.
Provided that—
(i) the requirement of classification of secured debt as non-performing asset
under this sub-section shall not apply to a borrower who has raised funds
through issue of debt securities; and

(ii) in the event of default, the debenture trustee shall be entitled to enforce
security interest in the same manner as provided under this section with such
modifications as may be necessary and in accordance with the terms and
conditions of security documents executed in favour of the debenture trustee;
• Notice prescribing the details of the debts: This notice shall give details of
the amount payable by the borrower and the secured assets intended to be
enforced by the secured creditor in the event of non-payment of secured debts
by the borrower. The procedure for the service of the notice is prescribed in
the Security Interests (Enforcement) Rules.
• Objection or rejection to the borrower on the notice: If, on receipt of the
notice , the borrower makes any representation or raises any objection, the
secured creditor shall consider such representation or objection and if the
secured creditor comes to the conclusion that such representation or objection
is not acceptable or tenable, he shall communicate within 15 days of
receipt of such representation or objection the reasons for non-acceptance
of the representation or objection to the borrower:
• No right to borrower to prefer an application: Provided that the reasons so
communicated or the likely action of the secured creditor at the stage of
communication of reasons shall not confer any right upon the borrower to
prefer an application to the Debts recovery Tribunal under section 17 or the
Court of District Judge under section 17A.
• Borrower fails to discharge his liability: if the borrower fails to discharge his
liability in full within the above specified period, the secured creditor may take
recourse to one or more of the following measures to recover his secured
debt:-
(a) Take possession of the secured assets of the borrower including the right
to transfer by way of lease, assignment or sale for realising the secured
asset;
(b) Take over the management of the business of the borrower including the
right to transfer by way of lease, assignment or sale for realising the
secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be
exercised only where the substantial part of the business of the borrower is
held as security for the debt:
Provided further that where the management of whole of the business or part
of the business is severable, the secured creditor shall take over the
management of such business of the borrower which is relatable to the
security for the debt;
(c) Appoint any person (hereafter referred to as the manager), to manage
the secured assets the possession of which has been taken over by the
secured creditor;
(d) Require at any time by notice in writing, any person who has acquired
any of the secured assets from the borrower and from whom any money
is due or may become due to the borrower, to pay the secured creditor,
so much of the money as is sufficient to pay the secured debt.

• Modes of enforcement of security
take possession of the secured
take over the management (which is

relatable to secured debt)
appoint any person as the manager, to

manage the secured assets
Demand notice to the person who has

acquired the secured assets
• Discharge from payment: Any payment made by any person referred to in

section 5(4)(d) to the secured creditor shall give such person a valid discharge
as if he has made payment to the borrower.
• Right with respect to the immovable property: Where the sale of an

immovable property, for which a reserve price has been specified, has been
postponed for want of a bid of an amount not less than such reserve price, it
shall be lawful for any officer of the secured creditor, if so authorised by the
secured creditor in this behalf, to bid for the immovable property on behalf of
the secured creditor at any subsequent sale [sub-section (5A)]
Where the secured creditor, referred to in sub-section (5A), is declared to be
the purchaser of the immovable property at any subsequent sale, the amount
of the purchase price shall be adjusted towards the amount of the claim of the
secured creditor for which the auction of enforcement of security interest is
taken by the secured creditor, under sub-section (4) of section 13. [Sub-
section (5B)]
The provisions of section 9 of the Banking Regulation Act, 1949 shall, as far
as may be, apply to the immovable property acquired by secured creditor
under sub-section (5A). [Sub-section (5C)]
• Right related to transfer of secured assets by the secured creditor: Any

transfer of secured asset after taking possession thereof or takeover of
management under sub-section (4), by the secured creditor or by the manager
on behalf of the secured creditor shall vest in the transferee all rights in, or in
relation to, the secured asset transferred as if the transfer had been made by
the owner of such secured asset.
• Recovery of expenses from the borrower: Where any action has been
taken against a borrower, all costs, charges and expenses which, in the
opinion of the secured creditor, have been properly incurred by him or any
expenses incidental thereto, shall be recoverable from the borrower and the
money which is received by the secured creditor shall, in the absence of any
contract to the contrary, be held by him in trust, to be applied-
(a) Firstly, in payment of such costs, charges and expenses and
(b) Secondly, in discharge of the dues of the secured creditor and the
residue of the money so received shall be paid to the person entitled
thereto in accordance with his rights and interests.

• Payment of dues of the secured creditors: Where the amount of dues of
the secured creditor together with all costs, charges and expenses incurred
by him is tendered to the secured creditor at any time before the date of
publication of notice for public auction or inviting quotations or tender from
public or private treaty for transfer by way of lease, assignment or sale of the
secured assets,—
(a) The secured assets shall not be transferred by way of lease assignment
or sale by the secured creditor; and
(b) In case, any step has been taken by the secured creditor for transfer by
way of lease or assignment or sale of the assets before tendering of such
amount under this subsection, no further step shall be taken by such
secured creditor for transfer by way of lease or assignment or sale of
such secured assets.
• Joint Financing: Subject to the provisions of the Insolvency and Bankruptcy

