Recently, The Insolvency and Bankruptcy Code, 2016, the Bill was passed by Lok Sabha on05-05-2016 (Bill N0. 349-C of 2015). It is a comprehensive legislation relating to insolvency, liquidation etc, irrespective of whether insolvency to companies, individuals or partnership firms. Actually, at present, the Companies can be liquidated either voluntarily or through court under the Companies Act, 2013 and insolvency to the individuals are concerned, provisions are laid down under the Provisions of the Insolvency Act.  

Now, the Insolvency and Bankruptcy Code, 2016 applies to

1. Any company incorporated under the Companies Act, 2013 or under any previous company law;
2. Any other company governed by any special Act, until, the provisions of the special Act are consistent to this Code;
3. Any Limited Liability Partnership (LLP) incorporated under the Limited Liability Partnership Act, 2008;
4. Such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf; and
5. Partnership Firms and Individuals.

In relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the case may be.

This Code totally contains Five Parts. The Second Part shall apply to matters relating to the insolvency and liquidation of Corporate Debtors (A corporate person who owes a debt to any Persons) where the minimum amount of default is one lakh rupees. Provided, that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.

The Third Part deals the matters relating to fresh start insolvency and bankruptcy of Individuals and Partnership Firms where the amount of the default is not less than one thousand rupees. Provided, that Central Government may by notification, specify the minimum amount of default of higher value which shall not be more than one lakh rupees. As per the Provisions of the Insolvency Act, Receiver will be appointed to discharge the debts of insolvent now according to this new Code, 2016 Bankruptcy Trustee will be appointed for conducting the bankruptcy process and he shall charge such fees as may be specified in proportion to the value of the estate of the bankrupt. The committee of creditors may, at a meeting, by vote of seventy five percent of voting share, propose to replace the bankruptcy trustee.

A bankruptcy trustee may resign on giving notice to Adjudicating Authority, if

1. He intends to cease practicing as an insolvency professional; or
2. There is conflict of interest or change or change of personal circumstances which preclude the further discharge of his duties as a bankruptcy trustee.

Adjudicating Authority in relation to insolvency matters of individuals and firms shall be the Debt Recovery Tribunal having territorial jurisdiction over the place where the individual debtor actually and voluntarily resides or carries on business or personally works for gain and can entertain an application under this Code regarding such person.

If any suit or application in the name and on behalf of a debtor is to be instituted/filed, either under the Limitation Act, 1963 or in any other law for the time being in force, then the period during which moratorium is in place shall be excluded in computing the period of limitation. Actually, on the date of admission of the application, the moratorium period shall commence in respect of all the debts.

No civil court or authority shall have jurisdiction to entertain any suit or proceeding in respect of any matter on which the Debt Recovery Tribunal or Debt Recovery Appellate Tribunal has jurisdiction under this Code. No injunction shall be granted by any court, tribunal or authority in respect of any action taken, or to be taken, in pursuance of any power conferred on the DRT or DRAT by or under this Code. An appeal from an order of the Debt Recovery Tribunal (DRT) under this Code shall be filed within thirty days before Debt Recovery Appellate Tribunal (DRAT). The DRAT may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within thirty days , allows the appeal to be file within further period not exceeding fifteen days. An appeal from an order of the DRAT on question of law under this Code shall be filed within forty five days, before the Supreme Court. The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an  appeal within 45 days , allow the appeal to be filed within further period not exceeding 15 days.

Punishments will be imposed for giving false information, concealment etc., either by creditor or debtor in insolvency process. Similarly, Punishments will be imposed to bankruptcy trustee for certain actions.

According to this the Central Government may, by notification, appoint and established a Board by the name of the Insolvency and Bankruptcy Board of India as a body corporate.  Part four of Code deals the provisions regarding to Insolvency and Bankruptcy Board. Any person aggrieved by the functioning of an insolvency professional agency or insolvency professional or an information utility may file a complaint to the Board in such form, within such time and in such manner as may be prescribed. The Board shall constitute a disciplinary committee to consider the reports of the investigating Authority. No person to functions as information utility without certificate of registration issued in that behalf by the Board. The Board may, renew the certificate from time to time in such manner and on payment of such fee as may be specified by regulations. The Board may, by order, suspend or cancel the certificate of registration granted to an information utility on any of the grounds specified in this Code. The Board shall, subject to the general direction of the Central Government, perform all or any of the functions mentioned in section 196 of the Code.

Any insolvency professional agency or insolvency professionals or information utilities which are aggrieved by the order of the Board may prefer an appeal to the National Company Law Appellate Tribunal in such form, within such period, and in such manner, as the case may be specified by regulations.

Ultimately, this Code is comprehensively covers regarding to insolvency, liquidation and Bankruptcy of individuals, corporations and partnership firms respectively.  

BY LAWZ BUREAU