IBC (Insolvency and Bankruptcy Code)

Our Recovery of Debt Services are :-

There are Lakhs of aggrieved persons viz Financial and Operational Creditors all over the Country whose payment is pending from the Debtors, Financial Institutions and the real-estate agencies and they have not paid the dues of the abovesaid aggrieved persons till date. After the action was taken, many aggrieved persons and the companies came out seeking solution for the same. As a result of which, the government of India has enacted the Insolvency and Bankruptcy Code, 2016, wherein it provides a chance to both the operational and the financial creditors to approach the NCLT and file the necessary application under Section 7 and Section 9 of the IBC for recovery of their unpaid debt.

Initiation of Corporate Insolvency Resolution Process by Financial Creditor : Section 7 of IBC
Application for initiation of corporate insolvency resolution process by operational creditor: Section 9 of IBC.
Summary Suit ( Order 37 of the Code of Civil Procedure Code, 1908)
Section 138 of Negotiable Instruments Act, 1881 ( Cheque Bounce cases)

Eligible Criteria to file Recovery of Debt cases :-

1. In case of Initiation of Corporate Insolvency Resolution Process by Financial Creditor, the Financial Creditor should owe the financial debt and the debt should be legally assigned to him and transferred. The Term “Financial Creditor” includes Banks, Financial Institutions, Homebuyers, Enterprise, Corporate Entity or Company (Section 7 of the IBC).

According to Sub-section (1) of the Act, the Financial Creditor either by itself or jointly with other financial creditors may file an application for Initiating the Corporate Insolvency Resolution Process against a corporate debtor when a default has occurred. The Adjudicating Authority shall within 14 days of the receipt of the application under sub-section (2), ascertain the existence of the default from the records of the information utility or on the basis of the evidence furnished by the financial creditor under sub-section (3).

Also, 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.

2. In case of Initiation of Corporate Insolvency Resolution Process by the Operational Creditor, the Operational Creditor should owe the financial debt and the debt should be legally assigned to him and transferred. The term “Operational Creditor” includes Manfacturers, Traders, Employees (Section 9 of the IBC).

After the expiry of the period of 10 days from the date of delivery of the notice or the invoice demanding payment under (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or the dispute under sub-

Section (2) of section 8, the operational creditor may file an application before the adjudicating authority for initiating the Cirp process.

The Adjudicating authority shall within 14 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 corporate debtor if,

The application made under sub-section (2) is complete.
There is no repayment of the unpaid operational debt.
The invoice or notice for payment to the corporate debtor has been delivered by the operational creditor.
No notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and
There is no disciplinary proceedings pending against any resolution professional proposed under sub-section (4).

II) Reject the Application and communicate such decision to the operational creditor and the corporate debtor, if-

The application made under sub-section (2) is incomplete.
There has been repayment of the unpaid operational debt.
The Creditor has not delivered the invoice or notice for payment to the corporate debtor.
Notice of dispute has been received by the operational creditor or there is a record in the information utility.
Any disciplinary proceeding is pending against any proposed resolution professional.

3. In case of the Summary Suit under Order 37 of the Code of Civil Procedure, 1908, the Creditor shall file the Summary Suit in the respective courts having jurisdiction if there is a suit upon Bills of Exchange, Hundies and Promissory Notes.

Suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising:

On a Written Contract
On an Enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of the debt other than a penalty; or
On a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

4. Section 138 of Negotiable Instruments Act, 1881 (Cheque Bounce Recovery Case): If the customer delays the payment through cheque then the seller can file the suit against the customer under Section 138 of the Negotiable

Instruments Act, 1881.

Under Section 138, a legal notice is sent to the customer regarding the bouncing of the cheque and if he does not pay within 30 days, then the seller can file the suit against the customer under Section 138 of the NI Act regarding non-payment of the payment.

Documents Required For Recovery Of Financial And Operational Debt Through Insolvency :-

Demand Notice (form 3 and form 4 – IBBI Rules)
Company’s Ledger Account
Copy of the Invoices showing proof of transactions between the two parties
Bank Statements of the Operational/ Financial Creditor
Affidavit by the Operational creditor Section 9 (3) (b) –IBBI Rules
Acknowledgement of Transaction between 2 parties
Copy of the Emails exchanged between 2 parties
Copy of the Legal Notice served by the Operational/ Financial Creditor
Affidavit – Bank Certificate – (Section 9 of IBBI Rules) ( Not Mandatory)

Comparison between Section 7 and Section 9 of the IBC, Summary Suit (Order 37 of the Cpc, 1908) and Section 138 of the Negotiable Instruments Act, 1881

Comparison Basis	Section 7 of IBC	Section 9 of IBC	Summary Suit (Order 37 of Cpc, 1908)	Section 138 of NI Act, 1881
Claim Amount	Minimum Amount is Rs. 1 lac	Minimum Amount is Rs. 1 lac	It is prescribed as per the Code of Civil Procedure, 1908.	It is prescribed as per the NI Act, 1881.
Limitation Period	It is 3 years from the date when the debt has become due.	It is 3 years from the date when the debt has become due.	The limitation is prescribed as per the	45 days is the time period for filing the case in the Concerned Court when the cheque has been bounced.
Total time-frame	6 months (Approx.)	6 months (Approx.)	3-4 months (Approx.)	6 months- 1 year (It can vary)
Type of Persons availing the Services	Homebuyers, Financial Institutions, Banks etc. (They all are termed as Financial Creditors)	Employees, Traders, Manfacturers (They all are termed as Financial Creditors)	Manfacturers, Traders, Buisnessmen and any other person dealing in goods and services.	Any person whose cheque has been bounced by the Bank due to insufficient funds on payment by the debtor.
Court Fees to be Paid	Rs. 25,000	Rs. 2,000	It is prescribed as per the Amount of claim.	It is prescribed as per the Amount of claim.