Code, 2016, in the case of financing of a financial asset by more than one
secured creditors or joint financing of a financial asset by secured creditors, no
secured creditor shall be entitled to exercise any or all of the rights conferred
on him under or pursuant to sub-section (4) unless exercise of such right is
agreed upon by the secured creditors representing not less than sixty per cent
in value of the amount outstanding as on a record date and such action shall
be binding on all the secured creditors. [Section 13(9)]. But in case of a
company in liquidation, the amount realised from the sale of secured assets
shall be distributed in accordance with the provisions of section 529A of the
Companies Act, 1956 (Corresponding section 326 of the Companies Act,
2013).
• Secured creditors may retain the sale proceeds of his secured assets:
Provided further that in the case of a company being wound up on or after the
commencement of this Act, the secured creditor of such company, who opts to
realise his security instead of relinquishing his security and proving his debt
under proviso to sub-section (1) of section 529 of the Companies Act, 1956
(Corresponding section 325 of the Companies Act, 2013), may retain the
sale-proceeds of his secured assets after depositing the workmen's dues with
the liquidator in accordance with the provisions of section 529A
(Corresponding section 326 of the Companies Act, 2013) of that Act:
• Role of liquidator with respect to workmen dues: Provided also that

liquidator referred to in the second proviso shall intimate the secured creditor
the workmen's dues in accordance with the provisions of section 529A of the
Companies Act, 1956 (Corresponding section 326 of the Companies Act,
2013) and in case such workmen's dues cannot be ascertained, the liquidator
shall intimate the estimated amount of workmen's dues under that section to
the secured creditor and in such case the secured creditor may retain the sale
proceeds of the secured assets after depositing the amount of such estimate
dues with the liquidator:
• In case of deposits of amount of workmen dues by secured creditor:

Provided also that in case the secured creditor deposits the estimated amount
of workmen's dues, such creditor shall be liable to pay the balance of the
workmen's dues or entitled to receive the excess amount, if any, deposited by
the secured creditor with the liquidator:

• Furnishing of undertaking by secured creditor: Provided also that the
secured creditor shall furnish an undertaking to the liquidator to pay the
balance of the workmen's dues, if any.
• Explanation- For the purposes of this sub-section,-

(a) "record date" means the date agreed upon by the secured creditors
representing not less than three-fourth in value of the amount
outstanding on such date;
(b) "Amount outstanding" shall include principal, interest and any other dues
payable by the borrower to the secured creditor in respect of secured
asset as per the books of account of the secured creditor.
• Filing of an application by secured creditor: Where dues of the secured

creditor are not fully satisfied with the sale proceeds of the secured assets, the
secured creditor may file an application in the form and manner as may be
prescribed to the Debts Recovery Tribunal having jurisdiction or a competent
court, as the case may be, for recovery of the balance amount from the
borrower.
• Rights of secured creditors in relation to secured assets: Without

prejudice to the rights conferred on the secured creditor under or by this
section, secured creditor shall be entitled to proceed against the guarantors or
sell the pledged assets without first taking any of the measured specifies in
clause (a) to (d) of sub-section (4) in relation to the secured assets under this
Act.
• The rights of a secured creditor under this Act may be exercised by one or
more of his officers authorised in this behalf in such manner as may be
prescribed.
• No transfer of secured assets by borrower: No borrower shall, after receipt

of notice, transfer by way of sale, lease or otherwise (other than in the ordinary
course of his business) any of his secured assets referred to in the notice,
without prior written consent of the secured creditor.
(II) Chief Metropolitan Magistrate or District Magistrate to assist secured creditor

in taking possession of secured asset (Section 14)
The secured creditor may, for the purpose of taking possession or control of
secured asset, request, in writing, the Chief Metropolitan Magistrate or the District
Magistrate within whose jurisdiction any such secured asset or other documents
relating thereto may be situated or found, to take possession thereof, and the Chief
Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on
such request being made to him--
(a) Take possession of such asset and documents relating thereto; and
(b) Forward such asset and documents to the secured creditor

within a period of thirty days from the date of application.
Provided further that if no order is passed by the Chief Metropolitan Magistrate
or District Magistrate within the said period of thirty days for reasons beyond
his control, he may, after recording reasons in writing for the same, pass the
order within such further period but not exceeding in aggregate sixty days.

(III) Manner and effect of takeover of management (Section 15)
• Appointment of persons by secured creditors: When the management of
business of a borrower is taken over by an ARC under section 9(a) or, by a
secured creditor under section 13(4)(b) as the case may be, the secured
creditor may, by publishing a notice in a newspaper published in English
language and in a newspaper published in an Indian language in circulation in
the place where the principal office of the borrower is situated, appoint as
many persons as it thinks fit-
(a) in a case in which the borrower is a company under the Companies Act,
1956, to be the directors of that borrower in accordance with the
provisions of that Act; or
(b) in any other case, to be the administrator of the business of the borrower
Manner and effect of takeover of management
Manner and effect of takeover of management

In case where borrower is a : Appoint persons as:
• On publication notice: All persons holding office as directors of the

company (if the borrower is a company) and in any other case, all persons
holding any office having power of superintendence, direction and control of
the business of the borrower immediately before the publication of the above
notice, shall be deemed to have vacated their offices.
• When any contract of management shall be deemed to be terminated:

Any contract of management between the borrower and any director or
manager thereof holding office as such immediately before publication of the
above notice, shall be deemed to be terminated. The directors or the
administrators appointed under this section shall take such steps as may be
necessary to take into their custody or under their control all the property,
effects and actionable claims to which the business of the borrower is, or
appears to be, entitled and all the property and effects of the business of the
borrower shall be deemed to be in the custody of the directors or
administrators, as the case may be, as from the date of the publication of the
above notice.
• Exercise of the powers of the person so appointed for the borrowers: All
directors appointed in accordance with the above notice shall, for all purposes,
be the directors of the company of the borrower and such directors or the
administrators (if the borrower is other than a company) appointed under
section 15, shall only be entitled to exercise all the powers of the directors or
as the case may be, of the persons exercising powers of superintendence,
direction and control, of the business of the borrower whether such powers are
derived from the memorandum or articles of association of the company of
the borrower or from any other source.

