Section 115: Effect of Order of Adjudicating Authority on Repayment Plan

Section 115 explains the legal consequences when the Adjudicating Authority approves or rejects a repayment plan under Section 114. It specifies who is bound by an approved plan, the right to apply for bankruptcy after rejection, and the requirement to communicate the rejection order to the Insolvency and Bankruptcy Board of India.

At a glance: An approved repayment plan binds the debtor and the creditors named in it. Rejection permits the debtor and creditors to seek bankruptcy under Chapter IV, subject to the applicable statutory requirements; rejection is not itself a bankruptcy order.

Section 115: Statutory provisions

115. Effect of order of Adjudicating Authority on repayment plan.

(1) Where the Adjudicating Authority has approved the repayment plan under section 114, such repayment plan shall-

(a) take effect as if proposed by the debtor in the meeting; and

(b) be binding on creditors mentioned in the repayment plan and the debtor.

(2) Where the Adjudicating Authority rejects the repayment plan under section 114, the debtor and the creditors shall be entitled to file an application for bankruptcy under Chapter IV.

(3) A copy of the order passed by the Adjudicating Authority under sub-section (2) shall be provided to the Board, for the purpose of recording an entry in the register referred to in section 196.

Meaning and legal effect of Section 115

1. Approved repayment plan becomes binding: Section 115(1)

Once the Adjudicating Authority approves a repayment plan under Section 114, the plan takes effect as though it had been proposed by the debtor at the creditors' meeting. It binds the debtor and the creditors expressly mentioned in the plan. The rights and payment obligations of those parties are therefore governed by the approved plan, subject to the Code and the terms of the order.

2. Rejection and bankruptcy applications: Section 115(2)

If the Adjudicating Authority rejects the repayment plan, the debtor and creditors become entitled to apply for bankruptcy under Chapter IV of Part III of the Code. The application and any resulting order must comply with the relevant provisions, including Sections 121 to 126. Rejection does not automatically declare the debtor bankrupt.

3. Recording the rejection order: Section 115(3)

A copy of the rejection order must be provided to the Insolvency and Bankruptcy Board of India (IBBI), for recording an entry in the register referred to in Section 196. This supports the Board's statutory information and record-keeping functions.

Section 105: Repayment plan prepared by the debtor in consultation with the resolution professional.
Section 111: Approval of the repayment plan by creditors at the required voting threshold.
Section 112: Report of the creditors' meeting on the repayment plan.
Section 114: Order of the Adjudicating Authority approving or rejecting the repayment plan and possible implementation directions.
Section 116: Supervision of the approved repayment plan by the resolution professional.
Section 117: Notice and report following completion of the repayment plan.
Section 118: Consequences when a repayment plan ends prematurely.
Section 119: Discharge order following implementation, subject to statutory requirements.
Section 121: Circumstances in which an application for bankruptcy may be filed.
Section 196: Powers and functions of the IBBI, including maintenance of prescribed records.

Scope and practical considerations

Section 115 is part of Part III of the Code, concerning insolvency resolution and bankruptcy for individuals and partnership firms. The commencement and practical application of Part III provisions depend on the relevant Central Government notifications. The notified framework for personal guarantors to corporate debtors should not be assumed to extend identically to every individual or partnership firm.

Before acting on an order, parties should examine the approved plan, identify the creditors named in it, review the directions issued under Section 114 and check the applicable rules, regulations and notifications.

Official legislation and further reading

Read the Insolvency and Bankruptcy Code, 2016 (India Code PDF), the IBBI Acts and amendments and the IBBI legal framework, rules, regulations and notifications for authoritative source material and subsequent changes.

Browse the complete Insolvency and Bankruptcy Code, 2016 guide.

Information updated: 23 October 2026. This article provides general legal information and is not a substitute for advice on individual facts.