Section 79 IBC 2016: Definitions Under Part III

(1) Adjudicating Authority means the Debt Recovery Tribunal constituted under the applicable provision of the Recovery of Debts and Bankruptcy Act, 1993. For personal guarantors to corporate debtors, Section 60 of the Code also provides the jurisdictional framework involving the National Company Law Tribunal in the circumstances specified there.

(2) Associate of the debtor includes:

• a person belonging to the immediate family of the debtor;
• a relative of the debtor or a relative of the debtor's spouse;
• a person in partnership with the debtor;
• a spouse or relative of a person with whom the debtor is in partnership;
• an employer or employee of the debtor;
• a trustee of a trust where the beneficiaries include the debtor, or where the trust gives the trustee a power exercisable for the debtor's benefit; and
• a company where the debtor, alone or together with associates, owns more than fifty per cent of the share capital or controls appointment of the board of directors.

The Explanation provides that "relative" includes persons who are members of a Hindu Undivided Family and persons related in the prescribed manner. Under the rules applicable to personal guarantors to corporate debtors, the prescribed relationship is linked to the manner provided in the Explanation to clause (24A) of Section 5 of the Code.

(3) Bankrupt means a debtor adjudged bankrupt by a bankruptcy order under Section 126; each partner of a firm where such an order has been made against the firm; or a person adjudged an undischarged insolvent.

(4) Bankruptcy means the state of being bankrupt.

(5) Bankruptcy debt, in relation to a bankrupt, includes debt owed on the bankruptcy commencement date, specified liabilities arising after that date but before discharge by reason of an earlier transaction, and interest forming part of the debt under Section 171.

(6) Bankruptcy commencement date means the date on which the Adjudicating Authority passes a bankruptcy order under Section 126.

(7) Bankruptcy order means an order passed by an Adjudicating Authority under Section 126.

(8) Bankruptcy process means a process against a debtor under Chapters IV and V of Part III.

(9) Bankruptcy trustee means the insolvency professional appointed as trustee for the estate of the bankrupt under Section 125.

(10) Chapter means a chapter under Part III.

(11) Committee of creditors means a committee constituted under Section 134.

(12) Debtor includes a judgment-debtor.

(13) Discharge order means an order of the Adjudicating Authority discharging the debtor under Sections 92, 119 or 138, as applicable.

(14) Excluded assets include specified unencumbered assets protected by the provision:

• tools, books, vehicles and other equipment necessary for personal use, employment, business or vocation;
• furniture, household equipment and provisions necessary for basic domestic needs of the bankrupt and immediate family;
• personal ornaments of the debtor or immediate family, within the prescribed value, which cannot be parted with according to religious usage;
• a life insurance policy or pension plan in the name of the debtor or immediate family; and
• a single dwelling unit owned by the debtor, within the prescribed value.

For personal guarantors to corporate debtors, the 2019 Rules prescribe limits for relevant excluded assets, including personal ornaments not exceeding Rs. 1 lakh and a single dwelling unit not exceeding Rs. 20 lakh in an urban area or Rs. 10 lakh in a rural area.

(15) Excluded debt includes liability to pay a fine imposed by a court or tribunal; damages for negligence, nuisance or breach of a statutory, contractual or other legal obligation; maintenance under applicable law; liability relating to a student loan; and any other debt prescribed under the Code.

(16) Firm means a body of individuals carrying on business in partnership, whether or not registered under Section 59 of the Indian Partnership Act, 1932.

(17) Immediate family of the debtor means the debtor's spouse, dependent children and dependent parents.

(18) Partnership debt means a debt for which all partners in a firm are jointly liable.

(19) Qualifying debt means an amount due, including interest or another sum due in respect of amounts owed under a contract, by the debtor for a liquidated sum payable immediately or at a certain future time. It excludes an excluded debt, debt to the extent secured, and debt incurred during the three months before the application for the fresh start process.

(20) Repayment plan means a plan prepared by the debtor in consultation with the resolution professional under Section 105, containing a proposal to the committee of creditors for restructuring the debtor's debts or affairs.

(21) Resolution professional means an insolvency professional appointed under Part III as resolution professional for conducting the fresh start process or insolvency resolution process.

(22) Undischarged bankrupt means a bankrupt who has not received a discharge order under Section 138.