Winding up jurisdiction of High Courts deserve to be restored

The Parliament of India in the year 2016 have enacted a historic legislation.  Corporate Insolvency under Insolvency and Bankruptcy Code, 2016, which among other things, replaces the Winding up jurisdiction of High Courts, with "Insolvency Resolution Application" to be filed before National Company Law Tribunal (NCLT). In the new regime, among other irrational things, the law expects that an aggrieved person would be invoking the jurisdiction of the Court for the benefit of his adversary. Just imagine the absurdity of the law. May read further –

A first look at the new Regime marched from 15.12.2016, under the Insolvency and Bankruptcy Code, 2016, replacing thereby the erstwhile regime of Winding up of Company Petitions which were filed under Companies Act, 1956.

The amount of debt for which the new jurisdiction can be invoked: Rs.1.00 Lakh. (Section 4)

Who can file: Financial creditor, Operational creditor, or the Corporate debtor itself. (Section 6)

Accrual of cause of action: Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself, may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter. (Section 6)

The place of filing: National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located.

The new regime introduces new legal expressions such as default [(S.3(12)], Claim r/w debt [(S.3(6) and 3(11)], operational debt [(S.5(21)]. dispute[(S.5(6)]. These legal expressions are jurisdictional terms which confers or take away the jurisdiction of the Tribunal. In my view, given the complex and subjective definition, to ascertain their true purport and import may be a tough task for the Tribunal. In the new regime, whereas the jurisdiction of the High Court is taken away, and therefore any conclusive pronouncement on these terms can only by Apex Court. And this could take a considerable time before the Apex Court decides such jurisdictional issues, and thus would be detrimental to both Petitioning Applicant and Respondent Company.

This write up contains –

1.      Some of the irrational provisions under the new Code of 2016, which deserves to be challenged; and the whole of new law deserves to be declared unconstitutional; and jurisdiction of Company Court / High Court requires to be restored.

2.      Territorial Jurisdiction of NCLT

3.      Some of important definitions in the Code, 2016

4.      Procedure for making Application by Operational Creditor for Corporate Insolvency

5.      Procedure for making Application by Financial Creditor for Corporate Insolvency

6.      Form of Demand Notice – Form Nos. 3 and 4

7.      Form of Application by Operational Creditor for Corporate Insolvency

8.      Form of Application by Financial Creditor for Corporate Insolvency

Irrational provisions under the new Code of 2016, which deserves to be challenged; and the whole of new law deserves to be declared unconstitutional; and jurisdiction of Company Court / High Court requires to be restored.

[A] Deprivation of valuable statutory remedy

Impugned Provision

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

(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8 , if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.

Contravention of Article / Statute

Article 14:

National Tax Tribunal case: Transfer of jurisdiction to Statutory Tribunals: Whilst transferring jurisdiction of traditional courts to Statutory Tribunals, it is imperative for the legislature to ensure, that redress should be available, with the same convenience and expediency, as it was prior to the introduction of the newly created court/tribunal.

Natural purport & import of impugned provision

1.      If any Suit or Arbitration proceeding is filed and is pending prior to filing of Application for Corporate Insolvency in the new regime, the said Application for Corporate Insolvency cannot be filed.

2.      However, there is no as bar to filing of Suit or Arbitration proceedings after filing of aforesaid Application.

3.      This is a fundamental departure from erstwhile regime under Companies Act, 1956.

4.      No conceivable reasons could be comprehended for this departure.

5.      An unscrupulous Corporate debtor may frustrate the entire process by filing a bogus litigation claiming damages or otherwise. It may further be appreciated that Arbitration proceedings can be initiated by merely recording a Notice u/s 21 upon the other side.

6.      Further, relegating an operational or financial creditor to Suit would be cruel, given the time, even decades, taken in finally disposing a lis.

7.      The impugned provision, which sought to take away a valuable statutory remedy, which was otherwise available in erstwhile regime, gives unfair advantage to Corporate debtor facilitating frustration of justice.

8.      In series of rulings of High Courts and Apex Court, in the erstwhile regime, it is ruled that filing and pendency of Suit or Arbitration proceeding, is no bar to filing of Winding up Petitions.

[B] Open ended expressions of debt when r/w claim

Impugned Provision          

Section 3(11) "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(6) "claim" means

(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;

(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;

Contravention of Article / Statute         

Contravention of basic legal principle that damages does not include debt.

Natural purport & import of impugned provision

1.      In the new regime, the definition of “debt” when r/w definition of “Claim, is stretched to unlimited extent, which may include claims towards damages.

2.      This open ended definition is prejudicial to both creditors and to the Corporate debtor; and is vulnerable to misuse by both.

3.      The operational creditors may file frivolous Application for claims based on damages, calling their claims as “debt”.

4.      There are every likelihood that Company would invariably raise frivolous counter claim of damages against Petitioning Creditors.