• Management of borrower taken by the secured creditor: Where the
management of the business of a borrower, being a company as defined in the
Companies Act, 1956 (i.e., the Companies Act, 2013), is taken over by the
secured creditor, then, notwithstanding anything contained, such borrower- in
the said Act or in the memorandum or articles of association of such company-
(a) it shall not be lawful for the shareholders of such company or any other
person to nominate or appoint any person to be a director of the
company;
(b) no resolution passed at any meeting of the shareholders of such
company shall be given effect to unless approved by the secured
creditor;
(c) no proceeding for the winding up of such company or for the appointment
of a receiver in respect thereof shall lie in any court, except with the
consent of the secured creditor.
• Obligation of secured creditor: The secured creditor is under an obligation

to restore the management of the business of the borrower, on realisation of
his debt in full, in case of takeover of the management of the business of a
borrower by such secured creditor.
• Provided that if any secured creditor jointly with other secured creditors or any
asset reconstruction company or financial institution or any other assignee has
converted part of its debt into shares of a borrower company and thereby
acquired controlling interest in the borrower company, such secured creditors
shall not be liable to restore the management of the business to such
borrower.
(IV) No compensation to directors for loss of office (Section 16)

Irrespective of anything contained in any contract or in any other law for the time
being in force, no managing director or any other director or a manager or any
person in charge of management of the business of the borrower shall be entitled to
any compensation for the loss of office or for the premature termination under this
Act. However any such managing director or any other director or manager or any
such person in charge of management has the right to recover from the business of
the borrower, moneys recoverable otherwise than by way of such compensation.
(V) Application against measures to recover secured debts (Section 17)

• Filing of an application: Any person (including borrower), aggrieved by any
of the measures given in section 13(4) taken by the secured creditor or his
authorised officer under this Chapter, may make an application along with
such fee, as may be prescribed to the Debts Recovery Tribunal having
jurisdiction in the matter within forty-five days from the date on which such
measure had been taken.
Provided that different fees may be prescribed for making the application by
the borrower and the person other than the borrower.
Explanation: For the removal of doubts, it is hereby declared that the

communication of the reasons to the borrower by the secured creditor for not
having accepted his representation or objection or the likely action of the
secured creditor at the stage of communication of reasons to the borrower
shall not entitle the person (including borrower) to make an application to the
Debts Recovery Tribunal under this sub-section.

• Jurisdiction : An application under sub-section (1) shall be filed before the
Debts Recovery Tribunal within the local limits of whose jurisdiction—
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial institution is
maintaining an account in which debt claimed is outstanding for the time
being.
• Measures taken shall be in compliance: The Debts Recovery Tribunal shall

consider whether any of the measures referred to in section 13(4) taken by the
secured creditor for enforcement of security are in accordance with the
provisions of this Act and the rules made thereunder.
• If, the Debts Recovery Tribunal, after examining the facts and circumstances
of the case and evidence produced by the parties, comes to the conclusion
that any of the measures referred to in section 13(4), taken by the secured
creditor are not in accordance with the provisions of this Act and the rules
made thereunder, and require restoration of the management or restoration of
possession, of the secured assets to the borrower or other aggrieved person,
it may, by order,—
(a) declare the recourse to any one or more measures referred to in section
13(4) taken by the secured creditor as invalid; and
(b) restore the possession of secured assets or management of secured
assets to the borrower or such other aggrieved person, who has made an
application under sub- section (1), as the case may be; and
(c) pass such other direction as it may consider appropriate and necessary
in relation to any of the recourse taken by the secured creditor under
sub-section (4) of section 13.
• Remedies opted by the securities creditor: If, the Debts Recovery Tribunal
declares the recourse taken by a secured creditor under sub-section (4) of
section 13, is in accordance with the provisions of this Act and the rules made
thereunder, then, notwithstanding anything contained in any other law for the
time being in force, the secured creditor shall be entitled to take recourse to
one or more of the measures specified under sub-section (4) of section 13 to
recover his secured debt.
Where—
i. any person, in an application under sub-section (1), claims any tenancy
or leasehold rights upon the secured asset, the Debt Recovery Tribunal,
after examining the facts of the case and evidence produced by the
parties in relation to such claims shall, for the purposes of enforcement of
security interest, have the jurisdiction to examine whether lease or
tenancy,—
a. has expired or stood determined; or
b. is contrary to section 65A of the Transfer of Property Act, 1882; or
c. is contrary to terms of mortgage; or
d. is created after the issuance of notice of default and demand by the
Bank under sub-section (2) of section 13 of the Act; and
ii. the Debt Recovery Tribunal is satisfied that tenancy right or leasehold
rights claimed in secured asset falls under the sub-clause (a) or sub-
clause (b) or sub-clause (c) or sub- clause (d) of clause (i), then
notwithstanding anything to the contrary contained in any other law for
the time being in force, the Debt Recovery Tribunal may pass such order
as it deems fit in accordance with the provisions of this Act.

