Section 115: Effect of Order of Adjudicating Authority on Repayment Plan
Section 115 of the Insolvency and Bankruptcy Code, 2016 specifies the legal consequences of an order made by the Adjudicating Authority under Section 114. An approved repayment plan takes effect and binds the debtor and the creditors mentioned in it, while rejection gives the debtor and creditors the statutory right to apply for bankruptcy under Chapter IV.
Text of Section 115
Section 115 - Effect of order of Adjudicating Authority on repayment plan.
(1) Where the Adjudicating Authority has approved the repayment plan under section 114, such repayment plan shall -
(a) take effect as if proposed by the debtor in the meeting; and
(b) be binding on creditors mentioned in the repayment plan and the debtor.
(2) Where the Adjudicating Authority rejects the repayment plan under section 114, the debtor and the creditors shall be entitled to file an application for bankruptcy under Chapter IV.
(3) A copy of the order passed by the Adjudicating Authority under sub-section (2) shall be provided to the Board, for the purpose of recording an entry in the register referred to in section 196.
Meaning and effect of Section 115
Section 115 deals with what follows after the Adjudicating Authority makes an order on the repayment plan under Section 114. The consequences differ depending on whether the plan is approved or rejected.
Approved repayment plan takes effect
Under Section 115(1)(a), once the repayment plan is approved under Section 114, it takes effect as if it had been proposed by the debtor in the meeting. The statutory approval therefore gives operative effect to the repayment arrangement through the mechanism provided by the Code.
Binding effect on debtor and specified creditors
Section 115(1)(b) makes the approved repayment plan binding on the debtor and on the creditors mentioned in the repayment plan. The statutory language is significant because the binding effect is expressly tied to creditors identified in the plan.
Rejection permits bankruptcy application
If the Adjudicating Authority rejects the repayment plan under Section 114, Section 115(2) entitles both the debtor and the creditors to file an application for bankruptcy under Chapter IV. The bankruptcy application is governed by the relevant provisions beginning with Section 121 and the applicable rules and regulations.
Order to be provided to the Insolvency and Bankruptcy Board of India
Section 115(3) requires a copy of the order passed under sub-section (2) to be provided to the Board for recording an entry in the register referred to in Section 196. In this context, the "Board" means the Insolvency and Bankruptcy Board of India constituted under the Code.
Relationship with Sections 114 and 116
Section 114 is the decision stage: the Adjudicating Authority approves or rejects the repayment plan and may give implementation directions or require reconsideration where modification is needed. Section 115 then prescribes the legal effect of that order.
Where the plan is approved, the next provision, Section 116, addresses implementation and supervision. It requires the resolution professional appointed under Section 97 or Section 98 to supervise implementation and permits the resolution professional to seek directions from the Adjudicating Authority where necessary in relation to a matter arising under the plan.
Section 196 and the Board's record-keeping function
Section 196 sets out the powers and functions of the Insolvency and Bankruptcy Board of India. Among its statutory functions is the collection and maintenance of records relating to insolvency and bankruptcy cases and dissemination of information relating to such cases. Section 115(3) specifically connects a rejection order with the register referred to in Section 196.
Current application of Section 115
Section 115 forms part of the individual insolvency resolution framework in Part III of the Code. The commencement and practical application of Part III provisions must be read with the relevant Central Government notifications and the rules and regulations applicable to the particular category of debtor or personal guarantor. Recent insolvency decisions have continued to apply Section 115(2) in proceedings involving personal guarantors to corporate debtors.
Official legal resources
For the current Code, regulations, notifications and orders, refer to the IBBI Legal Framework, the Insolvency and Bankruptcy Board of India and the India Code portal. The effective date and scope of the applicable provisions should be checked for the particular proceeding.
This page is intended as a legal information resource. Application of the Code depends on the applicable commencement notifications, rules, regulations, judicial orders and facts of the proceeding.