Appearance before other Regulatory and Quasi-judicial Authorities: formula sheet

Key formulas

Section 7: financial creditor

Default occurred → application (alone or jointly) → record of default (information utility or other evidence) + name of proposed IRP + other specified information → AA ascertains default within 14 days

Admit if default has occurred, application is complete and no disciplinary proceeding is pending against the proposed RP. Otherwise reject, after a 7-day notice to rectify.

Section 7: threshold for class creditors and allottees

Not less than 100 creditors or 10% of the class/project, whichever is less

Applies to financial creditors in the class under Section 21(6A)(a) and (b), and to allottees of the same real estate project, who must file jointly.

Section 7: communication

Order communicated within 7 days of admission or rejection

Admission order goes to financial creditor and corporate debtor. Rejection order goes to the financial creditor only.

Section 9: operational creditor

Demand notice/invoice (Section 8) → wait 10 days from delivery → no payment and no dispute notice → file application

Admission or rejection by the AA within 14 days of receipt of the application.

Section 9(3): documents

Invoice or demand notice copy + affidavit of no dispute notice + bank certificate (if available) + information utility record (if available) + other proof

The operational creditor may propose an RP to act as interim resolution professional.

Section 9(5): grounds for rejection

Incomplete application | payment made | no invoice/notice delivered | dispute notice or record of dispute | disciplinary proceeding pending against proposed RP

Notice to rectify within 7 days is required only before rejecting for incompleteness under clause (ii)(a).

Section 10: corporate applicant

Default by corporate debtor → application with books of account + proposed IRP + special resolution of shareholders (or resolution of at least three-fourths of partners)

AA must admit or reject within 14 days of receipt. Admit if complete and no disciplinary proceeding is pending against the proposed RP. Reject if incomplete or if one is pending.

Commencement

CIRP commences from the date of admission

Stated in Sections 7(6), 9(6) and 10(5).

Section 54B: pre-packaged process

IP proposed as RP prepares a report on whether the debtor meets Section 54A and the base resolution plan conforms to Section 54A(4)(c)

Duty begins on approval under Section 54A(2)(e). It ceases if the debtor fails to file in time or the application is admitted or rejected. Fees form part of pre-pack costs if admitted.

Core duty (Section 25(1))

RP's duty = preserve and protect assets + continue business operations

Quote this first in any answer. Section 25(2) actions are the means to achieve it.

Actions in Section 25(2)

(a) custody and control of assets and records; (b) represent the debtor; (c) interim finance with CoC approval; (d) appoint professionals; (e) updated list of claims; (f) convene and attend CoC meetings; (g) information memorandum; (h) invite resolution applicants; (i) present resolution plans to CoC; (j) avoidance applications; (k) other actions specified by the Board

Eleven clauses, (a) to (k). Group them as assets, representation, finance, claims, CoC and plans.

Interim finance

IRP: Section 20(2)(c), security over encumbered property needs secured creditors' consent. RP: Section 25(2)(c), subject to CoC approval under Section 28

Do not mix the two. The IRP's proviso waives consent where the property's value is at least twice the debt.

RP takes IRP's role

Section 23(2): RP exercises the powers and performs the duties of the IRP

This is the base for IRP versus RP questions.

Continuity of management

Section 23(1) proviso: RP continues to manage operations after the CIRP period ends until an order under Section 31(1) or appointing a liquidator under Section 34

Applies until the Adjudicating Authority passes the order.

Who may appear (Section 35(1))

Party or Director General → in person OR authorised CA / CS / CMA / legal practitioner / own officer

Authorisation can be of one or more persons. Authorisation is by the party or the Director General.

Condition for professionals

CA, CS, CMA must hold a certificate of practice under section 6(1) of their respective Act

A CS without a certificate of practice does not fit the definition in the Explanation.

Legal practitioner

Advocate, vakil or attorney of any High Court, including a pleader in practice

Definition in clause (d) of the Explanation.