• Time limit for disposal of an application: Any application made under sub-
section (1) shall be dealt with by the Debts Recovery Tribunal as
expeditiously as possible and disposed of within sixty days from the date of
such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the
said period for reasons to be recorded in writing, so, however, that the total
period of pendency of the application with the Debts Recovery Tribunal, shall
not exceed four months from the date of making of such application made
under sub-section (1).
• Order by the appellate tribunal for expeditious disposal of the pending

application: If the application is not disposed of by the Debts Recovery
Tribunal within the period of four months as specified in sub-section (5), any
party to the application may make an application, in such form as may be
prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal
for expeditious disposal of the application pending before the Debts
Recovery Tribunal and the Appellate Tribunal may, on such application, make
an order for expeditious disposal of the pending application by the Debts
Recovery Tribunal.
• Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as
far as may be, dispose of the application in accordance with the provisions of
the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and
the rules made thereunder.
(VI) Making of application to Court of District Judge in certain cases (Section 17A)
In the case of a borrower residing in the State of Jammu and Kashmir, the
application under section 17 shall be made to the Court of District Judge in that
State having jurisdiction over the borrower which shall pass an order on such
application.
Explanation: It is hereby declared that the communication of the reasons to the
borrower by the secured creditor for not having accepted his representation or
objection or the likely action of the secured creditor at the stage of communication
of reasons shall not entitle the person (including borrower) to make an application to
the Court of District Judge under this section.
(VII) Appeal to Appellate Tribunal (Section 18)

• Appeal to an order of DRT: Any person aggrieved, by any order made by
the Debts Recovery Tribunal under section 17, may prefer an appeal along
with such fee, as may be
Prescribed to the Appellate Tribunal within thirty days from the date of receipt
of the order of Debts Recovery Tribunal.
Provided that different fees may be prescribed for filing an appeal by the
borrower or by the person other than the borrower;
• Condition for the appeal: Provided further that no appeal shall be

entertained unless the borrower has deposited with the Appellate Tribunal fifty
per cent. of the amount of debt due from him, as claimed by the secured
creditors or determined by the Debts Recovery Tribunal, whichever is less.
Provided also that the Appellate Tribunal may, for the reasons to be recorded
in writing, reduce the amount to not less than twenty-five per cent of debt
referred above.

• Dispose of appeal as per the RDDBFI Act, 1993: Save as otherwise
provided in this Act, the Debts Recovery Tribunal under section 17 or the
Appellate Tribunal under section 18 shall, as far as may be, dispose of the
appeal in accordance with the provisions of the Recovery of Debts Due to
Banks and Financial Institutions Act(RDDBFI), 1993 and rules made
thereunder.
(VIII) Validation of fees levied (Section 18A)

Any fee levied and collected for preferring an appeal to the Debts Recovery Tribunal
or the Appellate Tribunal under this Act, before the commencement of the
Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act,
2004, shall be deemed always to have been levied and collected in accordance
with law as if the amendments made to sections 17 and 18 of this Act by sections
10 and 12 of the said Act were in force at all material times.
(IX) Appeal to High Court in certain cases (Section 18B)

• Any borrower residing in the State of Jammu and Kashmir and aggrieved
by any order made by the Court of District Judge under section 17A-
may prefer an appeal, to the High Court having jurisdiction over such
Court, within thirty days from the date of receipt of the order of the Court
of District Judge.
• Requirement for preferring an appeal: No appeal shall be preferred unless
the borrower has deposited, with the Jammu and Kashmir High Court, fifty per
cent. Of the amount of the debt due from him as claimed by the secured
creditor or determined by the Court of District Judge, whichever is less.
Provided further that the High Court may, for the reasons to be recorded in
writing, reduce the amount to not less than twenty-five per cent. Of the debt
referred here.
(X) Right to lodge a caveat (Section 18C)

• Filing of a caveat: Where an application or an appeal is expected to be made
or has been made under section 17(1) or section 17A or section 18(1) or
section 18B,
(a) the secured creditor, or
(b) any person claiming a right to appear before the Tribunal or the Court
of District Judge or the Appellate Tribunal or the High Court, as the case
may be, on the hearing of such application or appeal,
may lodge a caveat in respect thereof.
• Notice of caveat: Where a caveat has been lodged -
(a) the secured creditor by whom the caveat has been lodged (hereafter in
this section referred to as the caveator) shall serve notice of the caveat
by registered post, acknowledgement due, on the person by whom the
application has been or is expected to be made .
(b) any person by whom the caveat has been lodged (hereafter in this
section referred to as the caveator) shall serve notice of the caveat by
registered post, acknowledgement due, on the person by whom the
application has been or is expected to be made
• Notice on the caveator by adjudicating authority: Where after a caveat has
been lodged, any application or appeal is filed before the Tribunal or the court
of District Judge or the Appellate Tribunal or the High Court, as the case may
be, the Tribunal or the District Judge or the Appellate Tribunal or the High
Court, as the case may be, shall serve a notice of application or appeal filed
by the applicant or the appellant on the caveator.

