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CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy Order for Individuals and Partnership Firms

Meera Textiles, a partnership firm in Surat, defaulted on a loan from Sagar Finance. The Debt Recovery Tribunal passed an order under section 100(4) of the Code on 10 March. By which date must Sagar Finance file its bankruptcy application, counted from the date of that order?

Sagar Finance must file within three months of the order, that is by 10 June. Section 121(2) fixes a three-month window from the date of the Adjudicating Authority's order, and no 30-day, six-month or one-year period applies to a bankruptcy application.

  1. AWithin 30 days, i.e. by 9 April
  2. BWithin three months, i.e. by 10 JuneCorrect
  3. CWithin six months, i.e. by 10 September
  4. DWithin one year, i.e. by 10 March of next year

Explanation

An application for bankruptcy must be filed within three months of the date of the Adjudicating Authority's order under the sections listed in section 121(1). Counting from 10 March gives 10 June. The 30-day and six-month periods are not what the Code provides.

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