5.      It is settled law that claim of damages does not constitute “debt”.

6.      Where the law is manifestly (a) oppressive, (b) unwarranted, (c) irrational, (d) needlessly invades the privacy of persons (d) disproportionately beneficial to a class of persons, at the cost of the other persons; (e)  where the punishment / penalty prescribed is disproportionate to the act which is forbidden; and in all these cases the law may not be discriminatory, per se. yet may be declared invalid on the grounds of irrationality, and wanting in “reasonableness”, frustrating the mandate of Article 14.

[C] Takes away right of Corporate debtor to “bonafide defense”

Impugned Provision          

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

(2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.

(3) The operational creditor shall, along with the application furnish

(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;

(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt;

(c) a copy of the certificate from thefinancial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and

(d) such other information as may be specified.

(4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional.

(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order

(i) admit the application and communicate such decision to the operational creditor and the corporate debtor if,

(a) the application made under sub-section (2) is complete;

(b) there is no repayment of the unpaid operational debt;

(c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;

(d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and

(e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.

Contravention of Article / Statute         

Article 14: Irrationality of the impugned law

Natural purport & import of impugned provision

1.      The new regime contemplates that if the Application is filed in accordance with law; and no Suit or Arbitration proceedings is pending prior to filing of Application, the Application would be admitted.

2.      The new regime is thus silent about “bonafide dispute” which the Company may have against the claims of the Creditor. This may seriously prejudice any Company having a bonafide dispute to the claims made by a Creditor.

3.      This is again a conscious departure from erstwhile regime, wherein the Company Court had the discretion, to not to Order the Winding up of the Company, having regard to various issues, primarily being the passing financial difficulties of the Company, the fear of large scale unemployment of the work force employed in the Company; and the Social impact of liquidation of the Company.

4.      In the new regime, whereas the expression “shall” is consciously employed in Section 9(5), the discretion of the Tribunal is taken away; unless the provision is read down by the Hon’ble Court.

5.      The passing financial difficulties are incidental feature of any business enterprise. The impugned Code proceeds on fallacious presumption that, the moment there is any “default” by Corporate debtor, it would be deemed that said Corporate debtor is on the verge of Insolvency; and it be subjected to the process of Insolvency, which is invariably onerous and prejudicial to their goodwill. This is weird contemplation of law; and extremely prejudicial to any Corporate entity.

6.      Where the law is manifestly (a) oppressive, (b) unwarranted, (c) irrational, (d) needlessly invades the privacy of persons (d) disproportionately beneficial to a class of persons, at the cost of the other persons; (e)  where the punishment / penalty prescribed is disproportionate to the act which is forbidden; and in all these cases the law may not be discriminatory, per se. yet may be declared invalid on the grounds of irrationality, and wanting in “reasonableness”, frustrating the mandate of Article 14.

[D] Contravention of basic legal principle inhere in any Legal action

Impugned Provision          

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

(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8 , if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.

Contravention of Article / Statute         

Contravention of basic legal principle inheres in any “Legal action” wherein, it is provided that an aggrieved person would be invoking the jurisdiction of the Court for the benefit of his adversary.

The impugned provision takes away the adversarial nuances of the litigation and prescribes a mandatory conciliatory judicial process, in adversarial litigation.

Natural purport & import of impugned provision

1.      The new regime provides that operational creditor may file an Application before the Adjudicating Authority for initiating a corporate insolvency resolution process for the revival of the defaulting Corporate debtor.

2.      It implies that a creditor can file Application only for the purpose of Resolution of Insolvency of Corporate debtor; and his Prayer in the Application thus would be –

(a)  Insolvency Resolution process be initiated against the Corporate debtor.

3.      The point arises is, if my cause of action is “default” in payment of my debt, why I should be to initiate legal proceeding for the Resolution of Insolvency of Corporate debtor.

4.      The impugned law proceeds on grossly irrational contemplation that an operational or financial creditor would invoke Insolvency jurisdiction of the Court “for the resolution of insolvency of Corporate debtor”. This is irrational contemplation, for, Resolution of Insolvency of Corporate debtor, is not the concern of the Creditor, be it the financial or the operational.

5.      This is against the basic tenets of legal jurisprudence, where an aggrieved person would be invoking the jurisdiction of the Court for the benefit of his adversary. This is absurd to the core.

6.      On this aspect alone, the whole Code should be declared as irrational and ultra vires the Article 14 of the Constitution.

7.      Where the law is manifestly (a) oppressive, (b) unwarranted, (c) irrational, (d) needlessly invades the privacy of persons (d) disproportionately beneficial to a class of persons, at the cost of the other persons; (e)  where the punishment / penalty prescribed is disproportionate to the act which is forbidden; and in all these cases the law may not be discriminatory, per se. yet may be declared invalid on the grounds of irrationality, and wanting in “reasonableness”, frustrating the mandate of Article 14.

