Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Corporate and Economic Laws

Insolvency, Competition and Other Economic Laws for CA Final IBS

Updated 5 October 2026 · Fact-checked

This topic covers three economic laws. IBC resolves corporate insolvency through CIRP, run by an NCLT-appointed resolution professional and a committee of creditors. The Competition Act curbs anti-competitive agreements, abuse of dominance and harmful combinations. PMLA targets laundering of crime proceeds. Solve cases by identifying the law, the trigger, the authority, and the consequence.

Understand Insolvency, Competition and Other Economic Laws

These laws protect the economy in different ways. IBC deals with a company that cannot pay its debts. The Competition Act deals with firms that distort markets. PMLA deals with people who hide the origin of money earned from crime. In Paper 6, one case study often mixes them with audit, tax and strategy.

IBC (Insolvency and Bankruptcy Code, 2016). A corporate debtor that defaults can be taken to the NCLT (the Adjudicating Authority) by a financial creditor, an operational creditor or the corporate debtor itself. Once the application is admitted, the CIRP starts and a moratorium begins. The moratorium bars suits, recovery actions and the transfer of the debtor's assets, subject to the exceptions the Code provides. An interim resolution professional (IRP) takes over management, and the board's powers are suspended. The IRP invites claims through a public announcement, verifies them, and then forms the committee of creditors (CoC) from the financial creditors. The CoC consists only of financial creditors, and only they have voting rights. Operational creditors have no vote. They may attend CoC meetings without voting if their aggregate dues are not less than 10% of the debt. Representatives of workmen and employees may also attend, again without a vote. The CoC may confirm the IRP as the resolution professional (RP) or replace the IRP with another RP. The RP then conducts the rest of the process. Resolution applicants submit resolution plans. The RP examines them and places them before the CoC. The CoC approves a plan only by a vote of not less than 66% of the voting share. The NCLT then approves the plan that the CoC has approved. If the CoC resolves to liquidate, or no plan is approved, the company goes into liquidation.

Competition Act, 2002. The CCI regulates three things: anti-competitive agreements, abuse of dominant position, and combinations (mergers, acquisitions and amalgamations above prescribed thresholds). Agreements between enterprises engaged in identical or similar trade on price, output, market sharing or bid rigging are presumed to have an appreciable adverse effect on competition. The presumption can be rebutted. It is a presumption of adverse effect, not a finding of illegality. Dominance is not illegal. Misusing it is, for example through predatory pricing, denying market access or imposing unfair conditions. A combination above the notified thresholds needs CCI approval before it takes effect.

PMLA, 2002. Money laundering means dealing with proceeds of crime, such as concealing, possessing, acquiring, using or projecting them as untainted. Offences arise from "scheduled offences". The Enforcement Directorate investigates. Authorities can attach property. Banks, financial institutions and other reporting entities must keep records, verify client identity and report suspicious transactions to the Financial Intelligence Unit.

The exam rarely asks you to recite an Act. It gives a fact pattern and asks what happens next, who decides, and what the consequence is.

Key rules to remember

IBC: who can start CIRP: Financial creditor / Operational creditor / Corporate debtor → application to NCLT on default; Default must be of the minimum amount notified under the Code. Check the current threshold in the text supplied for your attempt.
CIRP sequence: Application → Admission by NCLT → Moratorium + IRP → Public announcement and claims → IRP verifies claims and forms CoC → Resolution applicants submit plans → RP verifies plans and places them before CoC → CoC vote → NCLT approval, else liquidation; Write the stages in this order in every descriptive answer.
Moratorium effect: No suits, no recovery, no transfer or encumbrance of assets, no termination or suspension of essential supplies during CIRP, subject to the exceptions in Section 14; State the effect, not just the word. Mention that exceptions exist, for example transactions notified by the regulator and guarantee sureties.
Competition Act: three pillars: Anti-competitive agreements + Abuse of dominant position + Combinations; Agreements and abuse are prohibited conduct. Combinations are regulated by prior approval.
Horizontal agreements: Price fixing, output limits, market or customer allocation, bid rigging → presumed appreciable adverse effect on competition; Presumption applies to agreements between enterprises engaged in identical or similar trade. It is a presumption of adverse effect, not of illegality, and it can be rebutted.
Combination test: Acquisition / merger / amalgamation that crosses the notified asset or turnover thresholds → notify CCI; Use the thresholds given in the question or supplied text. They are revised by notification, so do not rely on memory.
PMLA offence: Proceeds of crime from a scheduled offence + dealing with them (conceal, possess, acquire, use, project as untainted) = money laundering; No scheduled offence and no proceeds means no PMLA case.

How to solve Insolvency, Competition and Other Economic Laws questions

Use this method for any case question on insolvency, competition or PMLA.

1Identify which law is triggered: default on debt (IBC), market conduct or deal (Competition Act), or tainted money (PMLA).
2List the facts that matter: who the parties are, amounts, market positions, and what happened.
3Name the authority: NCLT, IRP/RP, CoC for IBC; CCI for competition; Enforcement Directorate or adjudicating authority for PMLA.
4Apply the test. For IBC, check default, applicant type and stage. For competition, classify as agreement, abuse or combination. For PMLA, check scheduled offence and proceeds.
5Add any exception or condition, such as moratorium limits, rebuttable presumption, or threshold not met.
6State the conclusion in one line, then the consequence or next step.
7Write in provision, facts, conclusion form so each part earns marks.

