Section 116: Implementation and Supervision of Repayment Plan

Section 116 of the Insolvency and Bankruptcy Code, 2016 governs implementation and supervision of a repayment plan after the plan reaches the implementation stage. It places supervision with the resolution professional appointed under Section 97 or Section 98 and provides a mechanism for seeking directions from the Adjudicating Authority when a particular matter arises under the plan.

Text of Section 116

Meaning and purpose of Section 116

Section 116 moves the insolvency resolution process from approval of the repayment plan to its actual implementation. The resolution professional remains involved after approval and has a statutory supervisory role over performance of the plan.

The provision also recognises that issues may arise while the repayment plan is being carried out. Instead of leaving such issues unresolved, Section 116 permits the resolution professional to approach the Adjudicating Authority for directions concerning a particular matter arising under the plan.

Role of the resolution professional

Supervision of implementation

Section 116(1) makes supervision a statutory responsibility of the resolution professional appointed under Section 97 or Section 98. Section 97 deals with appointment of a resolution professional in the individual insolvency resolution process, while Section 98 provides for replacement of the resolution professional in the circumstances specified by the Code.

The reference to both Sections 97 and 98 ensures that the professional who validly holds office at the implementation stage continues to supervise the repayment plan, including where the originally appointed resolution professional has been replaced.

Application for directions

Under Section 116(2), the resolution professional may apply to the Adjudicating Authority if directions are necessary in relation to a particular matter arising under the repayment plan. The statutory power is linked to matters arising under the plan and supports its orderly implementation.

Power of the Adjudicating Authority

Section 116(3) authorises the Adjudicating Authority to issue directions to the resolution professional on the basis of an application made under Section 116(2). The provision therefore establishes a direct mechanism for judicial directions during implementation without displacing the resolution professional's supervisory function.

Relationship with Sections 114 and 115

Section 114 empowers the Adjudicating Authority to approve or reject the repayment plan and permits an approval order to contain directions for implementation. Section 115 then sets out the legal effect of that order, including the binding effect of an approved plan on the debtor and the creditors mentioned in it.

Section 116 follows those provisions by regulating supervision during implementation. Together, Sections 114 to 116 provide the transition from approval, to legal effect, to supervised performance of the repayment plan.

Relationship with Section 117: completion of repayment plan

The next stage is governed by Section 117. When the repayment plan is fully implemented, the resolution professional is required to forward the prescribed notice and report concerning completion of the plan. Section 116 supervision therefore continues within the statutory process leading toward completion under Section 117.

If the repayment plan ends prematurely

If the repayment plan is not fully implemented, Section 118 addresses a repayment plan coming to an end prematurely. That provision requires the resolution professional to submit a report to the Adjudicating Authority identifying specified matters concerning implementation and the reasons for premature termination.

Current legal context

Section 116 forms part of Part III of the Insolvency and Bankruptcy Code dealing with insolvency resolution and bankruptcy for individuals and partnership firms. The practical application of Part III must be read with the Central Government commencement notifications and the rules and regulations applicable to the relevant class of debtor or personal guarantor. Judicial decisions concerning personal guarantors have recognised that Section 98 is not confined to an early stage and may operate even at later stages such as implementation of a repayment plan.

Official legal resources

For the current statutory text, rules, regulations, notifications and insolvency orders, refer to the IBBI Legal Framework, the Insolvency and Bankruptcy Board of India and the India Code portal. The applicable commencement notification and current regulatory framework should be checked for the particular proceeding.

This article is intended as a legal information resource. Application of the Code depends on the category of debtor or guarantor, applicable notifications, rules, regulations, judicial orders and the facts of the proceeding.