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

Neha Kapoor, a bankrupt, owes a fine imposed by a court and also maintenance to her former spouse under law. Her advocate asks how these liabilities are classified in Part III of the Code. Which classification is correct?

Both are excluded debts. Section 79(15) covers liability to pay a fine imposed by a court or tribunal and liability to pay maintenance under any law, and a qualifying debt by definition excludes any excluded debt.

  1. ABoth are qualifying debts
  2. BBoth are excluded debtsCorrect
  3. CThe fine is an excluded debt, maintenance is a qualifying debt
  4. DThe fine is a qualifying debt, maintenance is an excluded debt

Explanation

Section 79(15) lists as excluded debt a liability to pay a fine imposed by a court or tribunal in clause (a), and a liability to pay maintenance under any law in clause (c). Qualifying debt under section 79(19) specifically does not include an excluded debt. So both are excluded debts.

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