Issues which arises before the Hon’ble Court is –

The factors which would weigh the minds of the Constitutional Courts whilst deciding the Constitutional validity of a law which is challenged on the grounds of being “oppressive and / or irrational” –

a)     Whether the impugned law would shock the conscience of man of ordinary intelligence and prudence: Can fair-minded, reasonable, unbiased and resolute men, who are not swayed by emotion or prejudice, would regard the impugned law as reasonable, just and fair;

b)     Whether the impugned law imposes patently unreasonable / unwarranted stipulations having regard to backdrop of conditions;

Approach of the Court in deciding the issues of law

a)     Prima facie, there will always be presumption in favour of the constitutionality of the Statute / Policy of the State;

b)     The Courts would decide the Constitutionality or the vires of the law on the basis of the language of the law and whilst applying the settled principles of interpretation of Statutes. And validity of the impugned Law will not be decided on the basis of affidavits filed on behalf of the State, but by all the relevant circumstances which the court may ultimately find and more especially by what may be gathered from what the legislature has itself said. [Srinivasa Theatre Versus Government Of Tamil Nadu AIR 1992 SC 999].

S.NO.	Name Of Bench	Location	Territorial Jurisdiction of the Bench
1	(a) National Company Law Tribunal, Principal Bench. (b) National Company Law Tribunal, New Delhi Bench.	New Delhi	(1) State of Haryana. (2) State of Rajasthan. (3) Union territory of Delhi.
2	(a) National Company Law Tribunal, Principal Bench.	Ahmedabad	(1) State of Gujarat. (2)State of Madhya Pradesh. (3) Union territory of Dadra and Nagar Haveli. (4) Union territory of Daman and Diu.
3	National Company Law Tribunal, Allahabad Bench.	Allahabad	(1) State of Uttar Pradesh. (2) State of Uttarakhand.
4	National Company Law Tribunal, Bengaluru Bench.	Bengaluru	(1) State of Karnataka.
5	National Company Law Tribunal, Chandigarh Bench.	Chandigarh	(1) State of Himachal Pradesh. (2) State of Jammu and Kashmir. (3) State of Punjab. (4) Union territory of Chandigarh.
6	National Company Law Tribunal, Chennai Bench.	Chennai	(1) State of Kerala. (2) State of Tamil Nadu. (3) Union territory of Lakshadweep. (4) Union territory of Puducherry.
7	National Company Law Tribunal, Guwahati Bench.	Guwahati	(1) State of Arunachal Pradesh. (2) State of Assam. (3) State of Manipur. (4) State of Mizoram. (5) State of Meghalaya. (6) State of Nagaland. (7) State of Sikkim. (8) State of Tripura.
8	National Company Law Tribunal, Hyderabad Bench.	Hyderabad	(1) State of Andhra Pradesh. (2) State of Telangana.
9	National Company Law Tribunal, Kolkata Bench.	Kolkata Bench	(1) State of Bihar. (2) State of Jharkhand. (3) State of Odisha. (4) State of West Bengal. (5) Union territory of Andaman and Nicobar Islands.
10	National Company Law Tribunal, Mumbai Bench.	Mumbai Bench	(1) State of Chhattisgarh. (2) State of Goa. (3) State of Maharashtra.

Important definitions in the Code, 2016:

I will start with –

Section 3(12) "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, as the case may be;

Section 3(11) "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(6) "claim" means

(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;

(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;

Section 5(6) "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 3(10) "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 5(21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;

Section 5(20) "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(7) "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(8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes

(a) money borrowed against the payment of interest;

(b) any amount raised by acceptance under any acceptance credit facility or its de-materialized equivalent;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed;

(e) receivables sold or discounted other than any receivables sold on nonrecourse basis;

(f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account;

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution;

(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;

Section 3(9) "core services" means services rendered by an information utility for

(a) accepting electronic submission of financial information in such form and manner as may be specified;

(b) safe and accurate recording of financial information;

(c) authenticating and verifying the financial information submitted by a person; and

(d) providing access to information stored with the information utility to persons as may be specified;

Procedure for making Application by Operational Creditor for Corporate Insolvency

1.      Section 8 r/w Rule 5: Demand Notice to Corporate debtor, of unpaid (a) operational debt or (b) unpaid Invoice, demanding payment of amount involved in default, in prescribed format (Forms 3 and 4 appended to Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016), at the registered office by hand, registered post or speed post with acknowledgement due; or by electronic mail service to a whole time director or designated partner or key managerial personnel, if any, of the corporate debtor. A copy of demand notice or invoice demanding payment served under this rule by an operational creditor shall also be filed with an information utility, if any. This Rule 5 contemplates two Forms, 3 and 4; and Demand Notice is to be sent probably in both the Forms.

2.      Section 8(2): The Corporate debtor, on receipt of aforesaid Notice, is obliged to record a Reply, within 10 days from the date of receipt of said Notice, that is (a) the details of any Suit or Arbitration proceeding which is pending in respect of the Claim which is being made in the said demand Notice; or (b) proof of discharge of claim which is being made in the said demand Notice.

3.      If any of the Reply, as contemplated in Section 8(2) above, is received, the operational creditor cannot file Application for Corporate Insolvency.

