Section 87: Application Against Decision of Resolution Professional

Section 87 of the Insolvency and Bankruptcy Code, 2016 provides a statutory remedy to a debtor or creditor aggrieved by action taken by the resolution professional under Section 86 during the fresh start process.

Key timelines: The challenge may be made to the Adjudicating Authority within 10 days of the resolution professional's decision. The Adjudicating Authority is required to decide the application within 14 days.

Section 87 - Statutory Provisions

(1) The debtor or the creditor who is aggrieved by the action taken by the resolution professional under Section 86 may, within ten days of such decision, make an application to the Adjudicating Authority challenging such action on any of the following grounds, namely:-

(a) that the resolution professional has not given an opportunity to the debtor or the creditor to make a representation; or

(b) that the resolution professional colluded with the other party in arriving at the decision; or

(c) that the resolution professional has not complied with the requirements of Section 86.

(2) The Adjudicating Authority shall decide the application referred to in sub-section (1) within fourteen days of such application, and make an order as it deems fit.

(3) Where the application under sub-section (1) has been allowed by the Adjudicating Authority, it shall forward its order to the Board and the Board may take such action as may be required under Chapter VI of Part IV against the resolution professional.

Who Can Challenge the Decision?

The remedy is available to either the debtor or a creditor who is aggrieved by action taken by the resolution professional under Section 86. Section 86 concerns objections relating to qualifying debts and their examination by the resolution professional.

Grounds for an Application under Section 87

Section 87 limits the statutory challenge to three stated grounds: failure to provide an opportunity to make a representation, collusion by the resolution professional with the other party in reaching the decision, or non-compliance with Section 86.

Time Limit and Decision by Adjudicating Authority

The aggrieved debtor or creditor has 10 days from the decision to make the application. Section 87(2) requires the Adjudicating Authority to decide the application within 14 days and permits it to make such order as it considers fit.

Action Against the Resolution Professional

If the application is allowed, Section 87(3) requires the Adjudicating Authority to forward its order to the Insolvency and Bankruptcy Board of India. The Board may then take action as required under Chapter VI of Part IV of the Code against the resolution professional.

Meaning of Important Terms

Resolution professional: In the context of Part III, the expression refers to the insolvency professional appointed under the Code for conducting the relevant fresh start or insolvency resolution process.

Adjudicating Authority: The adjudicating forum designated by the applicable provisions of the Code for proceedings under Part III.

Board: The Insolvency and Bankruptcy Board of India established under Section 188 of the Code.

Qualifying debt: Section 79 defines qualifying debt for the fresh start provisions and specifies debts excluded from that expression.

Related Provisions

This page is a statutory information resource. The official text, amendments, commencement notifications and applicable rules should be checked for the relevant date and proceeding.