A financial creditor files under section 7 of the Insolvency and Bankruptcy Code, 2016, an operational creditor serves a demand notice under section 8 and then files under section 9, and the company itself files under section 10. Each route needs a default, which section 3(12) defines as non-payment of a debt, in whole or in part, once it has become due and payable. Section 4 applies this Part only where the default reaches the minimum amount, which is one crore rupees, substituted for one lakh rupees by notification S.O. 1205(E) with effect from 24 March 2020.
The financial creditor proves the default with the record held by an information utility, or with other evidence the Board specifies, and names the insolvency professional it proposes as interim resolution professional. The operational creditor proves delivery of the demand notice or invoice, the absence of payment, and the absence of any notice of dispute. The National Company Law Tribunal is to decide within fourteen days of receiving the application.
Admission starts the corporate insolvency resolution process on that date. Under section 13 the Tribunal declares a moratorium, orders a public announcement calling for claims and appoints an interim resolution professional. Section 14 then stops suits, executions, transfers of assets by the company and enforcement of security, including action under the SARFAESI Act, until the process ends.
Who may file, and under which section
Section 6 gives the right to start the process to a financial creditor, an operational creditor or the corporate debtor itself. A financial creditor is a person to whom a financial debt is owed, and section 5(8) defines that debt as one disbursed against the consideration for the time value of money: money borrowed against interest, bonds and debentures, finance leases and the other listed heads. An operational creditor is owed a claim for goods or services, including employment, or dues to the Central Government, a State Government or a local authority, under section 5(21).
Section 7(1) lets a financial creditor file alone or jointly. Its first and second provisos add a floor for two classes: creditors in a class under section 21(6A), and allottees under a real estate project, must file jointly with not less than one hundred of them or not less than ten per cent. of the total in the class or project, whichever is less. The company files under section 10, and since Act 26 of 2018 (from 6 June 2018) it must attach the special resolution of its shareholders or the resolution of at least three-fourth of the total number of its partners.
Section 11 shuts out some applicants. A company already in a corporate insolvency or pre-packaged process cannot file, nor can one that completed a resolution process in the twelve months before the application, nor a company under a liquidation order. Explanation II to section 11 makes clear that such a company may still file against another company that owes it money.
The evidence that proves a default
Section 7(3) asks the financial creditor for the record of default with the information utility or such other record or evidence of default as may be specified, the name of the proposed interim resolution professional, and any other information the Board specifies. Under section 7(4) the Tribunal ascertains the default from the utility's records or from the other evidence filed. The Explanation to section 7(1) counts a default owed to any financial creditor of the company, not only to the applicant.
For an operational creditor, section 9(3) lists the papers: a copy of the invoice or demand notice delivered, an affidavit that no notice of dispute was received, a certificate from the creditor's bank that no payment was made, if available, and any record with an information utility, if available. Those last two items carry the words if available, so an operational creditor without a bank certificate can still file on the other proof listed in clause (e).
In Innoventive Industries Ltd. v. ICICI Bank the Supreme Court held that the Code prevails over a State law moratorium that would have stalled the process, and that a defence raised late against admission, there a plea that the lenders had not disbursed under a restructuring agreement, did not displace a proved default. The financial creditor's case at admission is the debt and the default. The existence of a dispute is a defence that section 8 and section 9 give to the company against an operational creditor.
The demand notice, and what counts as a reply
Section 8(1) requires the operational creditor to deliver a demand notice or a copy of the invoice demanding payment. Under section 8(2) the company has ten days from receipt to bring to the creditor's notice the existence of a dispute, or the record of a suit or arbitration filed before the notice, or proof of payment by an attested record of electronic transfer or of an encashed cheque.
Section 9(1) lets the creditor file only after those ten days pass without payment or notice of dispute. Section 9(5)(ii)(d) then requires the Tribunal to reject the application if a notice of dispute has been received or there is a record of dispute with an information utility. Section 8(2)(a) speaks of a suit or arbitration filed before the receipt of the notice, so the timing of the dispute matters.
Limitation, and defaults the Code no longer reaches
Section 238A applies the Limitation Act, 1963, as far as may be, to proceedings and appeals before the Tribunal and the Appellate Tribunal. In B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates the Supreme Court held that the Limitation Act applied to applications under section 7 and section 9 from the Code's commencement, before section 238A was inserted. An application founded on a default that is time-barred under the Limitation Act fails on that ground before the Tribunal reaches the merits.
