CAIIB Paper 4 Module C Quiz 2

The IBC permits eligible financial creditors, operational creditors and corporate applicants to initiate CIRP, provided statutory requirements are met.

A section 7 application is filed by a financial creditor in respect of a financial debt and default. The definition of financial debt is set out in section 5(8) of the IBC.

Section 8 requires an operational creditor to deliver a demand notice or copy of an invoice demanding payment. The corporate debtor has 10 days to bring to notice a dispute or payment, after which a section 9 application may be considered.

Admission triggers CIRP and the section 14 moratorium, which restricts specified proceedings, enforcement and transfers during the moratorium, subject to statutory exceptions.

The Committee of Creditors votes on the resolution plan. The plan must then be approved by the NCLT under section 31 if it meets the Code’s requirements.

Section 30(4) generally requires approval by at least 66% of the voting share of financial creditors, subject to the Code’s current wording and any applicable amendments.

Section 14 imposes a time-bound moratorium during CIRP. It is not a permanent extinguishment of security, and the Code contains specific exceptions.

An interim resolution professional is appointed on admission, and a resolution professional subsequently performs the functions prescribed by the IBC. Management powers vest as provided by the Code.

Liquidation is ordered by the adjudicating authority when grounds under section 33 are met, including failure to approve a resolution plan within the permitted process or a qualifying CoC decision.

The Code distinguishes financial debt from operational debt. Classification can affect initiation, representation and distribution, although both categories have rights under the IBC.

The Act facilitates proof of banking entries in legal proceedings through certified copies, subject to statutory requirements. It does not by itself decide the underlying merits of a dispute.

The definition includes records used in the ordinary course of banking business and accommodates computer printouts and electronic records subject to the Act’s requirements.

A properly certified copy can be received as prima facie evidence of the existence of the entry and the matters, transactions and accounts recorded, but it is not necessarily conclusive proof of every disputed issue.

Electronic records must meet the applicable statutory requirements for certification and authenticity under the Bankers’ Books Evidence Act and, where relevant, the evidence law in force.

Limitation law generally bars the remedy after the prescribed period, subject to exceptions. It promotes timely litigation and legal certainty; it does not ordinarily extinguish the underlying debt in every context.

The commencement date depends on the relevant Schedule article and facts. In many money claims, time runs from when the cause of action or right to sue accrues.

Section 18 provides that a written and signed acknowledgment of liability made before the original limitation period expires gives rise to a fresh period of limitation from the date it is signed.

Section 19 addresses part-payment before expiry of the prescribed period and requires the statutory evidence of payment, including writing in the payer’s handwriting or signed by the payer, as applicable.

Section 13(3A) requires the secured creditor to consider the representation or objection and communicate reasons for non-acceptance within 15 days of receipt.

Section 17 generally prescribes 45 days from the date on which the measure under section 13(4) is taken.