Section 80 Eligibility for making an application
“(1) A debtor, who is unable to pay his debt and fulfils the conditions specified in subsection (2), shall be entitled to make an
application for a fresh start for discharge of his qualifying debt under this Chapter.
(2) A debtor may apply, either personally or through a resolution professional, for a fresh start under this Chapter in respect
of his qualifying debts to the Adjudicating Authority if –
(a) the gross annual income of the debtor does not exceed sixty thousand rupees;
(b)the aggregate value of the assets of the debtor does not exceed twenty thousand rupees;
(c) the aggregate value of the qualifying debts does not exceed thirty -five thousand rupees;
(d)he is not an undischarged bankrupt;
(e) he does not own a dwelling unit, irrespective of whether it is encumbered or not;
(f) a fresh start process, insolvency resolution process or bankruptcy process is not subsisting against him; and
(g)no previous fresh start order under this Chapter has been made in relation to him
in the preceding twelve months of the date of the application for fresh start”
VL Note : –
Section 81 Application for fresh start order
“(1) When an application is filed under section 80 by a debtor, an interim-moratorium shall commence on the date of filing of
said application in relation to all the debts and shall cease to have effect on the date of admission or rejection of such
application, as the case may be.
(2) During the interim-moratorium period, –
(i) any legal action or legal proceeding pending in respect of any of his debts shall be deemed to have been stayed; and
(ii) no creditor shall initiate any legal action or proceedings in respect of such debt.
(3) The application under section 80 shall be in such form and manner and accompanied by such fee, as may be prescribed.
(4) The application under sub-section (3) shall contain the following information supported by an affidavit, namely: –
(a) a list of all debts owed by the debtor as on the date of the said application along with details relating to the amount
of each debt, interest payable thereon and the names of the creditors to whom each debt is owed;
(b)the interest payable on the debts and the rate thereof stipulated in the contract;
(c) a list of security held in respect of any of the debts,
(d)the financial information of the debtor and his immediate family for up to two years prior to the date of the
application;
(e) the particulars of the debtor’s personal details, as may be prescribed;
(f) the reasons for making the application;
(g)the particulars of any legal proceedings which, to the debtor’s knowledge has been commenced against him;
(h) the confirmation that no previous fresh start order under this Chapter has been made in respect of the qualifying
debts of the debtor in the preceding twelve months of the date of the application”
VL Note : –
Section 82 Appointment of resolution professional
“(1) Where an application under section 80 is filed by the debtor through a resolution professional, the Adjudicating Authority
shall direct the Board within seven days of the date of receipt of the application and shall seek confirmation from the Board
that there are no disciplinary proceedings against the resolution professional who has submitted such application.
(2) The Board shall communicate to the Adjudicating Authority in writing either –
(a) confirmation of the appointment of the resolution professional who filed an application under sub-section (1); or
(b) rejection of the appointment of the resolution professional who filed an application under sub-section (1) and
nominate a resolution professional suitable for the fresh start process.
(3) Where an application under section 80 is filed by the debtor himself and no through the resolution professional, the
Adjudicating Authority shall direct the Board within seven days of the date of the receipt of an application to nominate a
resolution professional for the fresh start process.
(4) The Board shall nominate a resolution professional within ten days of receiving the direction issued by the Adjudicating
Authority under sub-section (3).
(5) The Adjudicating Authority shall by order appoint the resolution professional recommended or nominated by the Board
under sub-section (2) or sub-section (4), as the case may be.
(6) A resolution professional appointed by the Adjudicating Authority under subsection (5) shall be provided a copy of the
application for fresh start.”
VL Note : –
Section 83 Examination of application by resolution professional
“(1) The resolution professional shall examine the application made under section 80 within ten days of his appointment, and
submit a report to the Adjudicating Authority, either recommending acceptance or rejection of the application.
(2) The report referred to in sub-section (1) shall contain the details of the amounts mentioned in the application which in
the opinion of the resolution professional are–
(a) qualifying debts; and
(b)liabilities eligible for discharge under sub-section (3) of section 92.
(3) The resolution professional may call for such further information or explanation in connection with the application as may
be required from the debtor or any other person who, in the opinion of the resolution professional, may provide such
information.
(4) The debtor or any other person, as the case may be, shall furnish such information or explanation within seven days of
receipt of the request under sub-section (3).
