Section 60 – Adjudicating Authority for Corporate Persons

✅ Key Provisions:

1. Adjudicating Authority for Corporate Insolvency and Liquidation:

o The Adjudicating Authority for insolvency resolution and liquidation proceedings

for corporate persons (including corporate debtors and their personal guarantors)
shall be the National Company Law Tribunal (NCLT). The NCLT's territorial
jurisdiction will be determined by the location of the registered office of the
corporate person.

2. Jurisdiction Over Insolvency of Corporate Guarantors:

o If corporate insolvency resolution or liquidation proceedings for a corporate debtor

are pending before an NCLT, any application related to the insolvency or liquidation
of the corporate guarantor or personal guarantor of that corporate debtor must be
filed before the same NCLT.

3. Transfer of Pending Cases:

o Any insolvency resolution process or liquidation or bankruptcy proceedings related

to the corporate guarantor or personal guarantor (if pending in any other court or
tribunal) will be transferred to the NCLT handling the corporate debtor's insolvency.

4. Powers of NCLT:

o The NCLT will be vested with the powers of the Debt Recovery Tribunal (DRT) under
Part III of the Code to handle cases mentioned in subsection (2).

5. Jurisdiction of NCLT:

o The NCLT will have exclusive jurisdiction to:

 Entertain or dispose of any application or proceeding by or against the

corporate debtor or corporate person.

 Handle any claims made by or against the corporate debtor, including claims
involving its subsidiaries in India.

 Resolve any questions of priorities, law, or facts arising out of or related to

the insolvency or liquidation proceedings under this Code.

6. Moratorium and Limitation Period:

o Moratorium: The period during which a moratorium is in place (following the order
of moratorium under the insolvency process) will be excluded from the computation
of the limitation period for any suit or application by or against the corporate
debtor. This applies notwithstanding the provisions of the Limitation Act, 1963 or
any other laws.

⚖️Purpose:
  Centralization of Jurisdiction: The provision centralizes the jurisdiction for insolvency
proceedings, ensuring that cases related to a corporate debtor, including claims and issues
concerning its personal or corporate guarantors, are dealt with by the same NCLT.

 Consistency and Efficiency: By consolidating proceedings in one forum, the Code seeks to
maintain consistency and avoid conflicts between courts and tribunals, enhancing the
efficiency of insolvency resolution.

 Moratorium and Limitation: The exclusion of the moratorium period from the limitation
period ensures that the debtor is not unfairly disadvantaged due to the temporary halt in
proceedings during insolvency.

Section 61 – Appeals and Appellate Authority

✅ Key Provisions:

1. Right to Appeal:

o Any person aggrieved by an order of the Adjudicating Authority under this part of
the Code has the right to appeal to the National Company Law Appellate Tribunal
(NCLAT).

o This appeal can be filed notwithstanding any contrary provisions in the Companies
Act, 2013.

2. Time Limit for Filing Appeal:

o Appeals must be filed within 30 days from the date of the order passed by the
Adjudicating Authority.

o The NCLAT may allow the appeal to be filed after the 30-day period if the appellant
can show sufficient cause for the delay. The maximum extension for this is 15 days.

3. Grounds for Appeal Against Resolution Plan Approval:

o An appeal against the approval of a resolution plan under Section 31 can be filed on
the following grounds:

 Contravention of Law: The approved resolution plan contravenes provisions

of any law in force.

 Irregularity by Resolution Professional: There was a material irregularity in

the exercise of powers by the resolution professional during the corporate
insolvency resolution process.

 Non-Compliance with Debts to Operational Creditors: 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 Insolvency and
Bankruptcy Board of India (IBBI).

 Insolvency Resolution Costs: The insolvency resolution process costs have

not been provided for repayment in priority to all other debts.
  Non-Compliance with Board Criteria: The resolution plan does not comply
with any other criteria specified by the IBBI.