4.      Section 9: If no payment is received within 10 days, or if no reply is received, as contemplated in Section 8(2) above, the aggrieved person may file an Application before concerned Bench of NCLT (Section 60 for territorial jurisdiction of NCLT) for Corporate Insolvency of the concerned Company. This Application is to be accompanied by (a) Demand Notice (Forms 3 and 4 stated hereinabove); (b) Affidavit that No reply is recorded by Corporate debtor pursuant to Notice so given; (c) Copy of certificate from Financial Institution, who is maintaining accounts of operational creditor, that no payment is made in respect of the debt which is claimed in the demand Notice.

5.      The Adjudicating Authority, i.e. NCLT – within 14 days – would admit the Application, subject to compliance to these five conditions –

(a)  the Application made is “complete” as required u/s 9(3);

(b)  there is no repayment of the unpaid operational debt;

(c)  the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;

(d)  no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and

(e)  there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.

6.      If any of the conditions stated hereinabove are not complied with, Application would be rejected; and if it is the case that Application is rejected for reason of incomplete Application, the NCLT shall, before rejecting the application, give a notice to the Applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

7.      If Application is admitted, the NCLT would pass an Order to this effect; and would be communicated to both, the Applicant and to the Corporate debtor; and the “Corporate Insolvency Resolution process” commences.

FORM 3

(See clause (a) of sub-rule (1) of rule 5)

FORM OF DEMAND NOTICE / INVOICE DEMANDING PAYMENT UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

(Under rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016)

[Date]

To,

[Name and address of the registered office of the corporate debtor]

From,

[Name and address of the registered office of the operational creditor]

Subject: Demand notice/invoice demanding payment in respect of unpaid operational debt due from [corporate debtor] under the Code.

Madam/Sir,

1. This letter is a demand notice/invoice demanding payment of an unpaid operational debt due from [name of corporate debtor].

2. Please find particulars of the unpaid operational debt below:

Particulars of Operational debt

1	TOTAL AMOUNT OF DEBT, DETAILS OF TRANSACTIONS ON ACCOUNT OF WHICH DEBT FELL DUE, AND THE DATE FROM WHICH SUCH DEBT FELL DUE
2	AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF DEFAULT IN TABULAR FORM)
3	PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY)
4	DETAILS OF RETENTION OF TITLE ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS TO WHICH THE OPERATIONAL DEBT REFERS
5	RECORD OF DEFAULT WITH THE INFORMATION UTILITY (IF ANY)
6	PROVISION OF LAW, CONTRACT OR OTHER DOCUMENT UNDER WHICH DEBT HAS BECOME DUE
7	LIST OF DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT AND THE AMOUNT IN DEFAULT

3. If you dispute the existence or amount of unpaid operational debt (in default) please provide the undersigned, within ten days of the receipt of this letter, of the pendency of the suit or arbitration proceedings in relation to such dispute filed before the receipt of this letter/notice.

4. If you believe that the debt has been repaid before the receipt of this letter, please demonstrate such repayment by sending to us, within ten days of receipt of this letter, the following: (a) an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (b) an attested copy of any record that [name of the operational creditor] has received the payment.

5. The undersigned, hereby, attaches a certificate from an information utility confirming that no record of a dispute raised in relation to the relevant operational debt has been filed by any person at any information utility. (if applicable)

6. The undersigned request you to unconditionally repay the unpaid operational debt (in default) in full within ten days from the receipt of this letter failing which we shall initiate a corporate insolvency resolution process in respect of [name of corporate debtor].

Yours sincerely,

·        Signature of person authorized to act on behalf of the operational creditor

·        Name in block letters

·        Position with or in relation to the operational creditor

·        Address of person signing

·

Instructions

1. Please serve a copy of this form on the corporate debtor, ten days in advance of filing an application under section 9 of the Code.

2. Please append a copy of such served notice to the application made by the operational creditor to the Adjudicating Authority.

Form 4

(See clause (b) of sub-rule(1) of rule 5)

FORM OF NOTICE WITH WHICH INVOICE DEMANDING PAYMENT IS TO BE ATTACHED

(Under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016)

[Date]

To,

[Name and address of registered office of the corporate debtor]

From,

[Name and address of the operational creditor]

Subject: Notice attached to invoice demanding payment

Madam/Sir,

[Name of operational creditor], hereby provides notice for repayment of the unpaid amount of INR [insert amount] that is in default as reflected in the invoice attached to this notice.

In the event you do not repay the debt due to us within ten days of receipt of this notice, we may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process under section 9 of the Code.

Yours sincerely,

·        Signature of person authorized to act on behalf of the operational creditor

·        Name in block letters

·        Position with or in relation to the operational creditor

·        Address of person signing

·

My submissions

·        Whereas a Certificate from Information utility is contemplated to be annexed with the Demand Notice, confirming that no record of a dispute raised in relation to the relevant operational debt, with the rider “If applicable”; and whereas a copy of demand notice or invoice demanding payment served under Rule 5 by an operational creditor shall also be filed with an information utility; and whereas record of default with the Information Utility is to be attached alongwith the Application, the existence and functioning of “Information Utility is not yet clear. The Information utility are proposed to be established u/ss 209 to 216 of the Insolvency Code, 2016.

