Applicability ​​​​​​​of Insolvency and Bankruptcy Code, 2016 [ Section 2 ] - Definition / Legal Terminology and Intorduction - IBC

Applicability of Insolvency and Bankruptcy Code, 2016 As per section 2 of IBC Code,2016 The provisions of this Code shall apply for insolvency, liquidation, voluntary liquidation or bankruptcy of the following entities - (a) any company incorporated under the Companies Act, 2013 or under any previous company law; (b) any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act; (c) any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008; (d) such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf; [(e) personal guarantors to corporate debtors; (f) partnership firms and proprietorship firms; and (g) individuals, other than persons referred to in clause (e), in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the case may be. Judicial pronouncements with regard to applicability of I n the matter of State Bank of India Vs. V. Ramakrishnan Anr. 2018 (8) TMI 837 - SC da t ed 14.08.2018 The Supreme Court stated that Section 2(e) of t he Code, which was brought into force on 23.11.2017 would, when it refers to the application of the Code to a personal guarantor of a CD applies only for limited purpose contained in section 60(2) and (3). This is what is meant by strengthening the CIRP in the Statement of Objects and Reasons of the Insolvency and Bankruptcy Code (Amendment) Act, 2018. No n- a p p l i c a b il i t y of the Code T he Insolvency Bankruptcy Code, 2016 is not applicable to corporates in finance sector. Section 3(7) of Insolvency Bankruptcy Code, 2016 states that Corporate person shall not include any financial service provider. T h u s , t he Insolvency Bankruptcy Code, 2016 does not cover Bank, Financial Institutions, Insurance Company, Asset Reconstruction Company, Mutual Funds, Collective Investment Schemes or Pension Funds. F i n an c i a l service provider means a person engaged in the business of providing financial services in terms of authorisation issued or registration granted by a financial sector regulator [ section 3(17) ]. section 227 of the Insolvency Bankruptcy Code, 2016 , which was notified on 1-5-2018 provided that, Central Government can notify financial service providers for purpose of insolvency and liquidation proceedings, which may be conducted under the Insolvency Bankruptcy Code, in consultation with appropriate financial sector regulator. A s per notification dated 18-11-2019 it has been notified by the Central Government that insolvency resolution and liquidation proceedings of non-banking finance companies (which include housing finance companies) with asset size of Rs.500 crore or more, as per last audited balance sheet, shall be undertaken in accordance with the provisions of the Code and Rules made thereunder.