4. Grounds for Appeal Against Liquidation Order:

o An appeal against an order for liquidation under Section 33 or sub-sections (4) of

Sections 54L and 54N can be filed on the grounds of:

 Material Irregularity: A material irregularity or fraud in relation to the

liquidation order.

5. Grounds for Appeal Against Initiation of Corporate Insolvency Process:

o An appeal against an order for the initiation of corporate insolvency resolution

process under Section 54-O(2) may be filed on grounds of material irregularity or
fraud in relation to such an order.

⚖️Purpose:

 Appellate Recourse: The section provides a clear path for parties to seek redressal against
orders passed by the Adjudicating Authority in insolvency and liquidation proceedings,
ensuring fairness and accountability in the process.

 Timely and Flexible Filing: The provision allows a 30-day filing period with a 15-day
extension, giving sufficient time for appeals while preventing undue delays.

 Focus on Specific Grounds: The section outlines precise grounds on which appeals can be
made, ensuring that they are based on legitimate issues like contravention of laws, material
irregularities, or fraud.

 Protection of Stakeholders' Interests: By addressing issues such as the treatment of

operational creditors and insolvency resolution costs, the Code ensures that the interests of
various stakeholders in the insolvency process are safeguarded.

Section 62 – Appeal to Supreme Court

✅ Key Provisions:

1. Right to Appeal to the Supreme Court:

o A person aggrieved by an order of the National Company Law Appellate Tribunal

(NCLAT) may appeal to the Supreme Court on a question of law arising out of such
order under the Insolvency and Bankruptcy Code (IBC).

o This appeal must be filed within 45 days from the date of receipt of the NCLAT order.

2. Extension of Time for Filing the Appeal:

o If the Supreme Court is satisfied that the appellant was prevented by sufficient cause
from filing the appeal within the 45-day period, it may allow the appeal to be filed
within an additional 15-day period.
⚖️Purpose:

 Appeal on Legal Grounds: This provision provides a final recourse to the Supreme Court in
case a person is aggrieved by the decision of the NCLAT, but only on questions of law. It
ensures that legal interpretations and the application of the law are subject to scrutiny at the
highest judicial level.

 Timely Filing and Flexibility: The appeal must be filed within 45 days, but a 15-day extension
is possible if the Supreme Court is convinced that the appellant had a valid reason for the
delay, which offers a balance between maintaining deadlines and allowing for exceptions in
genuine cases.

Section 63 – Civil Court Not to Have Jurisdiction

✅ Key Provision:

 Exclusion of Civil Court Jurisdiction: This section explicitly bars any civil court or authority
from entertaining any suit or proceeding concerning matters that fall within the jurisdiction
of the National Company Law Tribunal (NCLT) or the National Company Law Appellate
Tribunal (NCLAT) under the Insolvency and Bankruptcy Code (IBC).

⚖️Purpose:

 Consolidation of Jurisdiction: This provision ensures that matters falling under the scope of
the IBC are handled exclusively by the NCLT or NCLAT, streamlining dispute resolution and
reducing conflicting decisions by multiple judicial bodies.

 Prevention of Forum Shopping: It prevents parties from approaching civil courts for matters
that are already governed under the specialized framework of the IBC, thereby ensuring the
integrity and efficiency of the insolvency process.

📝 Implications:

 This section reinforces the specialized jurisdiction of the NCLT and NCLAT, which are set up
to handle insolvency, corporate restructuring, and related matters.

 Any disputes related to insolvency resolutions, liquidation, or related proceedings must be

filed directly with the NCLT or NCLAT, rather than in a general civil court.

Section 64 – Expeditious Disposal of Applications

✅ Key Provisions:

1. Extension of Period for Disposal of Applications (Sub-section 1):

o If the National Company Law Tribunal (NCLT) or the National Company Law
Appellate Tribunal (NCLAT) fails to dispose of an application or pass an order within
 the period specified in the Insolvency and Bankruptcy Code (IBC), it must record
reasons for the delay.

o The President of NCLT or the Chairperson of NCLAT can then decide to extend the
period for disposal of the application, but the extension cannot exceed ten days.