·        The new regime also contemplates issuance of Demand Notice under Rule 5. This Rule 5 contemplates two Forms, 3 and 4; and Demand Notice is to be sent probably in both the Forms. Further, in Form No.3, In the table of Particulars of Debt, “Total amount of debt” and “Amount claimed to be in default” is asked. I fail to understand the difference between the two. Both amounts must be the same. However, given the definition of debt and claim in the Code, there must be some difference, which I am unable to figure out.

Form 5

(See sub-rule (1) of rule 6)

APPLICATION BY OPERATIONAL CREDITOR TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER THE CODE.

(Under rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016)

[Date]

To, The National Company Law Tribunal

[Address]

From,

[Name and address for correspondence of the operational creditor]

In the matter of [name of the corporate debtor]

Subject: Application u/s 9 to initiate corporate insolvency resolution process in respect of [name of the corporate debtor] under the Insolvency and Bankruptcy Code, 2016.

Madam/Sir,

[Name of the operational creditor], hereby submits this application to initiate a corporate insolvency resolution process in the case of [name of corporate debtor]. The details for the purpose of this application are set out below:

Before the National Company Law Tribunal

Mumbai Bench

Part I

Particulars of Applicant

1	Full name, parentage, age, description of each OPERATIONAL CREDITOR, if Suing in a Representative character, the details thereof
2	IDENTIFICATION NUMBER OF OPERATIONAL CREDITOR (IF ANY)
3	ADDRESS FOR CORRESPONDENCE OF THE OPERATIONAL CREDITOR

Part II

Particulars of Corporate Debtor

1	NAME OF THE CORPORATE DEBTOR
2	IDENTIFICATION NUMBER OF CORPORATE DEBTOR
3	DATE OF INCORPORATION OF CORPORATE DEBTOR
4	NOMINAL SHARE CAPITAL AND THE PAID-UP SHARE CAPITAL OF THE CORPORATE DEBTOR AND/OR DETAILS OF GUARANTEE CLAUSE AS PER MEMORANDUM OF ASSOCIATION (AS APPLICABLE)
5	ADDRESS OF THE REGISTERED OFFICE OF THE CORPORATE DEBTOR
6	NAME, ADDRESS AND AUTHORITY OF PERSON SUBMITTING APPLICATION ON BEHALF OF OPERATIONAL CREDITOR (ENCLOSE AUTHORISATION)
7	NAME AND ADDRESS OF PERSON RESIDENT IN INDIA AUTHORISED TO ACCEPT THE SERVICE OF PROCESS ON ITS BEHALF (ENCLOSE AUTHORISATION)

Part III

Particulars of the Proposed Interim Resolution Professional (If proposed)

1

NAME, ADDRESS, EMAIL ADDRESS AND THE REGISTRATION NUMBER OF THE PROPOSED INSOLVENCY PROFESSIONAL

Part IV

Particulars of Operational debt

1	TOTAL AMOUNT OF DEBT, DETAILS OF TRANSACTIONS ON ACCOUNT OF WHICH DEBT FELL DUE, AND THE DATE FROM WHICH SUCH DEBT FELL DUE
	AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM)

Part V

PARTICULARS OF OPERATIONAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT]

1	PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY)
2	DETAILS OF RESERVATION / RETENTION OF TITLE ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS TO WHICH THE OPERATIONAL DEBT REFERS
3	PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER)
4	RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD)
5	DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY)
6	PROVISION OF LAW, CONTRACT OR OTHER DOCUMENT UNDER WHICH OPERATIONAL DEBT HAS BECOME DUE
7	A STATEMENT OF BANK ACCOUNT WHERE DEPOSITS ARE MADE OR CREDITS RECEIVED NORMALLY BY THE OPERATIONAL CREDITOR IN RESPECT OF THE DEBT OF THE CORPORATE DEBTOR (ATTACH A COPY)
8	LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT AND THE AMOUNT IN DEFAULT

I, [Name of the operational creditor / person authorized to act on behalf of the operational creditor] hereby certify that, to the best of my knowledge, [name of proposed insolvency professional], is fully qualified and permitted to act as an insolvency professional in accordance with the Code and the rules and regulations made thereunder. [WHERE APPLICABLE]

[Name of the operational creditor] has paid the requisite fee for this application through [state means of payment] on [date].

Yours sincerely,

·        Signature of person authorized to act on behalf of the operational creditor

·        Name in block letters

·        Position with or in relation to the operational creditor

·        Address of person signing

Verifying Petition

I, ….., son of... ........ , aged ......... residing at... , do solemnly affirm and state that the statements made in paragraphs ……..of the petition herein now shown to me are true to my knowledge, and the statements made in paragraphs ..... are based on information, and I believe them to be true.

Solemnly affirmed, etc.

sd/-

Instructions

Please attach the following to this application:

1.      Annex I Copy of the invoice / demand notice as in Form 3 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 served on the corporate debtor.

