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CS Professional · Insolvency and Bankruptcy - Law and Practice · Insolvency Resolution of Individuals and Partnership Firms

Which of the following statements about the scope of Part III of the Code, as it applies to individuals and partnership firms, is correct?

Part III applies where the amount of default is not less than Rs 1,000. The Central Government may by notification specify a higher minimum amount of default, but that higher amount cannot be more than Rs 1 lakh.

  1. AIt applies only where the amount of default is at least Rs 1 crore, with no power to change it
  2. BIt applies where the default is not less than Rs 1,000, and the Central Government may notify a higher minimum not exceeding Rs 1 lakhCorrect
  3. CIt applies where the default is not less than Rs 1 lakh, and the Central Government may notify a higher minimum not exceeding Rs 1 crore
  4. DIt applies where the default is not less than Rs 1,000, and the Central Government may notify a higher minimum not exceeding Rs 10 lakh

Explanation

The Part applies to fresh start, insolvency and bankruptcy of individuals and firms where default is not less than Rs 1,000. The Central Government may notify a higher minimum, which cannot exceed Rs 1 lakh. The Rs 1 lakh and Rs 1 crore figures in other options mix up the corporate threshold or the cap.

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