4.Chapter 4
Learning Outcomes
Understand the meaning and mechanism of Fresh Start Process.
Understand the provisions related to Insolvency Resolution Process and Bankruptcy Order for Individuals and Partnership firms.
Understand the provisions related to Debt Recovery Tribunal and Debt Recovery Appellate Tribunal.
Understand Offences and penalties under the Code.
Introduction
Part III of the Insolvency and Bankruptcy Code, 2016 (sections 78-187) deals with Insolvency Resolution and Bankruptcy for individuals and partnership firms.
These provisions have been notified for personal guarantors to corporate debtors.
MCA issued Rules and IBBI issued Regulations, effective from December 1, 2019, to facilitate smooth implementation.
Key regulations and rules:
The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019
The Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019
Unlike Part III, matters for personal guarantors go before the National Company Law Tribunal (NCLT).
Section 2 of the Code applies to personal guarantors to corporate debtors as a distinct category from individuals.
Preliminary Application [Section 78]
Applies to:
Fresh start process
Insolvency Resolution Process
Bankruptcy Process
Minimum default amount: , but the Central Government can specify a higher amount, up to .
Definition (Section 79)
(1) Adjudicating Authority:
Debt Recovery Tribunal (DRT) constituted under section 3(1) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993.
(2) Associate of the debtor:
(a) Immediate family member.
(b) Relative of the debtor or their spouse.
(c) Partner of the debtor.
(d) Spouse or relative of the debtor's partner.
(e) Employer or employee of the debtor.
(f) Trustee of a trust benefiting the debtor.
(g) Company where the debtor (with associates) owns over 50% of share capital or controls the board of directors.
Explanation: "Relative" refers to members of a Hindu Undivided Family or those related as prescribed.
Regulation 2(a) of the IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
“Associate” in relation to a creditor, a bankruptcy trustee or professionals appointed by the bankruptcy trustee, shall have the same meaning as assigned to it in relation to a debtor in sub-section (2) of section 79, as may be applicable.
(3) Bankrupt:
(a) Debtor adjudged bankrupt by Bankruptcy Order under Section 126.
(b) Each partner of a firm, where a bankruptcy order has been made against the firm under section 126.
(c) Any person adjudged as an Undischarged insolvent.
(4) Bankruptcy:
The state of being bankrupt.
(5) Bankruptcy Debts:
(a) Any debt owed by the bankrupt on the Bankruptcy Commencement Date.
(b) Any debt for which the bankrupt may become liable after the bankruptcy commencement date but before discharge due to transactions before the commencement date.
(c) Any interest which is part of the debt under section 171.
(6) Bankruptcy Commencement Date:
Date on which a bankruptcy order is passed by the Adjudicating Authority under section 126.
(7) Bankruptcy Order:
Order passed by the Adjudicating authority under section 126.
(8) Bankruptcy Process:
Process against a debtor under Chapters IV and V of this part.
(9) Bankruptcy Trustee:
Insolvency Professional appointed as trustee for the estate of the bankrupt under section 125.
(11) Committee of Creditors:
Committee constituted under section 134.
(12) Debtor:
Includes a judgement-debtor.
(13) Discharge Order:
Order passed by Adjudicating Authority discharging the debtor under section 92, 119 and section 138.
(14) Excluded Assets:
(a) Unencumbered tools, books, vehicles, and equipment necessary for personal use or employment.
(b) Unencumbered furniture, household equipment, and provisions for basic domestic needs.
(c) Unencumbered personal ornaments of prescribed value, in accordance with religious usage (not exceeding `1 lakh as per Rule 5).
(d) Unencumbered life insurance policy or pension plan in the name of the debtor or immediate family.
(e) An unencumbered single dwelling unit owned by the debtor of prescribed value.
Urban area: not exceeding `20 lakh (as per Rule 5).
Rural area: not exceeding `10 lakh (as per Rule 5).
Unencumbered means free of debt or other financial liability.
(15) Excluded Debts:
Liability to pay a fine imposed by a court or tribunal.
Liability to pay damages for negligence, nuisance, or breach of a statutory, contractual, or other legal obligation.
Liability to pay maintenance under any law.
Liability in relation to a student loan.