2.      Annex II Copies of all documents referred to in this application.

3.      Annex III Copy of the relevant accounts from the banks/financial institutions maintaining accounts of the operational creditor confirming that there is no payment of the relevant unpaid operational debt by the operational debtor, if available.

4.      Annex IV Affidavit in support of the application in accordance with the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

5.      Annex V Written communication by the proposed interim resolution professional as set out in Form 2 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. [WHERE APPLICABLE]

6.      Annex VI Proof that the specified application fee has been paid.

Note: Where workmen/employees are operational creditors, the application may be made either in an individual capacity or in a joint capacity by one of them who is duly authorized for the purpose.

Rule 10: Filing of application and application fee.—

(1) Till such time the rules of procedure for conduct of proceedings under the Code are notified, the application made under sub-section (1) of section 7, sub-section (1) of section 9 or sub-section (1) of section 10 of the Code shall be filed before the Adjudicating Authority in accordance with rules 20, 21, 22, 23, 24 and 26 of Part III of the National Company Law Tribunal Rules, 2016.

(2) An applicant under these rules shall immediately after becoming aware, notify the Adjudicating Authority of any winding-up petition presented against the corporate debtor.

(3) The application shall be accompanied by such fee as specified in the Schedule.

(4) The application and accompanying documents shall be filed in electronic form, as and when such facility is made available and as prescribed by the Adjudicating Authority:

Provided that till such facility is made available, the applicant may submit the accompanying documents, and wherever they are bulky, in electronic form, in scanned, legible portable document format in a data storage device such as a compact disc or a USB flash drive acceptable to the Adjudicating Authority.

PART-III of the National Company Law Tribunal Rules, 2016.

Institution of proceedings, petition, appeals etc.

Rule 20: Procedure.-

(1) Every appeal or petition or application or caveat petition or objection or counter presented to the Tribunal shall be in English and in case it is in some other Indian language, it shall be accompanied by a copy translated in English and shall be fairly and legibly type written, lithographed or printed in double spacing on one side of standard petition paper with an inner margin of about four centimeter width on top and with a right margin of 2.5. cm, and left margin of 5 cm, duly paginated, indexed and stitched together in paper book form;

(2) The cause title shall state “Before the National Company Law Tribunal” and shall specify the Bench to which it is presented and also set out the proceedings or order of the authority against which it is preferred.

(3) Appeal or petition or application or counter or objections shall be divided into paragraphs and shall be numbered consecutively and each paragraph shall contain as nearly as may be, a separate fact or allegation or point.

(4) Where Saka or other dates are used, corresponding dates of Gregorian Calendar shall also be given.

(5) Full name, parentage, age, description of each party and address and in case a party sues or being sued in a representative character, shall also be set out at the beginning of the appeal or petition or application and need not be repeated in the subsequent proceedings in the same appeal or petition or application.

(6) The names of parties shall be numbered consecutively and a separate line should be allotted to the name and description of each party.

(7) These numbers shall not be changed and in the event of the death of a party during the pendency of the appeal or petition or matter, his legal heirs or representative, as the case may be, if more than one shall be shown by sub-numbers.

(8) Where fresh parties are brought in, they may be numbered consecutively in the particular category, in which they are brought in.

(9) Every proceeding shall state immediately after the cause title the provision of law under which it is preferred.

Rule 21: Particulars to be set out in the address for service.-

The address for service of summons shall be filed with every appeal or petition or application or caveat on behalf of a party and shall as far as possible contain the following items namely:-

(a) the name of the road, street, lane and Municipal Division or Ward, Municipal Door and other number of the house;

(b) the name of the town or village;

(c) the post office, postal district and PIN Code, and

(d) any other particulars necessary to locate and identify the addressee such as fax number, mobile number, valid e-mail address, if any.

Rule 22: Initialling alteration.-

Every interlineations, eraser or correction or deletion in any appeal or petition or application or document shall be initialled by the party or his authorized representative presenting it.

Rule 23: Presentation of petition or appeal .-

(1) Every petition, application, caveat, interlocutory application, documents and appeal shall be presented in triplicate by the appellant or applicant or petitioner or respondent, as the case may be, in person or by his duly authorized representative or by an advocate duly appointed in this behalf in the prescribed form with stipulated fee at the filing counter and non-compliance of this may constitute a valid ground to refuse to entertain the same.

(2) Every petition or application or appeal may be accompanied by documents duly certified by the authorised representative or advocate filing the petition or application or appeal duly verified from the originals.

(3) All the documents filed in the Tribunal shall be accompanied by an index in triplicate containing their details and the amount of fee paid thereon.

(4) Sufficient number of copies of the appeal or petition or application shall also be filed for service on the opposite party as prescribed under these rules.

(5) In the pending matters, all applications shall be presented after serving copies thereof in advance on the opposite side or his authorised representative.

(6) The processing fee prescribed by these rules, with required number of envelopes of sufficient size and notice forms shall be filled alongwith memorandum of appeal.