• Furnishing of copy of application and documents: Where a notice of any
caveat has been served on the applicant or the Appellant, he shall periodically
furnish the caveator with a copy of the application or the appeal made by him
and also with copies of any paper or document which has been or may be filed
by him in support of the application or the appeal.
• Validity of period of caveat : Where a caveat has been lodged, such
caveat shall not remain in force after the expiry of the period of ninety days
from the date on which it was lodged unless the application or appeal has
been made before the expiry of the period.
(XI) Right of borrower to receive compensation and costs in certain cases

(Section 19)
• If the Debts Recovery Tribunal or the Court of District Judge, on an application
made under section 17 or section 17A or the Appellate Tribunal or the High
Court on an appeal preferred under section 18 or section 18A, holds that the
possession of secured assets by the secured creditor is not in accordance with
the provisions of this Act and rules made thereunder, and
• directs the secured creditors to return such secured assets to concerned
borrowers or any other aggrieved person, who has filed the application under
section 17 or section 17A or appeal under section 18 or section 18A, as the
case may be,
• the borrower or such other person shall be entitled to the payment of such
compensation and costs as may be determined by such Tribunal or Court of
District Judge or Appellate Tribunal or the High Court referred to in section
18B.
8. CENTRAL REGISTRY
The provisions related to Central Registry is contained in chapter IV of the Act. It covers
sections 20 to 26 of the Act.
(I) Central Registry (Section 20)
• Setup of Central Registry: The Central Government may, by notification, set
up or cause to be set up from such date as it may specify in such notification,
a registry to be known as the Central Registry with its own seal for the
purposes of registration of transaction of securitisation and reconstruction of
financial assets and creation of security interest under this Act.
The head office of the Central Registry shall be at such place as the Central
Government may specify and for the purpose of facilitating registration of
transactions referred above, there may be established at such other places as
the Central Government may think fit, branch offices of the Central Registry.
• Central Government notifies territorial jurisdiction of the Central

Registry: The Central Government may, by notification, define the territorial
limits within which an office of the Central Registry may exercise its functions.
The provisions of this Act pertaining to the Central Registry shall be in
addition to and not in derogation of any of the provisions contained in the
Registration Act, 1908, the Companies Act, 1956 (i.e. Companies Act, 2013),
the Merchant Shipping Act, 1958, the Patents Act, 1970, the Motor Vehicles
Act, 1988 and the Designs Act, 2000 or any other law requiring registration of
charges and shall not affect the priority of charges or validity thereof under
those Acts or laws.
Central Registry of Securitisation Asset Reconstruction and Security Interest
of India (CERSAI) is a Government of India Company licensed under section
8 of the Companies Act, 2013 with Govt. of India having a shareholding of

51% by the Central Government and select Public Sector Banks and the
National Housing Bank also being shareholders of the Company.
The object of the company is to maintain and operate a Registration System
for the purpose of registration of transactions of securitisation, asset
reconstruction of financial assets and creation of security interest over
property, as envisaged in the SARFAESI Act.
(II) Integration of registration systems with Central Registry (Section 20A)

• The Central Government may, for the purpose of providing a Central
database, in consultation with State Governments or other authorities
operating registration system for recording rights over any property or creation,
modification or satisfaction of any security interest on such property, integrate
the registration records of such registration systems with the records of
Central Registry established under section 20, in such manner as may be
prescribed.
• The Central Government shall after integration of records of various

registration systems referred with the Central Registry, by notification, declare
the date of integration of registration systems and the date from which such
integrated records shall be available; and with effect from such date, security
interests over properties which are registered under any registration system
referred shall be deemed to be registered with the Central Registry for the
purposes of this Act
(III) Delegation of powers (Section 20B)

The Central Government may, by notification, delegate its powers and functions
under this Chapter, in relation to establishment, operations and regulation of the
Central Registry to the Reserve Bank, subject to such terms and conditions as may
be prescribed.
(IV) Central Registrar (Section 21)

• The Central Government may, by notification, appoint a person for the
purpose of registration of transactions relating to securitisation, reconstruction
of financial assets and security interest created over properties, who shall be
known as the Central Registrar.
• The Central Government may appoint such other officers with such
designations as it thinks fit for the purpose of discharging, under the
superintendence and direction of the Central Registrar, such functions of the
Central Registrar under this Act as he may, from time to time, authorise them
to discharge.
(V) Register of securitisation, reconstruction and security interest transactions

(Section 22)
• A record called the Central Register shall be kept at the head office of the
Central Registry for entering the particulars of the transactions relating to-
(a) Securitisation of financial assets;
(b) Reconstruction of financial assets;
(c) Creation of security interest
• The Central Registrar can keep the records wholly or partly in computer,
floppies, diskettes or in any other electronic form subject to the prescribed
safeguards. Records kept in these form shall also form a part of the Central
Register. The register shall be kept under the control and management of the
Central Registrar.

(VI) Filing of transactions of securitisation, reconstruction and creation of
security Interest (Section 23)
• The particulars of every transaction of securitisation, asset reconstruction or
creation of security interest shall be filed, with the Central Registrar in the
prescribed manner and on payment of the prescribed fees,. [Section 23(1)]
Provided that the Central Government may, by notification, require registration

of all transactions of securitisation, or asset reconstruction or creation of
security interest which are subsisting on or before the date of establishment of
the Central Registry under section 20(1) within such period and on payment of
such fees as may be prescribed.
• The Central Government may, by notification, require the registration of

transaction relating to different types of security interest created on different
kinds of property with the Central Registry [Section 23(2)]
• The Central Government may, by rules, prescribe forms for registration for
different types of security interest under this section and fee to be charged for
such registration.
(VII) Modification of security interest registered under this Act (Section 24)
Whenever the terms or conditions, or the extent or operation, of any security
interest registered under this Chapter, are, or is, modified it shall be the duty of the
ARC to send to the Central Registrar, the particulars of such modification.
(VIII) ARC or secured creditor to report satisfaction of security interest (Section 25)
• The ARC or the secured creditor as the case may be, shall give intimation to
the Central Registrar of the payment or satisfaction in full, of any security
interest relating to the ARC or the secured creditor and requiring registration
under this Chapter, within thirty days from the date of such payment or
satisfaction.
• On receipt on intimation, the Central Government shall order that a
memorandum of satisfaction shall be entered in the Central Registry.
(IX) Right to inspect particulars of securitisation, reconstruction and security

interest transactions (Section 26)
The particulars of securitisation or reconstruction or security interest entered in the
Central Register of such transactions kept under section 22 shall be open during the
business hours for inspection by any person on payment of such fee as may be
prescribed.
9. RECTIFICATION BY CENTRAL GOVERNMENT IN MATTERS OF REGISTRATION,

