Introduction
It is worth mentioning that the Insolvency and Bankruptcy Code, 2016, has designated the National Company Law Tribunal (hereinafter referred to as NCLT), which is established under Section 408 of the Companies Act, 2013, as the adjudicating authority for the purposes of insolvency resolution and corporate liquidation.
The National Company Law Tribunal has jurisdiction
It is worth noting that the registered office of a certain corporate entity is used to determine the bankruptcy resolution and liquidation of corporate individuals, corporate debtors, and personal guarantors. To file an application for the liquidation of a corporate debtor or to initiate insolvency resolution procedures, the application must be filed with the applicable National Company Law Tribunal (NCLT), which has jurisdiction over the place where the corporate entity's registered office is located.
Furthermore, when the jurisdiction of a corporate entity's registered office exists, an application for voluntary liquidation of a corporate person can be brought before the National Company Law Tribunal (NCLT).
In this regard, the Debt Recovery Tribunal (DRT) has been given adjudicating jurisdiction over partnerships, corporations, and individuals. However, if an individual is a personal guarantor of a specific corporate debtor and a corporate insolvency resolution process or liquidation proceedings of such corporate debtor is pending before the National Company Law Tribunal, the application for insolvency resolution or bankruptcy of such a personal guarantor or such a corporate debtor must also be filed before the requisite National Company Law Tribunal. As a result, in order to deal with petitions related to the insolvency resolution or bankruptcy of a specific personal guarantor of a corporate debtor, the National Company Law Tribunal has been entrusted with the powers of the Debt Recovery Tribunal.
Acceptance of Insolvency Resolution I Application to the NCLT
An Insolvency Resolution Application can be filed with the National Company Law Tribunal (NCLT) by one of three people:
Financial Creditor.
Operational Creditor.
Corporate itself.
Financial creditor
According to Section 7 of the Insolvency and Bankruptcy Code, 2016, a financial creditor may make an application with the NCLT either alone or in conjunction with others. When a default occurs, such an application might be submitted with the NCLT. In this section, a default refers to a financial obligation owing not only to the financial creditor who has filed an application before NCLT, but also to any of the corporate debtor's financial creditors.
Operational Creditor
The petition filed by the Operational Creditor is discussed under Section 8 of the Insolvency and Bankruptcy Code, 2016. According to the aforementioned part of the legislation, if a debt is not paid on time, the creditor is required to deliver a demand notice together with a copy of an invoice seeking such payments. If the invoice is not served on the operative debtor, the petition will be dismissed by the Tribunal.
Scrutinization of Debt by NCLT
It is worth noting that Section 7(4) of the Code specifies that the National Company Law Tribunal must determine whether there is a default within 14 days of receiving the creditor's claim.
Admission by NCLT
If the tribunal is satisfied that there is a default, that the application is properly prepared, and that no disciplinary procedures are ongoing before the prospective IRP, it will accept the application.
Furthermore, the NCLT has the authority to reject the application. Before rejecting the application, the Tribunal must deliver a notice to the applicant creditor giving him 7 days to correct any errors in his application.