2. Injunctions (Sub-section 2):

o No injunction can be granted by any court, tribunal, or authority that would

interfere with any action taken (or to be taken) under the powers conferred on the
NCLT or NCLAT under this Code. This means that no court or tribunal can halt or
prevent actions being taken by NCLT or NCLAT regarding insolvency or related
processes.

⚖️Purpose:

 Timely Resolution: This section is designed to ensure prompt disposal of applications or

matters under the IBC, reinforcing the emphasis on an efficient insolvency process.

 Accountability: If a delay occurs, the responsible authorities (NCLT/NCLAT

President/Chairperson) must provide reasons and can extend the period, but only by a
limited time.

 Prevention of Judicial Interference: The second sub-section ensures that the process under
the IBC remains uninterrupted by third-party injunctions, keeping the focus on expediting
resolution.

📝 Implications:

 Clear Accountability: The responsible authorities must justify any delay in disposal.

 Avoiding Delays in the Process: This ensures that insolvency matters are resolved within a
fixed and efficient timeframe, reducing unnecessary hold-ups.

 No Court Injunctions: Courts or tribunals cannot interfere with NCLT/NCLAT actions under
the IBC, which helps maintain the integrity of the insolvency process.

Section 65 – Fraudulent or Malicious Initiation of Proceedings

✅ Key Provisions:

1. Fraudulent or Malicious Initiation of Insolvency or Liquidation Proceedings (Sub-section 1):

o If a person fraudulently or with malicious intent initiates the insolvency resolution

process or liquidation proceedings for purposes other than the resolution of
insolvency or liquidation, the Adjudicating Authority (usually the National Company
Law Tribunal (NCLT)) may impose a penalty.

o The penalty imposed can be between one lakh rupees and one crore rupees.
 2. Fraudulent Initiation of Voluntary Liquidation (Sub-section 2):

o If a person fraudulently initiates voluntary liquidation proceedings with the intent

to defraud any person, the Adjudicating Authority can impose a penalty between
one lakh rupees and one crore rupees.

3. Fraudulent or Malicious Initiation of Pre-Packaged Insolvency Resolution Process (Sub-

section 3):

o If a person initiates the pre-packaged insolvency resolution process:

 Fraudulently or with malicious intent for purposes other than resolving

insolvency.

 With intent to defraud any person.

o The Adjudicating Authority may impose a penalty, which can range from one lakh
rupees to one crore rupees.

⚖️Purpose:

 Deterrent Against Abuse: This provision is aimed at preventing the abuse of the insolvency
framework for fraudulent or malicious purposes. It ensures that the insolvency process is
used for its intended purpose—resolving insolvency or liquidation—and not for other
personal or harmful objectives.

 Protecting Stakeholders: The penalty provision seeks to protect creditors and other
stakeholders from being defrauded or misled by fraudulent insolvency or liquidation
petitions.

📝 Implications:

 Severe Penalty for Abuse: The penalties imposed for fraudulent or malicious initiation are
significant, with the possibility of a fine ranging from one lakh to one crore rupees. This
provides a strong deterrent against misuse of the insolvency process.

 Covers Various Processes: The section applies not just to general insolvency and liquidation
proceedings but also to voluntary liquidation and the pre-packaged insolvency resolution
process, thus ensuring that all forms of insolvency procedures are safeguarded against
malicious actions.

 Protection Against Fraud: This section helps ensure that insolvency processes are used in
good faith and for legitimate business recovery or resolution, rather than being exploited for
fraudulent purposes.

Section 66 – Liability of Directors or Partners for Fraudulent Trading or Wrongful Trading

✅ Key Provisions:

1. Liability for Contribution to Corporate Debtor's Assets (Sub-section 1):

 o Directors or Partners of a corporate debtor can be held liable to contribute to the
assets of the corporate debtor under the following conditions:

 Before the insolvency commencement date, the director or partner knew

or ought to have known that there was no reasonable prospect of avoiding
the initiation of corporate insolvency resolution process (CIRP).