Any other debt as may be prescribed.
(16) Firm:
A body of individuals carrying on business in partnership, whether or not registered under section 59 of the Indian Partnership Act, 1932.
(17) Immediate Family:
Debtor's spouse, dependent children, and dependent parents.
(18) Partnership Debt:
Debt for which all partners in a firm are jointly liable.
(19) Qualifying Debt:
Amount due, including interest or any other sum, under any contract, for a liquidated sum either immediately or at a certain future time.
Exclusions:
Excluded debt
Debt to the extent it is secured
Debt incurred 3 months prior to the application for fresh start process
(20) Repayment Plan:
Plan prepared by the debtor in consultation with the Resolution Professional under Section 105, proposing to the committee of creditors for restructuring debts or affairs.
(21) Resolution Professional:
An Insolvency Professional appointed under this part for conducting:
Fresh Start Process
Insolvency Resolution Process
(22) Undischarged Bankrupt:
A bankrupt who has not received a discharge order under section 138.
Fresh Start Process, Eligibility to Make Application [Section 80]
(1) A debtor unable to pay debts and fulfilling conditions in sub-section (2) can apply for a discharge of qualifying debts.
(2) Conditions for application:
(a) Gross annual income does not exceed .
(b) Aggregate asset value does not exceed .
(c) Aggregate qualifying debts do not exceed .
(d) Not an undischarged bankrupt.
(e) Does not own a dwelling unit.
(f) No subsisting fresh start, insolvency resolution, or bankruptcy process.
(g) No previous fresh start order in the preceding twelve months.
Application for Fresh Start Order [Section 81]
(1) Interim-moratorium commences on the filing date and ceases upon admission or rejection of the application.
(2) During the interim-moratorium, no legal action can be initiated, and pending actions are stayed.
(3) The application must be in the prescribed form, manner and with the prescribed fee.
(4) The application must include an affidavit with:
(a) List of all debts with amounts, interest, and creditor names.
(b) Interest payable and rates.
(c) List of security held for any debts.
(d) Financial information of the debtor and immediate family for the last two years.
(e) Debtor's personal details as prescribed.
(f) Reasons for making the application.
(g) Particulars of any legal proceedings commenced against the debtor.
(h) Confirmation that no previous fresh start order has been made in the preceding twelve months.
Appointment of Resolution Professional [Section 82]
(1) If the application is filed through a resolution professional, the Adjudicating Authority directs the Board within seven days to confirm no disciplinary proceedings are pending against the professional.
(2) The Board communicates to the Adjudicating Authority:
(a) Confirmation of the resolution professional's appointment; or
(b) Rejection of the appointment and nomination of a suitable alternative.
(3) If the application is filed by the debtor, the Adjudicating Authority directs the Board within 7 days to nominate a resolution professional.
(4) The Board nominates a resolution professional within 10 days of the Adjudicating Authority's direction described just above.
(5) The Adjudicating Authority appoints the resolution professional recommended or nominated by the Board.
(6) The resolution professional receives a copy of the fresh start application.
Examination of Application by Resolution Professional [Section 83]
(1) The resolution professional examines the application within 10 days of appointment and submits a report either recommending acceptance or rejection.
(2) The report details the:
(a) Qualifying debts
(b) Liabilities eligible for discharge under section 92(3).
(3) The resolution professional may request further information or explanations from the debtor or other relevant parties.
(4) The debtor or other person must provide the requested information within seven days.
(5) The resolution professional presumes the debtor cannot pay debts if:
(a) The application information indicates inability to pay.
(b) There is no perceived change in financial circumstances since the application date.
(6) The resolution professional rejects the application if:
(a) The debtor does not satisfy the conditions under section 80; or
(b) The debts are not qualifying debts; or
(c) The debtor made false statements or omissions.
(7) The resolution professional records the reasons for recommending acceptance or rejection and provides a copy to the debtor.
Admission or Rejection of Application by Adjudicating Authority [Section 84]
(1) Within 14 days of the report submission, the Adjudicating Authority may either admit or reject the application.
(2) The order accepting the application states the accepted qualifying debts and amounts eligible for discharge under section 92.
(3) Copies of the order and application are provided to the creditors within seven days.
Effect of Admission of Application [Section 85]
(1) A moratorium commences on the admission date.
(2) During the moratorium:
(a) Pending legal actions are stayed.
(b) Creditors cannot initiate legal actions (subject to section 86).
(3) During the moratorium, the debtor:
(a) Cannot act as a company director or participate in company management.
(b) Cannot dispose of assets.
(c) Must inform business partners about the fresh start process.
(d) Must disclose the fresh start process before significant financial transactions.
(e) Must disclose any different business names.
(f) Cannot travel outside India without the Adjudicating Authority's permission.
(4) The moratorium ceases after 180 days from the admission date unless revoked under section 91(2).
For Example: If Mohan Sharma’s application has been accepted on 5th March under these provisions, then moratorium period will start from 5th March and end on 180 days starting from 5th March. i.e, August 31 of the relevant year.
Objections by Creditors and their Examination by Resolution Professional [Section 86]
(1) Creditors may object within ten days of receiving the order under section 84 only on the grounds of:
(a) Inclusion of a debt as a qualifying debt
(b) Incorrectness of the debt details.
(2) Objections are filed via application to the resolution professional.
(3) The application must be supported by relevant information and documents.
(4) The resolution professional considers all objections.
(5) The resolution professional examines objections and accepts or rejects them within ten days.
(6) The resolution professional may examine other relevant matters for the final list of qualifying debts per section 92.
(7) Based on the examination, the resolution professional:
(a) Prepares an amended list of qualifying debts
(b) Applies to the Adjudicating Authority for directions under section 90
(c) Takes other necessary steps.
Application Against Decision of Resolution Professional [Section 87]
(1) Either the debtor or the creditor can make an application to the Adjudicating Authority challenging such action within ten days of such decision, on the following grounds:—
(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.
General Duties of Debtors [Section 88]
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.
Replacement of Resolution Professional [Section 89]
(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 an 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 as may be required.
Directions for Compliance of Restrictions etc [Section 90]
(1) The resolution professional may apply to the Adjudicating Authority for any of the following directions, —
(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 of non- compliance 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.
Revocation of Order Admitting Application [Section 91]
(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; .
(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.
Discharge Order [Section 92]
(1) The resolution professional shall prepare a final list of qualifying debts and submit such list to the Adjudicating Authority at least 7 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.
Standard of Conduct of Resolution Professional [Section 93]
The resolution professional shall perform his functions and duties in compliance with the code of conduct provided under section 208.
Insolvency Resolution Process for Non- Corporate Application by Debtor to Initiate Insolvency Resolution Process [Section 94]
(1) A debtor who commits a default may apply, either personally or through a resolution professional, to the Adjudicating Authority for initiating the insolvency resolution process, by submitting an application.
(2) Where the debtor is a partner of a firm, such debtor shall not apply under this Chapter to the Adjudicating Authority in respect of the firm unless all or a majority of the partners of the firm file the application jointly.
(3) An application under sub-section (1) shall be submitted only in respect of debts which are not excluded debts.
(4) A debtor shall not be entitled to make an application under sub-section (1) if he is—
(a) an undischarged bankrupt;
(b) undergoing a fresh start process;
(c) undergoing an insolvency resolution process; or
(d) undergoing a bankruptcy process
(5) A debtor shall not be eligible to apply under sub-section (1) if an application under this Chapter has been admitted in respect of the debtor during the period of 12 months preceding the date of submission of the application under this section.
(6) The application referred to in sub-section (1) shall be in the prescribed form and manner along with requisite fee.
As per Rule 6 of the IB (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019
(1) The application under sub-section (1) of section 94 shall be submitted in Form A, along with an application fee of two thousand rupees.
(2) The guarantor shall serve forthwith a copy of the application referred to in sub-rule (1) to every financial creditor and the corporate debtor for whom the guarantor is a personal guarantor.
Application by Creditor to Initiate Insolvency Resolution Process [Section 95]
(1) A creditor may apply either by himself, or jointly with other creditors, or through a resolution professional to the Adjudicating Authority for initiating an insolvency resolution process under this section by submitting an application.
(2) A creditor may apply under sub-section (1) in relation to any partnership debt owed to him for initiating an insolvency resolution process against—
(a) any one or more partners of the firm; or
(b) the firm.
(3) Where an application has been made against one partner in a firm, any other application against another partner in the same firm shall be presented in or transferred to the Adjudicating Authority in which the first mentioned application is pending for adjudication and such Adjudicating Authority may give such directions for consolidating the proceedings under the applications as it thinks just. For example when any application against partner A with AA at Chandigarh has been made and another application against partner B with AA at Jaipur (both are partners of the same firm) under this provision is made. Then, AA can transfer the application against Partner B to Chandigarh, where the first application towards partner A was made.
(4) An application under sub-section (1) shall be accompanied with details and documents relating to:
(a) the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application;
(b) the failure by the debtor to pay the debt within a period of 14 days of the service of the notice of demand; and
(c) relevant evidence of such default or non-repayment of debt.
(5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor.
(6) The application referred to in sub-section (1) shall be in prescribed form and manner along with requisite fee.
(7) The details and documents required to be submitted under sub-section (4) shall be such as may be specified.
As per Rule 7 of the IB (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019
(1) A demand notice under clause (b) of sub-section (4) of section 95 shall be served on the guarantor demanding payment of the amount of default, in Form B.
(2) The application under sub-section (1) of section 95 shall be submitted in Form C, along with a fee of two thousand rupees
(3) The creditor shall serve forthwith a copy of the application referred to in sub-rule (2) to the guarantor and the corporate debtor for whom the guarantor is a personal guarantor.
(4) In case of a joint application, the creditors may nominate one amongst themselves to act on behalf of all the creditors.
Interim- Moratorium [Section 96]
(1) When an application is filed under section 94 or section 95—
(a) an interim-moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application; and
(b) during the interim-moratorium period—
(i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed;
(ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt.
(2) Where the application has been made in relation to a firm, the interim-moratorium under sub-section (1) shall operate against all the partners of the firm as on the date of the application.
(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
Appointment of Resolution Professional [Section 97]
(1) If the application under section 94 or 95 is filed through a resolution professional, the Adjudicating Authority shall direct the Board within seven days of the date of the application to confirm that there are no disciplinary proceedings pending against resolution professional.
(2) The Board shall within seven days of receipt of directions under sub-section (1) communicate to the Adjudicating Authority in writing either—
(a) confirming the appointment of the resolution professional; or
(b) rejecting the appointment of the resolution professional and nominating another resolution professional for the insolvency resolution process.
(3) Where an application under section 94 or 95 is filed by the debtor or the creditor himself, as the case may be, and not through the resolution professional, the Adjudicating Authority shall direct the Board, within seven days of the filing of such application, to nominate a resolution professional for the insolvency resolution 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 under sub-section (2) or as nominated by the Board under sub-section (4).
(6) A resolution professional appointed by the Adjudicating Authority under sub-section (5) shall be provided a copy of the application for insolvency resolution process.
Replacement of Resolution Professional [Section 98]
(1) Where the debtor or the creditor is of the opinion that the resolution professional appointed under section 97 is required to be replaced, he may apply to the Adjudicating Authority for the replacement of the 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 the resolution professional to the Adjudicating Authority against whom no disciplinary proceedings are pending.
(4) Without prejudice to the provisions contained in sub-section (1), the creditors may apply to the Adjudicating Authority for replacement of the resolution professional where it has been decided in the meeting of the creditors, to replace the resolution professional with a new resolution professional for implementation of the repayment plan.
(5) Where the Adjudicating Authority admits an application made under sub-section (1) or sub- section (4), it shall direct the Board to confirm that there are no disciplinary proceedings pending against the proposed resolution professional.
(6) The Board shall send a communication within ten days of receipt of the direction under sub- section (5) either—
(a) confirming appointment of the nominated resolution professional; or
(b) rejecting appointment of the nominated resolution professional and recommend a new resolution professional.
(7) On the basis of the communication of the Board under sub-section (3) or sub-section (6) , the Adjudicating Authority shall pass an order appointing a new resolution professional.