Section 10A bars applications under section 7, 9 or 10 for any default arising on or after 25th March, 2020 for six months or such further period, not exceeding one year from that date, as was notified. Its proviso says no application shall ever be filed for a default in that period, and its Explanation keeps defaults before 25th March, 2020 outside the bar. A creditor whose only default falls inside the window cannot use these sections for it at all, whatever later date it files on.
Admission, and what the moratorium stops
Under section 7(5)(a) the Tribunal may admit the application where a default has occurred, the application is complete and no disciplinary proceeding is pending against the proposed professional. The proviso gives the applicant seven days to cure defects before rejection. Section 7(7) requires the order to be communicated within seven days. Surendra Trading Company v. Juggilal Kamlapat Jute Mills held that the seven-day period for curing defects is directory, so an application is not rejected only because the cure took longer.
In Vidarbha Industries Power Ltd. v. Axis Bank Ltd. the Supreme Court read the word may in section 7(5)(a) as leaving the Tribunal a discretion to decline or defer admission even where a default is shown. In M. Suresh Kumar Reddy v. Canara Bank the Court treated Vidarbha as confined to its facts and held that once a financial debt and default are established the application is to be admitted. A company opposing admission now has to dispute the debt or the default itself; complaints about the lender's conduct will not usually stop admission.
Section 14(1) prohibits the institution or continuation of suits and proceedings against the company, including execution of decrees and arbitration; transfers or encumbrances by the company; action to foreclose, recover or enforce security, including action under the SARFAESI Act; and recovery of property by an owner or lessor from the company's possession. Section 14(3)(b) leaves out a surety in a contract of guarantee to the company, so a guarantor is not protected. The moratorium ends when the Tribunal approves a resolution plan under section 31 or orders liquidation under section 33.
Who runs the company after admission
Section 16 requires the Tribunal to appoint an interim resolution professional on the insolvency commencement date, and section 17 vests the management of the company in that professional and suspends the powers of the board of directors. Officers report to the professional, and the company's bankers act on the professional's instructions.
Section 21 constitutes the committee of creditors from the financial creditors once claims are collated. Section 21(8) takes its decisions by not less than fifty-one per cent. of the voting share unless the Code says otherwise, and section 22 lets the first meeting confirm or replace the interim professional by a vote of sixty-six per cent. Operational creditors whose aggregate dues are not less than ten per cent. of the debt receive notice of the meetings under section 24(3) and may attend through one representative without a vote.
The clock, and how an admitted case can still be withdrawn
Section 12 fixes one hundred and eighty days from admission for completing the process, extendable once by up to ninety days on a vote of sixty-six per cent. of the voting shares. The second proviso to section 12(3) caps the whole process at three hundred and thirty days from the insolvency commencement date, counting extensions and time taken in legal proceedings.
Section 12A allows the Tribunal to permit withdrawal of an admitted application on an application by the applicant with the approval of ninety per cent. of the voting share of the committee of creditors. A settlement reached after admission therefore needs the committee's vote as well as the applicant's consent.
If no plan is approved in time, section 33 requires the Tribunal to order liquidation. The guide on resolution plans and liquidation on this site sets out what a plan must contain, how the committee votes on it and how assets are distributed under section 53.
Supreme Court decisions
Innoventive Industries Ltd. v. ICICI Bank(2018) 1 SCC 407
The Code overrides a State law moratorium, and a belated defence does not displace a proved default at admission.
- Issue
- Whether a moratorium declared under the Maharashtra Relief Undertakings (Special Provisions) Act, 1958 could stall a process started by a financial creditor, and whether the company could resist admission by pleading, late, that the lenders had failed to disburse under a restructuring agreement.
- Held
- The Supreme Court dismissed the appeals. The Code, a later Parliamentary law with a non obstante clause in section 238, prevails over the State Act where the two conflict, and the plea about non-disbursement was an afterthought that did not answer the default, the company's obligations under the agreement being unconditional.
- In practice
- A company facing a section 7 application should put every ground in its first reply, because a ground raised later is likely to be treated as an afterthought. A State relief statute does not hold off an application under section 7.
B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates(2019) 11 SCC 633
The Limitation Act applies to applications under sections 7 and 9 from the Code's commencement.
- Issue
- Whether the Limitation Act, 1963 governed applications under section 7 and section 9 filed between the Code's commencement on 1 December 2016 and the insertion of section 238A on 6 June 2018.
- Held
- The Supreme Court held that the Limitation Act applies to applications under section 7 and section 9 from the inception of the Code, and remanded the appeals to the Appellate Tribunal to be decided afresh on that footing.
- In practice
- Before filing, a creditor has to fix the date of default and check that the application is within time under the Limitation Act. An old default cannot be revived by choosing the insolvency route instead of a suit.