 The director or partner failed to exercise due diligence in minimizing

potential losses to creditors of the corporate debtor.

2. Definition of Due Diligence (Explanation):

o A director or partner is deemed to have exercised due diligence if the actions taken
were reasonably expected of a person performing similar duties and functions for
the corporate debtor. Essentially, this means that the standard of care expected is
based on the functions they perform in the corporate debtor’s operations.

3. Suspension of Application for Certain Defaults (Sub-section 3):

o No application can be filed by the resolution professional under this section against
a director or partner for such default, if the initiation of CIRP is suspended under
section 10A.

⚖️Purpose:

 Accountability of Directors/Partners: This section seeks to hold directors and partners

accountable for mismanagement or negligence that leads to insolvency. It is meant to
ensure that they take timely action and exercise diligence to avoid potential insolvency
situations, which could otherwise harm creditors.

 Protecting Creditors: By imposing liability on those responsible for poor financial

management, this section aims to minimize losses to creditors by ensuring that directors and
partners act in the best interest of the company and its creditors.

📝 Implications:

 Potential Personal Liability: Directors or partners who fail to exercise due diligence may be
personally liable to contribute to the assets of the company, meaning they could face
financial consequences for their failure to act responsibly.

 Due Diligence Standard: Directors and partners must be proactive in ensuring the company's
financial health. The law does not require them to prevent insolvency but expects them to
act as a prudent person would in managing the company's affairs.

 Suspension under Section 10A: If the corporate debtor has a suspension of insolvency
proceedings under section 10A, no action can be initiated under this section during that
time. This ensures that directors and partners are not penalized if the corporate debtor is
temporarily protected from the insolvency process.
🛑 Examples of Non-Diligence:

 A director is aware of the company's financial issues and the likelihood of insolvency but
does not take any steps to mitigate losses or inform creditors.

 A partner continues to allow risky transactions or failure to pay debts despite knowing that
the company's financial situation has no path for recovery.

Section 67 – Proceedings Under Section 66:

✅ Key Provisions:

1. Directions for Giving Effect to the Order (Sub-section 1):

o When the Adjudicating Authority passes an order under Section 66(1) or Section
66(2) (for fraudulent or malicious trading), it has the power to issue further
directions to ensure the implementation of the order.

o These directions may include:

 Liability as a charge: The liability imposed by the order can be placed as a

charge on any debt or obligation due to the person liable, or on any
mortgage or charge on the assets of the corporate debtor held by or vested
in the liable person, or anyone acting on their behalf.

 Further enforcement directions: The Adjudicating Authority may issue

further directions necessary for enforcing any charge imposed under this
section.

2. Explanation Regarding Assignee (Sub-section 1):

o An assignee refers to a person who receives the debt, obligation, mortgage, or

charge as directed by the liable person, excluding those who acquire it for valuable
consideration without knowledge of the grounds for the order.

3. Ranking of Debts (Sub-section 2):

o When the Adjudicating Authority passes an order regarding a creditor's debt under
Section 66, it may decide that the debt owed by the corporate debtor to that person
will rank lower in priority for repayment, after all other debts owed by the corporate
debtor, in accordance with Section 53.

Section 67A – Fraudulent Management During Pre-Packaged Insolvency:

✅ Key Provision:

1. Penalty for Fraudulent Management (Sub-section 1):

 o Officers of the corporate debtor who manage its affairs with the intent to defraud
creditors or for any fraudulent purpose during the pre-packaged insolvency
resolution process may face a penalty.

o The penalty can range from ₹1 lakh to ₹1 crore.

o The penalty can be imposed on the application of the resolution professional.

⚖️Purpose:

 Enforcing Liability: Section 67 ensures that any person found liable under Section 66 for
fraudulent activities can be held responsible by making their liabilities a charge on the
corporate debtor's assets. It serves to ensure that fraudulent actions are penalized and their
consequences are enforceable.

