Persons not entitled to make application to initiate corporate insolvency resolution process [ Section 11 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Persons not entitled to make application to Initiate Corporate Insolvency Resolution Process The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:- (a) a corporate debtor undergoing a corporate insolvency resolution process or a pre-packaged insolvency resolution process; or (aa) a financial creditor or an operational creditor of a corporate debtor undergoing a pre-packaged insolvency resolution process; or (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or (ba) a corporate debtor in respect of whom a resolution plan has been approved under Chapter III-A , twelve months preceding the date of making of the application; or (c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under this Chapter; or (d) a corporate debtor in respect of whom a liquidation order has been made. Explanation I .-For the purposes of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor. Explanation ll .-For the purposes of this section, it is hereby clarified that nothing in this section shall prevent a corporate debtor referred to in clauses (a) to (d) from initiating corporate insolvency resolution process against another corporate debtor. Relevant case Law interpretated the Section 11 by Supreme Court In the case of Forech India Ltd. Vs. Edelweiss Assets Reconstruction Co. Ltd. - SC, dated 22.01.2019, The Supreme Court opined that Section 11 is of limited application and only bars a CD from initiating an application under section 10 of the Code in respect of whom a liquidation order has been made. From a reading of the section, it does not follow that until a liquidation order has been made against the CD, an insolvency application may be filed under section 7 or section 9 of the Code. In the case of Manish Kumar Vs. Union of India Anr.- SC , dated 19.01.2021 , The Supreme Court held that the intention of the legislature was always to target the CD only insofar as it purported to prohibit application by the CD against itself, to prevent abuse of the provisions of the Code. It could never had been the intention to create an obstacle in the path of the CD, in any of the circumstances contained in Section 11 , from maximizing its assets by trying to recover the liabilities due to it from others.