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OLD ACT(The Insolvency and Bankruptcy Code, 2016)

The Principal Act

Insolvency and Bankruptcy Code(Amendment) Act,2018

(1) Short title, extent and Commencement

(1) This Code may be called the Insolvency and Bankruptcy Code, 2016.

(2) It extends to the whole of India:

Provided that Part III of this Code shall not extend to the State of Jammu and Kashmir.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Code and any reference in any such provision to the commencement of this Code shall be construed as a reference to the commencement of that provision.

(1) This Act may be called the Insolvency and Bankruptcy Code (Amendment) Act, 2018.

(2) It shall be deemed to have come into force on the 23rd day of November, 2017.

COMMENTS:

The Change has been made in Short title and Commencement.

(2)Applicability

The Provisions of this Code shall apply to-

a) any company incorporated under the Companies Act,2013 (18 of 2013) or under any Previous Company Law;

b)any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act;

c)any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008;

(d) 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

(e) partnership firms and individuals,

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

The Provisions of this Code apply to-

a) any company incorporated under the Companies Act,2013 (18 of 2013) or under any Previous Company Law;

b)any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act;

c)any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008;

(d) 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

(e) personal guarantors to corporate debtors;

(f) partnership firms and proprietorship firms; and

(g) individuals, other than persons referred to in clause (e),"

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

COMMENTS:

The Word Shall from the very first line in relation to applicability has been omitted and Clause (e) of Section 2 has been substituted with other clause as mentioned above with clause (e), (f), (g).

Section 5 (25) Defination

(25) "resolution applicant" means any person who submits a resolution plan to the resolution professional;

(25) "resolution applicant" means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of section 25;

COMMENTS

Sub Clause (25) of Section 5 has been substituted with new definition of resolution applicant.

Section 5 (26) Defination

(26) "resolution plan" means a plan proposed by any person for insolvency resolution of the corporate debtor as a going concern in accordance with Part II;

(26) "resolution plan" means a plan proposed by RESOLUTION APPLICANT for insolvency resolution of the corporate debtor as a going concern in accordance with Part II;

COMMENT

(26), for the words "any person", the words "resolution applicant" shall be substituted.

Section 25(2) Duties of Resolution Professional

(h) invite prospective lenders, investors, and any other persons to put forward resolution plans;

(h) “invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans.".

COMMENTS

In section 25 of the principal Act, in sub-section (2), for clause (h), the following clause has been substituted.

Section 29A Person not eligible to be resolution applicant

NOT IN THE ACT

A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person—

(a) is an undischarged insolvent;

(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949;

(c) has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor:

Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan;

(d) has been convicted for any offence punishable with imprisonment for two years or more;

(e) is disqualified to act as a director under the Companies Act, 2013;

(f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets;

(g) has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code;

(h) has executed an enforceable guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code;

(i) has been subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or

(j) has a connected person not eligible under clauses (a) to (i).

Explanation.— For the purposes of this clause, the expression "connected person" means—

(i) any person who is the promoter or in the management or control of the resolution applicant; or

(ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or

(iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii):

Provided that nothing in clause (iii) of this Explanation shall apply to—

(A) a scheduled bank; or

(B) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; or

(C) an Alternate Investment Fund registered with the Securities and Exchange Board of India.".

COMMENTS

New section has been inserted in the IBC(Amendment),2017 which was not there in principal act. This Section 29A is for those persons who are not eligible as resolution applicant for submitting resolution plan.

Section 30 Submission of Resolution Plan

(4) The committee of creditors may approve a resolution plan by a vote of not less than seventy five per cent. of voting share of the financial creditors.

"(4) The committee of creditors may approve a resolution plan by a vote of not less than seventy-five per cent. of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board:

Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under  section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it:

Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A:

Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.”.

COMMENTS

Sub-Section (4) of the Section 30 has been substituted with new provision mentioned above.

Section 35 (1) Powers and Duties of Liquidator

(f) subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified;

(f) subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified;

"Provided that the liquidator shall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant."

COMMENTS

Proviso in section 35(1) (f) has been inserted.

Section 235A Punishment where no specific penalty or Punishment is provided

NOT THERE IN THE ACT

"235A. If any person contravenes any of the provisions of this Code or the rules or regulations made thereunder for which no penalty or punishment is provided in this Code, such person shall be punishable with fine which shall not be less than one lakh rupees but which may extend to two crore rupees."

COMMENTS

New Section has been inserted which defines the punishment where no specific penalty or punishment has been provided.

Section 240(2) clause (sa)

Power to make regulations

NOT THERE ONLY CLAUSE (s) WAS THERE

(sa) other conditions under clause (h) of sub-secton (2) of section 25;"

COMMENTS

This sub clause has been newly inserted after clause (s).

Section 240(2) clause (wa)

Power to make regulations

NOT THERE

"(wa) other requirements under sub-section (4) of section 30;"

COMMENTS

This sub clause has been newly inserted after clause (w).

Section 243 Repeal and Savings

(1) The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the Insolvency and Bankruptcy Code, 2016, as amended by the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of the said Code, as amended by this Act.