MODIFICATION AND SATISFACTION ETC. (SECTION 26A)
• The Central Government, on being satisfied-
(a) that the omission to file with the Registrar the particulars of any
transaction of securitisation, asset reconstruction or security interest or
modification or satisfaction of such transaction or; the omission or mis-
statement of any particular with respect to any such transaction or modification
or with respect to any satisfaction or other entry made in pursuance of section
23 or section 24 or section 25 of the principal Act was accidental or due to
inadvertence or some other sufficient cause or it is not of a nature to prejudice
the position of creditors; or

(b) that on other grounds, it is just and equitable to grant relief, may, on the
application of a secured creditor or securitisation company or reconstruction
company or any other person interested on such terms and conditions as it
may seem to the Central Government just and expedient, direct that the time
for filing of the particulars of the transaction for registration or modification or
satisfaction shall be extended or, as the case may require, the omission or
mis-statement shall be rectified.
• Where the Central Government extends the time for the registration of transaction
of security interest or securitisation or asset reconstruction or modification or
satisfaction thereof, the order shall not prejudice any rights acquired in respect of
the property concerned or financial asset before the transaction is actually
registered."
10. REGISTRATION BY SECURED CREDITORS AND OTHER CREDITORS

The government has introduced new provisions in the form of Chapter IVA in order to
encourage registration of security interest by the secured creditors, which shall facilitate
uniformity, completeness and transparency in the status of security interest of the
creditors over the borrower’s assets.
(I) Registration by secured creditors and other creditors (Section 26B)
• The Central Government may by notification, extend the provisions of Chapter
IV relating to Central Registry to all creditors other than secured creditors as
defined in clause (zd) of section 2(1), for creation, modification or satisfaction
of any security interest over any property of the borrower for the purpose of
securing due repayment of any financial assistance granted by such creditor to
the borrower.
• From the date of notification, any creditor including the secured creditor may
file particulars of transactions of creation, modification or satisfaction of any
security interest with the Central Registry in such form and manner as may be
prescribed.
• However A creditor other than the secured creditor filing particulars of

transactions of creation, modification and satisfaction of security interest over
properties created in its favour shall not be entitled to exercise any right of
enforcement of securities under this Act.
• Every authority or officer of the Central Government or any State Government

or local authority, entrusted with the function of recovery of tax or other
Government dues and for issuing any order for attachment of any property of
any person liable to pay the tax or Government dues, shall file with the Central
Registry such attachment order with particulars of the assesse and details of
tax or other Government dues from such date as may be notified by the
Central Government, in such form and manner as may be prescribed.
• Also If any person, having any claim against any borrower, obtains orders for
attachment of property from any court or other authority empowered to issue
attachment order, such person may file particulars of such attachment orders
with Central Registry in such form and manner on payment of such fee as
may be prescribed.

(II) Effect of the registration of transactions, etc. (Section 26C)
• any registration of transactions of creation, modification or satisfaction of
security interest by a secured creditor or other creditor or filing of attachment
orders under this Chapter shall be deemed to constitute a public notice from
the date and time of filing of particulars of such transaction with the Central
Registry.
• Where security interest or attachment order upon any property in favour of the
secured creditor or any other creditor are filed for the purpose of registration,
the claim of such secured creditor or other creditor holding attachment order
shall have priority over any subsequent security interest created upon such
property and any transfer by way of sale, lease or assignment or licence of
such property or attachment order subsequent to such registration, shall be
subject to such claim:
Provided that nothing contained in this sub-section shall apply to transactions

carried on by the borrower in the ordinary course of business.
(III) Right of enforcement of securities (Section 26D)
• No secured creditor shall be entitled to exercise the rights of enforcement of
securities under Chapter III unless the security interest created in its favour by
the borrower has been registered with the Central Registry.
(IV) Priority to secured creditors (Section 26E)
• After the registration of security interest, the debts due to any secured creditor
shall be paid in priority over all other debts and all revenues, taxes, cesses
and other rates payable to the Central Government or State Government or
local authority.
• However such priority shall be subject to the provisions of the Insolvency and
Bankruptcy Code, 2016, where insolvency or bankruptcy proceedings are
pending in respect of secured assets of the borrower.
11. OFFENCES AND PENALTIES

