India: Insolvency And Bankruptcy Code, 2016: A Time-Period Puzzle

The Insolvency and Bankruptcy Code, 2016 aims to consolidate and amend the laws relating to insolvency resolution of companies and limited liability entities, partnerships and individuals, which are contained in various enactments, into a single legislation. The focus of this legislation is to provide e resurrection and resolution for maximization of value of debtor's assets. The Code has put forth an overarching framework to aid sick companies to either wind up their business or engineer a revival plan, and for investors to exit. Notably, the Code has also empowered the operational creditors (workmen, suppliers etc.) to initiate the insolvency resolution process if default occurs.

Another important feature of this Code is the time bound resolution process, which tries to make sure that the process of resolution and liquidation does not suffer the trauma of never ending litigations. However, the time-line provided does not always give a coherent mechanism and therefore, calls for following considerations.

Initiation of Corporate Insolvency Resolution Process:

Section 7 of the Code enshrines the initiation of the Corporate Insolvency Resolution Process. Therefore, for greater understanding, it is imperative to produce the relevant part of the provision here.

"7. Inter alia,

(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 subsection (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 communi cate—

(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-sec tion (5) to the financial creditor,

within seven days of admission or rejection of such application, as the case may be."

Under section 7(4), the Adjudicatory Authority shall ascertain the existence of a default within 14 days of the receipt of the application. Proviso of section 7(5) provides that if the submitted application has any defect, such defect can be rectified within 7 days of receipt of such notice of rectification from the Adjudicating Authority. The difficulty lies in ascertaining whether the 14-days period will be inclusive of the 7-days period of rectification or not?

Moreover, in Bank of India v. Tirupati Infraprojects Pvt. Ltd1, the NCLT Principal Bench Delhi has stated that the interim order2 giving stipulated period of 7 days to rectify the defect cannot be regarded as notice within the meaning of proviso to Section 7(5) of the Code. In consequence, extending the total period by 7 days, that excludes 14 days period of admission or rejection of the application and 7-days notice period for rectification of defects.

Further in J.K Jute Mills Company Limited v. Surendra Trading Company Case3, the NCLAT has ruled,

"50. Inter alia,

The time is the essence of the Code and all the stakeholders, including the Adjudicating Authority are required to perform its job within the time prescribed under the Code except in exceptional circumstances if the Adjudicating Authority for one or other good reason fails to do so. In the case in hand we find that the Adjudicating Authority has unnecessarily adjourned the case from time to time which is against the essence of the Code.

51. Further, we find that the application was defective, and for the said reason the application was not admitted within the specified time. Even if it is presumed that 7 additional days' time was to be granted to the operational creditor, the defects having pointed out on 16th February 2017 and having not taken care within time, we hold that the petition under section 9 filed by respondent/ operational creditor being incomplete was fit to be rejected."

The above paragraphs of the case clearly lay down that the object behind the time period prescribed under the Code is to prevent the delay in hearing the disposal of the cases and 7 days' period for rectification of any defect is mandatory and on failure, such applications are fit to be rejected. Whether the same reasoning of the above-mentioned case can be considered under section 7(4) and can it be said that if the Adjudicatory Authority does not ascertain the existence of a default within 14 days, then such application is fit to be rejected.

Further, if in case the Adjudicatory Authority decides to accept the application, then what will be the date of admission of application, the original date or the date on which the rectified application is filed? By reason, the date of admission should be the date on which the rectified application is filed as the Adjudicatory Authority will pass the order of initiating the resolution process only when application under section 7 is rectified.

Public Announcement:

Under section 12 of the Code, the time-limit for the completion of the Corporate Insolvency Resolution Process (CIRP) is given to be 180 days with the extension of 90 days, if instructed through a resolution passed at a meeting of the committee of creditors by a vote of 75% of the voting shares. Under section 13, the Adjudicatory Authority, through order, cause a public announcement of the initiation of CIRP immediately4 after appointment of Interim Resolution Professional. Section 15 of the Code, gives the details of the public announcement including the closing date of CIRP, i.e. 180 days from the admission of the application.

Now, the question arises that if the Resolution Professional (RP) takes an extension period of 90 days after the public announcement then the closing date of the CIRP will also be shifted beyond 180 days. In such scenario, the question arises whether the RP has to make another public announcement of such extension or the process continues without the announcement.


Under Section 61 of the Code, any person aggrieved by the order of the Adjudicatory Authority can file an appeal to NCLAT. Sub-section (2) says, "Every appeal shall be filed within thirty days before the NCLAT". However, the section does not mention about the initiation of 30 days. Whether the period of 30-days starts from passing of order by the Adjudicatory Authority or starts from the day of communication of the order to the concerned parties, which has to be done under section 7(7) by the Adjudicatory Authority. If the day of communication of the order is considered as date of initiation of 30 days appeal period, then the appeal period gets extended by 7 days.

Conclusion :

The Insolvency and Bankruptcy Code, 2016 clearly highlights the intention of the legislature for speedy disposal for the cases. But looking at the above discussion, the intention is not clearly outlined in the Act. As the Code is still at a nascent stage, it does need the help of Adjudicatory Authority to unfold the answers to above referred questions on time-line.


1 Order dated 30.05.2017 in C.P No. (IB)-104(PB)/2017.

2 Order dated 03.07.2017 in C.P No. (IB)-104(PB)/2017.

3 Company Appeals (AT) (Ins) No. 9 of 2017

4 Immediately meaning not later than 3 days from the date of appointment of Interim Resolution Professional. (Regulation 6 of the IRPCP, 2016)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions