Corporate & insolvency

Company law, directors, NCLT and the insolvency code.

Questions advocates ask about Corporate & insolvency

An insolvency application under the Insolvency and Bankruptcy Code needs a default of at least ₹1 crore and is subject to the Limitation Act. A member who complains of oppression or mismanagement goes to the NCLT under section 241 of the Companies Act, 2013, but must first meet the eligibility test in section 244.

Who can start insolvency proceedings against a company, and what default is needed?

A financial creditor can apply under section 7, an operational creditor under section 9, and the company itself under section 10. The default must be at least ₹1 crore, the threshold in force since 24 March 2020. An operational creditor must first serve a demand notice under section 8 and may apply only if the debt is not paid, or no dispute is raised, within ten days. The Supreme Court has held that an operational creditor's application is to be rejected where a genuine dispute about the debt already existed before the demand notice.

Insolvency and Bankruptcy Code, 2016, ss. 4, 7, 8, 9, 10; Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353

Is there a time limit for filing an application?

Yes. The Limitation Act applies to applications under the Code, so an application under section 7 or 9 must ordinarily be filed within three years of the date of default. A written acknowledgment of the debt signed before that period ends gives a fresh period.

Insolvency and Bankruptcy Code, 2016, s. 238A; Limitation Act, 1963, Article 137 and s. 18; B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633

How long does the resolution process run?

Section 12 sets 180 days from the date of admission. The Adjudicating Authority may extend this once by up to 90 days if the committee of creditors approves it by a vote of 66% of the voting share, and since the 2019 amendment the outer limit, including time spent in litigation, is 330 days. The Supreme Court has dealt with how strictly the limit applies in particular cases, so check the latest decision before arguing for or against an extension.

Insolvency and Bankruptcy Code, 2016, s. 12

Does the moratorium stop a cheque bounce case?

Against the company, yes. From the date of the insolvency commencement order, section 14 bars the institution or continuation of suits and proceedings against the corporate debtor. The Supreme Court has held that proceedings under section 138 of the Negotiable Instruments Act against the corporate debtor are covered by the moratorium, but proceedings against its directors and other persons who are not the corporate debtor are not.

Insolvency and Bankruptcy Code, 2016, s. 14; P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SCC 258

Is a personal guarantor freed when the company's resolution plan is approved?

No. The Supreme Court has upheld the notification bringing personal guarantors to corporate debtors within the Code, and held that approval of a resolution plan does not by itself discharge the guarantor, because a guarantee is a separate contract. The creditor can proceed against the guarantor separately.

Insolvency and Bankruptcy Code, 2016, Part III and s. 60(2); Lalit Kumar Jain v. Union of India, (2021) 9 SCC 321

Who can petition the NCLT for oppression and mismanagement?

Section 241 lets members complain that the affairs of the company are being conducted in a manner prejudicial to the public interest, oppressive or prejudicial to a member, or prejudicial to the interests of the company. For a company with share capital, the petitioners must be at least 100 members or one-tenth of the total number of members, whichever is less, or members holding at least one-tenth of the issued share capital. The Tribunal may waive these requirements on an application. If it finds oppression it can regulate the company's affairs, restrain a transaction, or order a buy-out of shares, among other reliefs.

Companies Act, 2013, ss. 241, 242, 244

Prepared by The EduLaw Editorial Team on 5 November 2026. It has not yet been reviewed by a named advocate. Educational content, not legal advice; check the current text of each provision before relying on it.

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