Expert opinion (Section 35(2))

Party may call experts from economics, commerce, international trade or any other discipline

Inserted by Act 9 of 2023 w.e.f. 18-5-2023. It is without prejudice to sub-section (1).

Commission's procedure (Section 36)

Natural justice + own procedure + civil court powers (summons, documents, affidavit evidence, commissions)

Section 36(3) separately lets the Commission call experts to assist its inquiry.

General penalty cap (section 27(b))

Penalty ≤ 10% of average turnover or income of the last three preceding financial years

Applies to each person or enterprise party to the agreement or abusing dominance. Turnover means global turnover from all products and services.

Cartel penalty (proviso to section 27(b))

Up to the higher of: 3 × profit for each year of the agreement, or 10% of turnover or income for each year

Applies to each producer, seller, distributor, trader or service provider in the cartel.

Dominant position (section 4 Explanation)

Position of strength in the relevant market in India enabling independence from competitive forces or affecting competitors, consumers or the market in its favour

Dominance itself is not an offence. Only its abuse is.

Settlement window (section 48A)

After receipt of DG report under section 26(4) and before the cut-off set by regulations before an order under section 27 or 28

Available for section 3(4) and section 4 inquiries only. No appeal under section 53B against a settlement order. Amounts go to the Consolidated Fund of India.

District Commission pecuniary limit (section 34)

Value of goods or services paid as consideration ≤ ₹1 crore

The Central Government may prescribe another value. Always say this proviso exists.

State Commission pecuniary limit (section 47)

₹1 crore < consideration paid ≤ ₹10 crore

Also hears complaints against unfair contracts where consideration does not exceed ₹10 crore, and appeals from District Commissions in the State.

National Commission pecuniary limit (section 58)

Consideration paid > ₹10 crore

Also hears complaints against unfair contracts above ₹10 crore, appeals against State Commission orders and appeals against Central Authority orders.

Territorial jurisdiction (sections 34(2) and 47(4))

Where opposite party resides, carries on business, has a branch office or works for gain; or where cause of action arises wholly or in part; or where complainant resides or personally works for gain

If there are several opposite parties, each must reside or work there, or any one can be used with the Commission's permission.

Complaints to authorities (section 17)

Class-wide complaint → District Collector, regional Commissioner or Central Authority

May be in writing or in electronic mode. Covers consumer rights violations, unfair trade practices and misleading advertisements prejudicial to consumers as a class.

Directions on a misleading advertisement (Section 21(1))

Investigation → advertisement false or misleading and prejudicial to consumers → order to discontinue or modify, within a specified time

Directions can go to the trader, manufacturer, endorser, advertiser or publisher.

Penalty on manufacturer or endorser (Section 21(2))

First contravention: up to ₹10,00,000. Each subsequent contravention: up to ₹50,00,000

These are maximum limits. The Authority must first think a penalty is necessary.

Prohibition on endorser (Section 21(3))

First: up to 1 year. Each subsequent contravention: up to 3 years

It bars endorsing any product or service for that period.

Penalty on publisher or party to publication (Section 21(4))

Up to ₹10,00,000

Applies to a person who publishes, or is a party to publishing, a misleading advertisement.

Endorser defence (Section 21(5))

No penalty under Section 21(2) and (3) if due diligence was exercised to verify the claims

Due diligence protects only against those two sub-sections.

Ordinary course of business defence (Section 21(6))

No penalty if the advertisement was published or arranged in the ordinary course of business

Not available if the person knew of the Authority's earlier order for withdrawal or modification.

Factors for fixing penalty (Section 21(7))

Population and area affected; frequency and duration; vulnerability of the class affected; gross revenue from sales due to the offence

Remember as four factors.

Hearing (Section 21(8))

Opportunity of being heard before any order under Section 21

Natural justice is mandatory.