(8) The Adjudicating Authority may give directions to the resolution professional replaced under sub-section (7)—
(a) to share all information with the new resolution professional in respect of the insolvency resolution process; and
(b) to co-operate with the new resolution professional in such matters as may be required.
Submission of Report by Resolution Professional [Section 99]
(1) The resolution professional shall examine the application referred to in section 94 or section 95, as the case may be, within ten days of his appointment, and submit a report to the Adjudicating Authority recommending for approval or rejection of the application.
(2) Where the application has been filed under section 95, the resolution professional may require the debtor to prove repayment of the debt claimed as unpaid by the creditor by furnishing—
(a) evidence of electronic transfer of the unpaid amount from the bank account of the debtor;
(b) evidence of encashment of a cheque issued by the debtor; or
(c) a signed acknowledgment by the creditor accepting receipt of dues.
(3) Where the debt for which an application has been filed by a creditor is registered with the information utility, the debtor shall not be entitled to dispute the validity of such debt.
(4) For the purposes of examining an application, the resolution professional may seek such further information or explanation in connection with the application as may be required from the debtor or the creditor or any other person who, in the opinion of the resolution professional, may provide such information.
(5) The person from whom information or explanation is sought under sub-section (4) shall furnish such information or explanation within seven days of receipt of the request.
(6) The resolution professional shall examine the application and ascertain that—
(a) the application satisfies the requirements set out in section 94 or 95;
(b) the applicant has provided information and given explanation sought by the resolution professional under sub-section (4).
(7) After examination of the application under sub-section (6), he may recommend acceptance or rejection of the application in his report.
(8) Where the resolution professional finds that the debtor is eligible for a fresh start under Chapter II, the resolution professional shall submit a report recommending that the application by the debtor under section 94 be treated as an application under section 81 by the Adjudicating Authority.
(9) The resolution professional shall record the reasons for recommending the acceptance or rejection of the application in the report under sub-section (7)
(10) The resolution professional shall give a copy of the report under sub-section (7) to the debtor or the creditor, as the case may be.
Admission or Rejection of Application [Section 100]
(1) The Adjudicating Authority shall, within fourteen days from the date of submission of the report under section 99 pass an order either admitting or rejecting the application referred to in section 94 or 95, as the case may be.
(2) Where the Adjudicating Authority admits an application under sub-section (1), it may, on the request of the resolution professional, issue instructions for the purpose of conducting negotiations between the debtor and creditors and for arriving at a repayment plan.
(3) The Adjudicating Authority shall provide a copy of the order passed under sub-section (1) along with the report of the resolution professional and the application referred to in section 94 or 95, as the case may be, to the creditors within seven days from the date of the said order.
(4) If the application referred to in section 94 or 95, as the case may be, is rejected by the Adjudicating Authority on the basis of report submitted by the resolution professional that the application was made with the intention to defraud his creditors or the resolution professional, the order under sub-section (1) shall record that the creditor is entitled to file for a bankruptcy order under Chapter IV.
Moratorium [Section 101]
(1) When the application is admitted under section 100, a moratorium shall commence in relation to all the debts and shall cease to have effect at the end of the period of one hundred and eighty days beginning with the date of admission of the application or on the date the Adjudicating Authority passes an order on the repayment plan under section 114, whichever is earlier.
(2) During the moratorium period—
(a) any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed;
(b) the creditors shall not initiate any legal action or legal proceedings in respect of any debt; and
(c) the debtor shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein;
(3) Where an order admitting the application under section 96 has been made in relation to a firm, the moratorium under sub-section (1) shall operate against all the partners of the firm.
(4) The provisions of this section shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
Public Notice and Claims From Creditors [Section 102]
(1) The Adjudicating Authority shall issue a public notice within seven days of passing the order under section 100 inviting claims from all creditors within twenty-one days of such issue.
(2) The notice under sub-section (1) shall include—
(a) details of the order admitting the application;
(b) particulars of the resolution professional with whom the claims are to be registered; and
(c) the last date for submission of claims.
(3) The notice shall be—
(a) published in at least one English and one vernacular newspaper which is in circulation in the state where the debtor resides;
(b) affixed in the premises of the Adjudicating Authority; and
(c) placed on the website of the Adjudicating Authority.