(5) The resolution professional shall presume that the debtor is unable to pay his debts at the date of the application if –
(a) in his opinion the information supplied in the application indicates that the debtor is unable to pay his debts and he
has no reason to believe that the information supplied is incorrect or incomplete; and
(b)he has reason to believe that there is no change in the financial circumstances of the debtor since the date of the
application enabling the debtor to pay his debts.
(6) The resolution professional shall reject the application, if in his opinion –
(a) the debtor does not satisfy the conditions specified under section 80; or
(b) the debts disclosed in the application by the debtor are not qualifying debts; or
(c) the debtor has deliberately made a false representation or omission in the application or with respect to the
documents or information submitted.
(7) The resolution professional shall record the reasons for recommending the acceptance or rejection of the application in
the report to the Adjudicating Authority under sub-section (1) and shall give a copy of the report to the debtor.”
VL Note : –
Section 84 Admission or rejection of application by Adjudicating Authority
“(1) The Adjudicating Authority may within fourteen days from the date of submission of the report by the resolution
professional, pass an order either admitting or rejecting the application made under sub-section (1) of section 81.
(2) The order passed under sub-section (1) accepting the application shall state the amount which has been accepted as
qualifying debts by the resolution professional and other amounts eligible for discharge under section 92 for the purposes of
the fresh start order.
(3) A copy of the order passed by the Adjudicating Authority under sub-section (1) along with a copy of the application shall
be provided to the creditors mentioned in the application within two days of the passing of the order”
VL Note : –
Section 85 Effect of admission of application
“(1) On the date of admission of the application, the moratorium period shall commence in respect of all the debts.
(2) During the moratorium period –
(a) any pending legal action or legal proceeding in respect of any debt shall be deemed to have been stayed; and
(b) subject to the provisions of section 86, the creditors shall not initiate any legal
action or proceedings in respect of any debt.
(3) During the moratorium period, the debtor shall –
(a) not act as a director of any company, or directly or indirectly take part in or be concerned in the promotion,
formation or management of a company;
(b)not dispose of or alienate any of his assets;
(c) inform his business partners that he is undergoing a fresh start process;
(d) be required to inform prior to entering into any financial or commercial transaction of such value as may be notified
by the Central Government, either individually or jointly, that he is undergoing a fresh start process;
(e) disclose the name under which he enters into business transactions, if it is different from the name in the application
admitted under section 84;
(f) not travel outsides India except with the permission of the Adjudicating Authority.
(4) The moratorium ceases to have effect at the end of the period of one hundred an eighty days beginning with the date of
admission unless the order admitting the application is revoked under sub-section (2) of section 91.”
VL Note : –
Section 86 Objections by creditor and their examination by resolution professional
“(1) Any creditor mentioned in the order of the Adjudicating Authority under section 84 to whom a qualifying debt is owed
may, within a period of ten days from the date of receipt of the order under section 84, object only on the following grounds,
namely: –
(a)inclusion of a debt as a qualifying debt; or
(b) incorrectness of the details of the qualifying debt specified in the order under section 84.
(2) A creditor may file an objection under sub-section (1) by way of an application to the resolution professional.
(3) The application under sub-section (2) shall be supported by such information and documents as may be prescribed.
(4) The resolution professional shall consider every objection made under this section.
(5) The resolution professional shall examine the objections under sub-section (2 ) and either accept or reject the objections,
within ten days of the date of the application.
(6) The resolution professional may examine on any matter that appears to him to be relevant to the making of a final list of
qualifying debts for the purposes of section 92.
(7) On the basis of the examination under sub-section (5) or sub-section (6), the resolution professional shall –
(a) prepare an amended list of qualifying debts for the purpose of the discharge order;
(b)make an application to the Adjudicating Authority for directions under section 90; or
(c) take any other steps in relation to the debtor.”
VL Note : –
Section 87 Application against decision of resolution professional.
“(1) The debtor or the creditor who is aggrieved by the action taken by the resolution professional under section 86, may,
within ten days of such decision, make an application to the Adjudicating Authority challenging such action on any of the
following grounds, namely: –
(a)that the resolution professional has not given an opportunity to the debtor or the creditor to make a representation;
or
(b) that the resolution professional colluded with the other party in arriving at the decision; or
(c) that the resolution professional has not complied with the requirements of section 86.