Rule 24: Number of copies to be filed.-

The appellant or petitioner or applicant or respondent shall file three authenticated copies of appeal or petition or application or counter or objections, as the case may be, and shall deliver one copy to each of the opposite party.

Rule 26: Endorsement and Verification.-

(1) At the foot of every petition or appeal or pleading there shall appear the name and signature of the authorized representative.

(2) Every petition or appeal shall be signed and verified by the party concerned in the manner provided by these rules

Section 8 : Insolvency resolution by operational creditor

(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor

(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;

(b) the repayment of unpaid operational debt

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.

Explanation. For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred.

Rule 5: Demand notice by operational creditor.—(1) An operational creditor shall deliver to the corporate debtor, the following documents, namely.- (a) a demand notice in Form 3; or (b) a copy of an invoice attached with a notice in Form 4. (2) The demand notice or the copy of the invoice demanding payment referred to in sub-section (2) of section 8 of the Code, may be delivered to the corporate debtor, (a) at the registered office by hand, registered post or speed post with acknowledgement due; or (b) by electronic mail service to a whole time director or designated partner or key managerial personnel, if any, of the corporate debtor. (3) A copy of demand notice or invoice demanding payment served under this rule by an operational creditor shall also be filed with an information utility, if any.

Rule 6: Application by operational creditor.—(1) An operational creditor, shall make an application for initiating the corporate insolvency resolution process against a corporate debtor under section 9 of the Code in Form 5, accompanied with documents and records required therein and as specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (2) The applicant under sub-rule (1) shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor.

Procedure for making Application by Financial Creditor for Corporate Insolvency

1.      Section 7(1) r/w Rule 4 – Application in prescribed format (Form 1 appended to Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016), with fee (Rs.25,000) and supporting documents (a) Record of the default available with Information utility; or any other record / evidence of default as may be specified; (b) Name of Resolution Professional; (c) other information as specified by Insolvency and Bankruptcy Board of India.

2.      The Adjudicating Authority, i.e. NCLT – within 14 days – would ascertain existence of default.

3.      “Satisfaction” of NCLT as to – (a) default has occurred; (b) Application is complete; (c) No disciplinary proceeding is pending against proposed Resolution Professional.

4.      The Application would be Admitted or rejected.

5.      If Application is admitted, the NCLT would pass an Order to this effect; and would be communicated to both, the Applicant and to the Corporate debtor; and the “Corporate Insolvency Resolution process” commences.

6.      If Application is rejected, and if it is the case that Application is rejected for reason of incomplete Application, the NCLT shall, before rejecting the application, give a notice to the Applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

Form 1

(See sub-rule (1) of rule 4)

APPLICATION BY FINANCIAL CREDITOR(S) TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER THE CODE.

(Under section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016)

[Date]

To,

The National Company Law Tribunal

[Address]

From,

[Names and addresses of the registered offices of the financial creditors]

In the matter of [name of the corporate debtor]

Subject: Application u/s 7 to initiate corporate insolvency resolution process in the matter of [name of the corporate debtor] under the Insolvency and Bankruptcy Code, 2016.

Madam/Sir,

[Names of the financial creditor(s)], hereby submit this application to initiate a corporate insolvency resolution process in the matter of [name of corporate debtor]. The details for the purpose of this application are set out below:

Before the National Company Law Tribunal

Mumbai Bench

Part-I

PARTICULARS OF APPLICANT (PLEASE PROVIDE FOR EACH FINANCIAL CREDITOR MAKING THE APPLICATION)

1	NAME OF FINANCIAL CREDITOR
2	DATE OF INCORPORATION OF FINANCIAL CREDITOR
3	IDENTIFICATION NUMBER OF FINANCIAL CREDITOR
4	ADDRESS OF THE REGISTERED OFFICE OF THE FINANCIAL CREDITOR
5	NAME AND ADDRESS OF THE PERSON AUTHORISED TO SUBMIT APPLICATION ON ITS BEHALF (ENCLOSE AUTHORISATION)
6	NAME AND ADDRESS OF PERSON RESIDENT IN INDIA AUTHORISED TO ACCEPT THE SERVICE OF PROCESS ON ITS BEHALF (ENCLOSE AUTHORISATION)

Particulars of Corporate Debtor

1	NAME OF THE CORPORATE DEBTOR
2	IDENTIFICATION NUMBER OF CORPORATE DEBTOR
3	DATE OF INCORPORATION OF CORPORATE DEBTOR
4	NOMINAL SHARE CAPITAL AND THE PAID-UP SHARE CAPITAL OF THE CORPORATE DEBTOR AND/OR DETAILS OF GUARANTEE CLAUSE AS PER MEMORANDUM OF ASSOCIATION (AS APPLICABLE)
5	ADDRESS OF THE REGISTERED OFFICE OF THE CORPORATE DEBTOR