Quickest way: Three-question triage

When to use it: Use this for case-scenario MCQs and for opening a long answer when time is short.

Ask: what is the core event? Default, a deal or agreement, or illegal money.
Ask: who decides? NCLT and CoC, CCI, or ED. Often only one option fits.
Ask: what is the immediate consequence? Moratorium, approval or penalty risk, or attachment.
Eliminate options that mix laws, for example CCI approving a loan default case.
Check any threshold or time figure in the question before choosing.

Common mistakes in Insolvency, Competition and Other Economic Laws

Saying the board continues to manage the company during CIRP.
Students remember the moratorium but forget that management powers move to the IRP/RP.
Fix: Link admission to two effects: moratorium and IRP taking over. Write both.
Giving the committee of creditors operational creditors as voting members.
The word creditor is read loosely.
Fix: The CoC is made only of financial creditors, and only they vote. Operational creditors have no vote. They may attend meetings without voting if their aggregate dues are not less than 10% of the debt. Representatives of workmen and employees may also attend, without a vote.
Treating dominant position itself as an offence.
Students mix dominance with abuse.
Fix: Dominance is lawful. Only abuse, such as unfair or discriminatory pricing or conditions, is prohibited.
Assuming every agreement between competitors is automatically void or presumed illegal.
The presumption of adverse effect is read as a final verdict of illegality.
Fix: Say the appreciable adverse effect on competition is presumed for horizontal cartel-type agreements between enterprises in identical or similar trade, and the presumption can be rebutted.
Closing a combination before CCI approval because the parties already signed.
Students confuse signing with taking effect.
Fix: If thresholds are met, the combination cannot take effect until CCI approves it or the review period lapses as the Act provides.
Applying PMLA to any illegal act without a scheduled offence.
Money laundering is understood as any wrongdoing with money.
Fix: First confirm a scheduled offence and proceeds derived from it. Then test the dealing.

Worked examples

Example 1

Case: Alpha Ltd. defaults on a ₹2,00,00,000 term loan from Bank X. Bank X files a CIRP application with the NCLT, which admits it. The directors say they will keep running the business and will sell a factory to raise cash. Advise on the position.

Show the solution

Provision: a financial creditor can apply to the NCLT on default. On admission, a moratorium starts and an IRP is appointed.
Facts: Bank X is a financial creditor, the default exists, and the NCLT has admitted the application.
Management: the powers of the board are suspended and the IRP takes over running the company as a going concern. The directors cannot carry on as before.
Asset sale: the moratorium bars transfer or disposal of the corporate debtor's assets. The directors cannot sell the factory.
Next steps: claims are invited by public announcement, and the IRP verifies them and forms the CoC of financial creditors. The IRP is confirmed as RP by the CoC or replaced. Resolution applicants then submit plans, and the RP examines them and places them before the CoC.
Approval: the CoC must approve a plan by a vote of not less than 66% of the voting share. The NCLT then approves the plan the CoC has approved. If the CoC resolves to liquidate, or no plan is approved, liquidation follows.

Answer: The directors cannot continue management or sell the factory. The IRP controls the company and the moratorium bars the transfer. The IRP forms the CoC after verifying claims. The CoC approves a resolution plan by a vote of not less than 66% of the voting share, and the NCLT then approves that plan. If the CoC resolves to liquidate or no plan is approved, liquidation follows.

Exam tips

Write CIRP as a numbered sequence. Examiners reward correct order.
In case MCQs, decide first which of the three laws applies. Many wrong options borrow terms from another law.
Always separate agreement, abuse and combination in competition answers. A one-line definition of each earns quick marks.
For thresholds and monetary limits, use the figures given in the case or supplied text. Do not quote from memory.
In Paper 6, link the law to another subject. A CIRP case may also raise audit going concern, tax carry-forward or valuation points.

Practice questions from Corporate and Economic Laws

Insolvency, Competition and Other Economic Laws: frequently asked questions

What is the difference between an anti-competitive agreement and abuse of dominance?

An anti-competitive agreement needs two or more parties acting together, such as a cartel fixing prices. Abuse of dominance is the conduct of one enterprise that holds a dominant position and misuses it. Holding dominance is not an offence; the abuse is.

Who can start CIRP under IBC?

A financial creditor, an operational creditor or the corporate debtor itself can apply to the NCLT once a default has occurred. The default must meet the minimum amount notified under the Code. Check the current figure in your updated study text.

What is the effect of the moratorium in CIRP?

It stops suits, recovery proceedings and transfer of the debtor's assets during the process. It protects the business while a resolution plan is sought. It also keeps essential supplies running, with the exceptions the Code provides.

Do I need to remember combination thresholds for CA Final IBS?

Learn what a combination is and why CCI approval is needed. Thresholds are revised by notification, so use the values given in the question or supplied text. Focus on applying the test to the case.

What is the basic idea of PMLA for CA Final?

PMLA punishes dealing with proceeds of crime arising from scheduled offences and projecting them as clean. The Enforcement Directorate investigates and can attach property. Reporting entities must verify clients, keep records and report suspicious transactions.