Quick revision

• Section 25 IBC: the resolution professional must preserve and protect the corporate debtor's assets, including continued business operations.
• Under section 25, the resolution professional takes immediate custody and control of assets and business records.
• The resolution professional raises interim finances only with the committee of creditors' approval under section 28.
• The resolution professional prepares the information memorandum under section 29 and presents all resolution plans to the committee of creditors.
• Section 31 IBC: an approved plan binds the corporate debtor, employees, members, creditors, the Central and State Governments, local authorities, guarantors and other stakeholders.
• After approval under section 31, the moratorium ceases and the resolution professional forwards records to the Board.
• Section 31(4): the resolution applicant must obtain necessary approvals within one year of approval, or the period in the relevant law, whichever is later.
• Proviso to section 31(4): if a plan contains a combination, CCI approval is needed before the committee of creditors approves the plan.
• Section 54B: the insolvency professional first reports on whether the debtor meets section 54A and whether the base plan conforms.
• Section 54F: the resolution professional in the pre-packaged process confirms the list of claims and monitors management of the debtor.
• Section 35 Competition Act: a party or the Director General may appear in person or authorise a chartered accountant, company secretary, cost accountant, legal practitioner or an officer.
• Section 35(2): a party may call experts from fields such as economics, commerce or international trade to give an expert opinion.

Common mistakes

• Saying CIRP starts on the date of filing. Fix: State that CIRP commences from the date of admission under Sections 7(6), 9(6) and 10(5).
• Giving the 7-day rectification notice for every rejection ground under Section 9. Fix: Under Section 9 the notice is tied to rejection for an incomplete application, clause (ii)(a). A paid debt or a dispute notice cannot be cured by rectification. Sections 7 and 10 require the notice before rejection generally.
• Treating Section 25 as the section on the IRP's duties. Fix: Section 18 is the IRP's duties, Section 20 the IRP's going concern powers, Section 25 the RP's duties.
• Saying the RP can raise interim finance without anyone's approval. Fix: Section 25(2)(c) makes the RP's interim finance subject to CoC approval under Section 28.
• Saying any company secretary can appear before the CCI. Fix: Add that the CS must hold a certificate of practice under section 6(1) of the Company Secretaries Act, 1980.
• Writing that only advocates may appear. Fix: Quote the full list, including CAs, CSs, cost accountants and the party's own officers.
• Treating dominance as illegal in itself. Fix: Write that only abuse of dominant position is prohibited, and then match the conduct to section 4(2).
• Applying the 10% cap to cartels without the proviso. Fix: For cartels, state up to three times profit per year or 10% of turnover per year, whichever is higher.
• Deciding the forum by the compensation claimed. Fix: Use only the value of goods or services paid as consideration. Say so in your answer.
• Putting exactly ₹1 crore or exactly ₹10 crore in the wrong tier. Fix: Consideration up to and including ₹1 crore is District. Above ₹1 crore up to and including ₹10 crore is State. Above ₹10 crore is National.

Exam tips

• Start every answer with the section and the type of applicant. Examiners reward correct identification first.
• Quote the numbers exactly: 14 days, 7 days, 10 days, 100 creditors or 10%. Do not mix them. Remember that the 14 days in Section 7 is for ascertaining default, while in Sections 9 and 10 it is for admitting or rejecting.
• Always address the proposed resolution professional and any pending disciplinary proceeding, because it is a ground for rejection in Sections 7, 9 and 10.
• Remember the rectification notice: in Section 9 it is given only before rejecting for incompleteness, whereas Sections 7 and 10 give notice before rejection generally.
• In drafting questions, list the annexures required under the relevant section: the resolution under Section 10, the record of default under Section 7, and the affidavit under Section 9.
• Finish with the conclusion and the date CIRP commences. Briefly mention the appeal to NCLAT if the question asks about remedies.
• Begin with Section 25(1) in your own words. Examiners look for the purpose first, then the list.
• Cite clause numbers from Section 25(2) next to each duty. Do this only for clauses you are sure of.