This chapter V of the Act provides of the offences and the penalties for the commission of
default in filing of particulars of every transaction of securitisation, asset reconstruction
or creation of security interest with Central registry. This chapter covers section 27 to 30
of the Act.
(I) Penalties (Section 27)
If a default is made-
(a) in filing under section 23, the particulars of every transaction of any
securitisation or asset reconstruction or security interest created by an ARC or
secured creditors; or
(b) in sending under section 24, the particulars of the modification referred to in
that section; or
(c) in giving intimation under section 25,
Then, every company and every officer of the company or the secured creditors and
every officer of the secured creditor who is in default shall be punishable with fine
which may extend to five thousand rupees for every day during which the default
continues.
Provided that provisions of this section shall be deemed to have been omitted from
the date of coming into force of the provisions of this Chapter and section 23 as
amended by the Enforcement of Security Interest and Recovery of Debts Laws and
Miscellaneous Provisions (Amendment) Act, 2016
(II) Offences (Section 29)
• If any person-

contravenes or
attempts to contravene or
abets the contravention of the provisions of this Act or of any rules made
thereunder,
he shall be punishable with imprisonment for a term which may extend to one year,
or with fine, or with both.
(III) Cognizance of offence (Section 30)
• No court shall take cognizance of any offence punishable under section 27 in
relation to non- compliance with the provisions of section 23, section 24 or
section 25 or under section 28 or section 29 or any other provisions of the Act,
except upon a complaint in writing made by an officer of the Central Registry
or an officer of the Reserve Bank, generally or specially authorised in writing in
this behalf by the Central Registrar or, as the case may be, the Reserve Bank.
• No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of
the first class shall try any offence punishable under this Act.
(IV) Power of adjudicating authority to Impose penalty (Section 30A)
• Where any asset reconstruction company or any person fails to comply with
any direction issued by the Reserve Bank under this Act the adjudicating
authority may, by an order, impose on such company or person in default, a
penalty not exceeding one crore rupees or twice the amount involved in such
failure where such amount is quantifiable, whichever is more, and where such
failure is a continuing one, a further penalty which may extend to one lakh
rupees for every day, after the first, during which such failure continues.
• The adjudicating authority shall serve a notice on the asset reconstruction
company or the person in default requiring such company or person to show
cause why the amount specified in the notice should not be imposed as a
penalty and a reasonable opportunity of being heard shall be given to such
person.
• Any penalty imposed under this section shall be payable within a period of
thirty days from the date of issue of notice, failure of which adjudicating
authority shall cancel its registration.
• No complaint shall be filed against any person in default in any court
pertaining to any failure under sub-section (1) in respect of which any penalty
has been imposed and recovered by the Reserve Bank under this section.
• Where any complaint has been filed against a person in default in the court
having jurisdiction no proceeding for imposition of penalty against that person
shall be taken under this section.
• "Adjudicating authority" means such officer or a committee of officers of the
Reserve Bank, designated as such from time to time, by notification, by the
Central Board of Reserve Bank.
• "person in default" means the asset reconstruction company or any person
which has committed any failure, contravention or default under this Act and
any person in charge of such company or such other person, as the case
may be, shall be liable to be proceeded against and punished under section
33 for such failure or contravention or default committed by such company or
person.
(V) Appeal against penalties (Section 30B)
• A person in default, aggrieved by an order passed in section 30A(4), may,
within a period of thirty days from the date on which such order is passed,
prefer an appeal to the Appellate Authority.
• Appellate Authority may entertain an appeal after the expiry of the said period
of thirty days, if it is satisfied that there was sufficient cause for not filing it
within such period.
(VI) Appellate Authority (Section 30C)
• The Central Board of Reserve Bank may designate such officer or committee
of officers as it deems fit to exercise the power of Appellate Authority.
• The Appellate Authority shall have power to pass such order as it deems fit
after providing a reasonable opportunity of being heard to the person in
default.
• The Appellate Authority may, by an order stay the enforcement of the order
passed by the adjudicating authority under section 30A, subject to such terms
and conditions, as it deems fit.
• Where the person in default fails to comply with the terms and conditions
imposed by order without reasonable cause, the Appellate Authority may
dismiss the appeal
(VII) Recovery of penalties (Section 30D)
Any penalty imposed under section 30A shall be recovered as a "recoverable sum"
and shall be payable within a period of thirty days from the date on which notice
demanding payment of the recoverable sum is served upon the person in default
and, in the case of failure of payment by such person within such period, the
Reserve Bank may recover the sum as per the section.
12. MISCELLANEOUS
Chapter VI of the Act comprises of miscellaneous provisions dealt under sections 31-42
of the Act.
(I) Provisions of this Act not to apply in certain cases (Section 31)
• The situations in which the provisions of this Act do not apply are as follows:-
(a) a lien on any goods, money or security given by or under the Indian
Contract Act, 1872 or the Sale of Goods Act, 1930 or any other law for
the time being in force;
(b) a pledge of movables within the meaning of section 172 of the Indian
Contract Act, 1872;
(c) creation of any security in any aircraft as defined in clause (1) of section
2 of the Aircraft Act, 1934;
(d) creation of security interest in any vessel as defined in clause (55) of
section 3 of the Merchant Shipping Act, 1958;
(e) any rights of unpaid seller under section 47 of the Sale of Goods Act,
1930;
(f) any properties not liable to attachment (excluding the properties
specifically charged with the debt recoverable under this Act) or sale
under the first proviso to sub- section (1) of section 60 of the Code of
Civil Procedure, 1908;
(g) any security interest for securing repayment of any financial asset not
exceeding one lakh rupees;
(h) any security interest created in agricultural land;
(i) any case in which the amount due is less than twenty per cent of the
principal amount and interest thereon
(II) Provisions of the Act not to apply in some cases (Section 31A)
• The Central Government may, by notification in the public interest, direct that
any of the provisions of this Act,-
a. shall not apply to such class or classes of banks or financial institutions;
or
b. shall apply to the class or classes of banks or financial institutions with
such exceptions, modifications and adaptations, as may be specified in
the notification.