Surendra Trading Company v. Juggilal Kamlapat Jute Mills Co. Ltd.(2017) 16 SCC 143
The seven days allowed to cure defects in an application is directory.
- Issue
- Whether the seven-day period in the proviso to section 9(5), and the matching provisos to section 7(5) and section 10(4), for removing defects in an application is mandatory, so that an application not cured in time must be rejected.
- Held
- The Supreme Court set aside the part of the Appellate Tribunal's judgment that treated the seven-day period as mandatory. The period is directory, and an application is not to be rejected only because the defects were cured after it ran out.
- In practice
- An applicant who receives a notice of defects should still cure them at once. A short delay is not fatal, and the Tribunal can accept the cured application.
Vidarbha Industries Power Ltd. v. Axis Bank Ltd.(2022) 8 SCC 352
Section 7(5)(a) uses may, and the Tribunal was held to have a discretion on admission.
- Issue
- Whether the Tribunal must admit a financial creditor's application under section 7(5)(a) once satisfied that a default has occurred and the application is complete, or whether it may defer or reject it on other grounds the company raises.
- Held
- The Supreme Court held that section 7(5)(a) confers a discretion and that the Tribunal and the Appellate Tribunal erred in treating admission as mandatory. It set aside both orders and sent the company's application for a stay back for consideration on merits.
- In practice
- A company may place before the Tribunal facts beyond the default that bear on admission. Read this case with M. Suresh Kumar Reddy, which narrows how far that discretion runs.
M. Suresh Kumar Reddy v. Canara Bank[2023] 5 S.C.R. 387
Once debt and default are shown, the section 7 application is admitted; Vidarbha is confined to its facts.
- Issue
- Whether the Tribunal rightly admitted a bank's section 7 application where the company argued that the default was brought on by the bank's own conduct and that a High Court interim order stood in the way.
- Held
- The Supreme Court dismissed the appeal. Relying on Innoventive Industries and E.S. Krishnamurthy, it held that once a financial debt and a default are established the application is to be admitted, and it treated Vidarbha Industries as decided on its own facts.
- In practice
- A company opposing admission has to dispute the debt or the default itself. Complaints about the lender's conduct are unlikely to stop admission on their own.
Questions
Can a supplier and a lender both start insolvency against the same company?
Yes, by different routes. A lender owed a financial debt files directly under section 7 of the Insolvency and Bankruptcy Code, 2016, with the record of default from an information utility or other evidence. A supplier owed for goods or services first serves a demand notice under section 8 and can file under section 9 only after ten days pass without payment or notice of a dispute. Once one application is admitted, section 14(1)(a) bars new proceedings against the company, so the other creditor files its claim in that process after the public announcement under section 13.
What is the minimum default for filing against a company?
Section 4 of the Code applies Part II, the corporate process, only where the minimum amount of the default reaches the figure the section fixes, which is one crore rupees, substituted for one lakh rupees by notification S.O. 1205(E) with effect from 24 March 2020. The proviso to section 4 lets the Central Government notify a higher minimum of not more than one crore rupees. Section 7 counts a default owed to any financial creditor of the company, not only the applicant, so the amount is the company's default on the financial debt.
How long does the Tribunal take to admit an application?
Section 7(4) and section 9(5) ask the National Company Law Tribunal to decide within fourteen days of receiving the application, and section 7(7) asks it to communicate the order within seven days. If it has not ascertained the default within fourteen days, the proviso to section 7(4) requires it to record its reasons in writing. If the application is incomplete, the proviso to section 7(5) gives the applicant seven days from the Tribunal's notice to rectify it, and the Supreme Court has held that period to be directory.
Does the moratorium protect the directors who gave personal guarantees?
No. Section 14(3)(b) says the moratorium in section 14(1) does not apply to a surety in a contract of guarantee to a corporate debtor. A bank can therefore sue or proceed against a director's personal guarantee while the company is in the resolution process. The Supreme Court held in State Bank of India v. V. Ramakrishnan that the corporate moratorium does not reach a personal guarantor. A guarantor's own insolvency is a separate application under Part III of the Code, before the same Tribunal.
Can I file for a default that happened during the pandemic?
Not under section 7, 9 or 10. Section 10A bars any application for a default arising on or after 25th March, 2020 for six months or such further period, not exceeding one year from that date, as was notified, and its proviso says no application shall ever be filed for a default in that period. The Explanation keeps earlier defaults outside the bar. A later fresh default, after the window closed, can found an application in the ordinary way, so the date of each default matters when the account was in arrears for a long time.
This guide is general information on Indian insolvency and bankruptcy law as at 11 November 2026. It is not legal advice on any particular case.