Part III

Particulars of the Proposed Interim Resolution Professional

1

NAME, ADDRESS, EMAIL ADDRESS AND THE REGISTRATION NUMBER OF THE PROPOSED INSOLVENCY PROFESSIONAL

Part IV

Particulars of Financial debt

1	TOTAL AMOUNT OF DEBT GRANTED DATE(S) OF DISBURSEMENT
2	AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAULT IN TABULAR FORM)

Part V

PARTICULARS OF OPERATIONAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT]

1	PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY)
2	PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER)
3	RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD)
4	DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY)
5	THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A COPY)
6	A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT INFORMATION COMPANY (ATTACH A COPY)
7	COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY)
8	LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF DEFAULT

I, hereby certify that, to the best of my knowledge, [name of proposed insolvency professional], is fully qualified and permitted to act as an insolvency professional in accordance with the Insolvency and Bankruptcy Code, 2016 and the associated rules and regulations. [Name of the financial creditor] has paid the requisite fee for this application through [state means of payment] on [date].

Yours sincerely,

·        Signature of person authorized to act on behalf of the Financial creditor

·        Name in block letters

·        Position with or in relation to the Financial creditor

·        Address of person signing

Verifying Petition

I, ….., son of... ........ , aged ......... residing at... , do solemnly affirm and state that the statements made in paragraphs ……..of the petition herein now shown to me are true to my knowledge, and the statements made in paragraphs ..... are based on information, and I believe them to be true.

Solemnly affirmed, etc.

sd/-

Instructions

Please attach the following to this application:

1.      Annex I Copies of all documents referred to in this application.

2.      Annex II Written communication by the proposed interim resolution professional as set out in Form 2.

3.      Annex III Proof that the specified application fee has been paid.

4.      Annex IV Where the application is made jointly, the particulars specified in this form shall be furnished in respect of all the joint applicants along with a copy of authorization to the financial creditor to file and act on this application on behalf of all the applicants.

Rule 10: Filing of application and application fee.—

(1) Till such time the rules of procedure for conduct of proceedings under the Code are notified, the application made under sub-section (1) of section 7, sub-section (1) of section 9 or sub-section (1) of section 10 of the Code shall be filed before the Adjudicating Authority in accordance with rules 20, 21, 22, 23, 24 and 26 of Part III of the National Company Law Tribunal Rules, 2016.

(2) An applicant under these rules shall immediately after becoming aware, notify the Adjudicating Authority of any winding-up petition presented against the corporate debtor.

(3) The application shall be accompanied by such fee as specified in the Schedule.

(4) The application and accompanying documents shall be filed in electronic form, as and when such facility is made available and as prescribed by the Adjudicating Authority:

Provided that till such facility is made available, the applicant may submit the accompanying documents, and wherever they are bulky, in electronic form, in scanned, legible portable document format in a data storage device such as a compact disc or a USB flash drive acceptable to the Adjudicating Authority.

PART-III of the National Company Law Tribunal Rules, 2016.

Institution of proceedings, petition, appeals etc.

(Same as stated hereinabove)

Section 7: Initiation of corporate insolvency resolution process by financial creditor

(1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.

Explanation. For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.

(2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed.

(3) The financial creditor shall, along with the application furnish

(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;

(b) the name of the resolution professional proposed to act as an interim resolution professional; and

(c) any other information as may be specified by the Board.

(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).

(5) Where the Adjudicating Authority is satisfied that

(a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:

Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).

(7) The Adjudicating Authority shall communicate

(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;

(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be.

Rule 4: Application by financial creditor.—

(1) A financial creditor, either by itself or jointly, shall make an application for initiating the corporate insolvency resolution process against a corporate debtor under section 7 of the Code in Form 1, accompanied with documents and records required therein and as specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

(2) Where the applicant under sub-rule (1) is an assignee or transferee of a financial contract, the application shall be accompanied with a copy of the assignment or transfer agreement and other relevant documentation to demonstrate the assignment or transfer.

(3) The applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor.

(4) In case the application is made jointly by financial creditors, they may nominate one amongst them to act on their behalf.

Section 5(7) "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 (8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes

(a) money borrowed against the payment of interest;

(b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed;

(e) receivables sold or discounted other than any receivables sold on nonrecourse basis;

(f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account;

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution;

(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;

Legal issues !!

If you are facing any of these issues like (a) Recovery of Moneys (b) Immovable property disputes (c) grievances against Municipalities & Govts., including challenge to legitimacy of laws etc. (d) grievances against illegalities and highhandedness of Police like illegal arrests, refusal to register FIR, deliberately flawed investigations, etc (e) False FIRs (f) False Claims (g) False evidences (h) Grievances against Judges (i) Illegal or perverse Orders of the Courts / Tribunals, among others.

or

If you are looking for draft of any legal proceeding; or if you want to know the nature and attribute of any legal proceeding; or if you want to know the procedure followed in any legal proceeding; or if you want to know the grounds on which any order of the court / tribunal is challenged; or if you are facing any frivolous litigation.

Law Referencer: https://www.litigationplatform.com/

Thank you.