• A copy of every notification proposed to be issued under sub-section (1), shall
be laid in draft before each House of Parliament, while it is in session, for a
total period of thirty days, and if, both Houses agree in disapproving the issue
of notification or both Houses agree in making any modification in the
notification, the notification shall not be issued or, as the case may be, shall be
issued only in such modified form as may be agreed upon by both the Houses.
• In reckoning any such period of thirty days as is referred to in sub-section (2),
no account shall be taken of any period during which the House referred to in
sub-section (2) is prorogued or adjourned for more than four consecutive days.
• The copies of every notification issued under this section shall, as soon as
may be after it has been issued, be laid before each House of Parliament
(III) Protection of action taken in good faith (Section 32)
• No suit, prosecution or other legal proceedings shall lie against the Reserve
Bank or the Central Registry or any secured creditor or any of its officers for
anything done or omitted to be done in good faith under this Act.
(IV) Offences by companies (Section 33)
• Where an offence under this Act has been committed by a company, every
person who at the time the offence was committed was in charge of, and was
responsible to, the company, for the conduct of the business of the company,
as well as the company, shall be deemed to be guilty of the offence and shall
be liable to be proceeded against and punished in accordance with the
provisions of the Act.
• But if such person is able to prove that the offence was committed without his
knowledge or that he had exercised all due diligence to prevent the
commission of such offence, then section 33 does not apply to such person.
• It must also be noted that, where an offence under this Act has been
committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to any
neglect on the part of, any director, manager, secretary or other officer of
the company, such director, manager, secretary or other officer shall also be
deemed to be guilty of the offence and shall be liable to be proceeded
against and punished in accordance with the provisions of the Act.
• For the purposes of section 33:-
(a) "Company'' means anybody corporate and includes a firm or other
association of individuals; and
(b) "Director'', in relation to a firm, means a partner in the firm.
(V) Civil Court not to have jurisdiction (Section 34)
• No civil court shall have jurisdiction to entertain any suit or proceeding in
respect of any matter which a Debts Recovery Tribunal or the Appellate
Tribunal is empowered by or under this Act to determine and no injunction
shall be granted by any court or other authority in respect of any action taken
or to be taken in pursuance of any power conferred by or under this Act or
under the Recovery of Debts Due to Banks and Financial Institutions Act,
1993.
(VI) The provisions of this Act to override other laws (Section 35)
• The provisions of this Act shall have effect, notwithstanding anything
inconsistent therewith contained in any other law for the time being in force or
any instrument having effect by virtue of any such law.
(VII) Application of other laws not barred (Section 37)
• The provisions of this Act or the rules made thereunder shall be in addition to,
and not in derogation of, the Companies Act, 2013, the Securities Exchange
Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 or any other law for the time being in force.

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CAFCINTER CAFINAL CA

Concept of Insolvency and Bankruptcy

Term “Insolvency” can

Known as Known as Corporate

If, untreated insolvency, it will lead to-

For non- corporates Corporates

:1: REVISION NOTES – MAY ‘19

Relationship between Bankruptcy, Insolvency & Liquidation

Need for a New Law

The existing framework of law has failed to resolve insolvency situations.

Structure of the Code

:3: REVISION NOTES – MAY ‘19

Extent and Commencement of the Code:

Applicability of the Code

Key Objectives of the Code

1. Insolvency and Bankruptcy Board of India-The Code provides for establishment of a

2. Insolvency Professional Agencies-The Code provides for establishment of insolvency

3. Insolvency Professionals: The Code provides for insolvency professionals as

4. Information Utilities – The Code envisages creation of information utility to collect,

5. Adjudicating Authority-The Adjudicating Authority for corporate insolvency and

:8: REVISION NOTES – MAY ‘19

:9: REVISION NOTES – MAY ‘19

: 10 : REVISION NOTES – MAY ‘19

3. CORPORATE INSOLVENCY RESOLUTION PROCESS [SECTIONS 4, 6-32]

: 11 : REVISION NOTES – MAY ‘19

ii. Application to National Company Law Tribunal Commitment of Default

: 12 : REVISION NOTES – MAY ‘19

• Filling of an application by a financial creditor: A financial creditor either itself

Answer: The following persons shall not be entitled to make an application to

iii. Adjudication: Admission or Rejection of Application

: 14 : REVISION NOTES – MAY ‘19

Application before NCLT with proof and name of

Rejection of Application (14 days from Admission of Application

Declaration of moratium and appointment

Vesting of powers of Board &

Collection of all claims and

Appointment of RP and vesting of

: 15 : REVISION NOTES – MAY ‘19

The key roles to be performed by the Interim Resolution Professional are:-

vi. Appointment of Resolution Professional (RP)

: 16 : REVISION NOTES – MAY ‘19

As per Regulation 3 of Insolvency and Bankruptcy (Insolvency Resolution) Regulation,

Fees of Resolution Professional

Replacement of Resolution Professional

: 17 : REVISION NOTES – MAY ‘19

Example: Mr. Z was continuing as Interim resolution professional (IRP) in XY company.

vii. Public Announcement

viii. Committee of Creditors

: 18 : REVISION NOTES – MAY ‘19

Voting in the Meeting

First Meeting of Creditors

Notice of the Meeting

Quorum for the Meeting

: 19 : REVISION NOTES – MAY ‘19

ix. Resolution Plan (Section 22- 31)

Submission of Resolution Plan

: 20 : REVISION NOTES – MAY ‘19

Formulation and submission of Resolution Plan