(2) The Adjudicating Authority shall decide the application referred to in sub-section (1) within fourteen days of such
application and make an order as it deems fit.
(3) Where the application under sub-section (1) has been allowed by the Adjudicating Authority, it shall forward its order to
the Board and the Board may take such action as may be required under Chapter VI of Part IV against the resolution
professional.”
VL Note : –
Section 88 General duties of debtor
“The debtor shall –
(a) make available to the resolution professional all information relating to his affairs, attend meetings and comply with the
requests of the resolution professional in relation to the fresh start process (b) inform the resolution professional as soon as
reasonably possible of –
(i) any material error or omission in relation to the information or document supplied to the resolution professional; or
(ii) any change in financial circumstances after the date of application, where such change has an impact on the fresh
start process.”
VL Note : –
Section 89 Replacement of resolution professional
“(1) Where the debtor or the creditor is of the opinion that the resolution professional appointed under section 82 is required
to be replaced, he may apply to the Adjudicating Authority for the replacement of such resolution professional.
(2) The Adjudicating Authority shall within seven days of the receipt of the application under sub-section (1) make a
reference to the Board for replacement of the resolution professional.
(3) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (2),
recommend the name of insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are
pending.
(4) The Adjudicating Authority shall appoint another resolution professional for the purposes of the fresh start process on the
basis of the recommendation by the Board.
(5) The Adjudicating Authority may give directions to the resolution professional replaced under sub-section (4) –
(a) to share all information with the new resolution professional in respect of the fresh start process; and
(b)to co-operate with the new resolution professional in such matters as may be required”
VL Note : –
Section 90 Directions for compliances of restrictions, etc
“(1) The resolution professional may apply to the Adjudicating Authority for any of the following directions, namely: –
(a) compliance of any restrictions referred to in sub-section (3) of section 85, in case of non-compliance by the debtor;
or
(b) compliance of the duties of the debtor referred to in section 88, in case on noncompliance by the debtor.
(2) The resolution professional may apply to the Adjudicating Authority for directions in relation to any other matter under
this Chapter for which no specific provisions have been made.”
VL Note : –
Section 91 Revocation of order admitting application
“(1) The resolution professional may submit an application to the Adjudicating Authority seeking revocation of its order made
under section 84 on the following grounds, namely: –
(a) if due to any change in the financial circumstances of the debtor, the debtor is ineligible for a fresh start process; or
(b) non-compliance by the debtor of the restrictions imposed under sub-section (3) of section 85; or
(c) if the debtor has acted in a mala fide manner and has wilfully failed to comply with the provisions of this Chapter.
(2) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (1), may by
order admit or reject the application.
(3) On passing of the order admitting the application referred to in sub-section (1), the moratorium and the fresh start
process shall cease to have effect.
(4) A copy of the order passed by the Adjudicating Authority under this section shall be provided to the Board for the purpose
of recording an entry in the register referred to in section 196.”
VL Note : –
| “(1) The resolution professional shall prepare a final list of qualifying debts and submit such list to the Adjudicating Authority at least seven days before the moratorium period comes to an end. (2) The Adjudicating Authority shall pass a discharge order at the end of the moratorium period for discharge of the debtor from the qualifying debts mentioned in the list under sub-section ( 1 ). (3) Without prejudice to the provisions of sub-section (2), the Adjudicating Authority shall discharge the debtor from the following liabilities, namely: – (a) penalties in respect of the qualifying debts from the date of application till the date of the discharge order; (b) interest including penal interest in respect of the qualifying debts from the date of application till the date of the discharge order; and (c) any other sums owed under any contract in respect of the qualifying debts from the date of application till the date of the discharge order. (4) The discharge order shall not discharge the debtor from any debt not included in sub-section (2) and from any liability not included under sub-section (3). (5) The discharge order shall be forwarded to the Board for the purpose of recording an entry in the register referred to in section 196. (6) A discharge order under sub-section (2) shall not discharge any other person from any liability in respect of the qualifying debts.” VL Note : – |
Section 93 Standard of conduct
| “The resolution professional shall perform his functions and duties in compliance with the code of conduct provided under section 208”
VL Note : – |