 Ensuring Priority in Payments: Section 67 also makes sure that any debts owed to persons
involved in fraudulent activities are ranked lower in the priority list, protecting legitimate
creditors and minimizing losses to them.

 Strengthening the Pre-Packaged Insolvency Process: Section 67A adds a deterrent against
fraudulent management during the pre-packaged insolvency resolution process, ensuring
that officers of the corporate debtor cannot exploit the process for their benefit.

📝 Practical Implications:

 Liability on Assets: A person found liable under Section 66 could have their obligations tied
to the corporate debtor’s assets, making enforcement of liability easier.

 Penalty for Fraudulent Management: In the pre-packaged insolvency process, there are
safeguards to penalize fraudulent officers, further promoting transparency and fairness in
the insolvency process.

 Preventing Fraudulent Avoidance of Payment: The provision ensures that fraud does not
allow a debtor to avoid paying legitimate debts or creditors by pushing fraudulent debts to a
lower priority in liquidation.

ADJUDICATING AUTHORITY FOR INDIVIDUALS AND PARTNERSHIP FIRMS

🔹 Section 179 – Adjudicating Authority for Individuals and Partnership Firms

📘 Bare Act Summary (Simplified):

(1) Primary Authority:

 For individuals and firms (not companies), the Debt Recovery Tribunal (DRT) is the
adjudicating authority.

 It must have territorial jurisdiction over the place where:

o The debtor lives, or

o Carries on business, or

o Works personally for gain.

(2) Powers of the DRT:

 DRT can deal with all matters related to insolvency and bankruptcy of individuals and firms,
including:

o (a) Any suit or proceeding by or against the debtor.

o (b) Any claim for or against the debtor.

o (c) Any issue of priority of claims, or other legal/factual questions.

(3) Exclusion from Limitation Period:

 If a moratorium (legal freeze) is in place under this Part:

o That time period is not counted while calculating limitation (under the Limitation
Act, 1963) for filing suits or applications.

🧾 Quick Notes:

 👩‍⚖️Adjudicating Authority = DRT (for individuals/firms).

 📍 Jurisdiction = Based on where debtor lives, works, or does business.

 🔧 DRT handles:

o Suits & claims (for/against debtor).

o Priority of debts and other insolvency issues.

 ⏳ Moratorium period is excluded from limitation calculations.

📘 Section 180 – Civil Court Not to Have Jurisdiction

🔹 Simplified Explanation:

(1) Civil Courts Have No Role:

 If a case relates to a matter under the jurisdiction of the Debt Recovery Tribunal (DRT) or the
Debt Recovery Appellate Tribunal (DRAT),
👉 then civil courts or any other authority cannot handle such cases.
(2) No Injunctions (Stay Orders):

 No court or authority can issue a stay (injunction) to stop or interfere with

👉 any action that the DRT or DRAT is taking or planning to take under the IBC.

🧾 Key Points for Notes:

 DRT/DRAT = Exclusive authority for individual & firm insolvency cases under IBC.

 🚫 Civil courts CANNOT:

o Hear cases

o Interfere with DRT/DRAT matters

 ❌ No injunctions allowed to block DRT/DRAT actions.

📘 Section 181 – Appeal to Debt Recovery Appellate Tribunal (DRAT)

🔹 Simplified Explanation:

(1) Right to Appeal:

 If a person is not satisfied with the order passed by the Debt Recovery Tribunal (DRT) under
the IBC,
👉 they can file an appeal before the Debt Recovery Appellate Tribunal (DRAT).

🕒 Time Limit:

 The appeal must be filed within 30 days from the date of the DRT's order.

(2) Delay in Filing – Allowed in Some Cases:

 If there is a valid reason (sufficient cause) for not filing the appeal within 30 days,
👉 DRAT can allow the appeal to be filed within an additional 15 days.

🧾 Key Points for Notes:

 📍 Appeal against DRT orders goes to DRAT.

 🕔 Time limit: 30 days from the order.

 ⏳ Extension: Max 15 more days, if delay is justified.

 ❗ Total maximum time = 45 days (30 + 15, if allowed).

📘 Section 182 – Appeal to Supreme Court

🔹 Simplified Explanation:

(1) Appeal from DRAT to Supreme Court:

 If a person is not satisfied with the decision of the Debt Recovery Appellate Tribunal
(DRAT),
👉 they can file an appeal to the Supreme Court, but only on a question of law.

🕔 Time Limit: The appeal must be filed within 45 days from the date of DRAT’s order.

(2) Delay in Filing – Some Relaxation:

 If there is a valid reason (sufficient cause) for delay,

👉 the Supreme Court may allow filing within an additional 15 days.

🧾 Key Points for Notes:

 📍 Appeal lies only on a question of law, not facts.

 Appeal is from DRAT to Supreme Court.

 ⏰ Time Limit = 45 days.

 ⏳ Extension = Max 15 days, if justified.

 ❗ Maximum total time = 60 days (45 + 15 if allowed).

📘 Section 183 – Expeditious Disposal of Applications

🔹 Simplified Explanation:

 The Debt Recovery Tribunal (DRT) or the Debt Recovery Appellate Tribunal (DRAT) is
expected to dispose of applications or pass orders within the time limit mentioned in the
Code.

 If the DRT or DRAT fails to do so,

👉 they must record the reasons for the delay.

 After reviewing the reasons, the Chairperson of DRAT may extend the period,
👉 but only up to a maximum of 10 days.

🧾 Key Points for Notes:

 Applications/orders must be decided within the specified time.

 📝 If delayed, written reasons must be recorded.

  👩‍⚖️DRAT Chairperson can extend the time limit,
✅ but not more than 10 days.

Appeals
📘 Section 61 – Appeals and Appellate Authority

🔹 Who Can Appeal and Where?

 Any person aggrieved by an order of the Adjudicating Authority (NCLT) under this Part
👉 can appeal to the NCLAT (National Company Law Appellate Tribunal).
🔹 Time Limit for Appeal:

 Appeal must be filed within 30 days of the NCLT’s order.

 NCLAT can allow delay if there's sufficient cause,

➤ but only up to 15 more days.

🔹 Grounds for Appeal against Approval of Resolution Plan (Sec. 31):

You can appeal if the approved plan:

1. Violates any law in force.

2. Has material irregularity in conduct by the Resolution Professional.

3. Ignores operational creditors' claims as per IBBI rules.

4. Doesn’t prioritise CIRP costs over other debts.

5. Fails to meet other criteria laid down by the IBBI.

🔹 Other Appeals Allowed Under This Section:

 📍 Against liquidation order (u/s 33, 54L(4), or 54N(4))

👉 If there's material irregularity or fraud in the order.

 📍 Against initiation of CIRP under Section 54-O(2)

👉 Also on grounds of material irregularity or fraud.

🧾 Quick Summary:

Time Extension
Appeal Type Where to File
Limit Allowed

Against NCLT order NCLAT 30 days 15 days (max)

Grounds for appeal (e.g. Sec Legal contravention, fraud, material

31 plan) irregularity, etc.

📘 Section 62 – Appeal to Supreme Court

🔹 **Who Can Appeal?

➡️Any person** who is aggrieved by an order of the NCLAT (National Company Law Appellate
Tribunal).
🔹 **Where to Appeal?

👉 Supreme Court**, but only on a question of law.

🔹 Time Limit for Filing Appeal:

 Must be filed within 45 days from the date of receipt of the NCLAT order.

🔹 Extension of Time (Condonation of Delay):

 Supreme Court may allow an appeal to be filed after 45 days,

➤ if sufficient cause is shown,
➤ but only up to a maximum of 15 more days.

🧾 Quick Summary Table:

🔍 Particulars 📝 Details

Appeal lies against Order of NCLAT

Appeal to Supreme Court

Nature of appeal Only on a question of law

Time limit 45 days

Extension (condonation of delay) Up to 15 days, if sufficient cause is shown