Section 116 of the Insolvency and Bankruptcy Code, 2016: Implementation and Supervision of Repayment Plan

Section 116 provides for supervision of an approved repayment plan by the resolution professional and allows the professional to seek directions from the Adjudicating Authority when issues arise during implementation.

Section 116 - Statutory provision

Source: India Code - Insolvency and Bankruptcy Code, 2016 (official text). Check the latest amendments and commencement notifications before relying on the provision for a specific case.

Meaning and explanation of Section 116

Section 116(1): Duty to supervise

The resolution professional appointed under Section 97 (appointment of resolution professional) or Section 98 (replacement of resolution professional) is responsible for supervising implementation of the repayment plan. The duty concerns oversight of the plan as approved, rather than independently changing its binding terms.

Section 116(2): Application for directions

If a particular issue arises under the repayment plan, the resolution professional may apply to the Adjudicating Authority for directions. This is a discretionary power to seek judicial guidance when needed; the subsection does not itself authorise unilateral modification of the plan.

Section 116(3): Directions by the Authority

On receiving an application under subsection (2), the Adjudicating Authority may issue directions to the resolution professional. The provision enables supervision of issues encountered in implementing the repayment plan through the statutory adjudication process.

Related provisions and practical implications

Section 105 - Repayment plan: The debtor prepares the proposed plan in consultation with the resolution professional. The plan may provide for restructuring debts or affairs and may assign specified functions to the professional.

Sections 111 and 112 - Creditor approval and report: These sections address voting on the repayment plan and the resolution professional's report of the creditors' meeting.

Section 114 - Order on repayment plan: The Adjudicating Authority approves or rejects the repayment plan and may give implementation directions. It may also require reconsideration where modification is needed.

Section 115 - Effect of the order: An approved repayment plan binds the debtor and the creditors mentioned in it. Rejection may enable an application for bankruptcy under Chapter IV, subject to applicable provisions.

Section 117 - Completion: Within fourteen days of completion, the resolution professional must send the specified notice and report to the persons bound by the plan and the Adjudicating Authority, subject to a possible extension of up to seven days.

Section 118 - Premature end: Where the plan is not fully implemented within its stated period, the statutory reporting, order and potential bankruptcy consequences apply.

Section 119 - Discharge order: The resolution professional applies for a discharge order in relation to debts mentioned in the plan, and the Authority may pass an order as provided by law.

Section 120 - Standard of conduct: The resolution professional must perform functions in accordance with the standards specified under the Code.

Who is the Adjudicating Authority?

The relevant forum depends on the debtor and the statutory framework. Under Section 179, the Debt Recovery Tribunal is ordinarily the Adjudicating Authority for individuals and partnership firms under Part III, subject to the Code. Under Section 60, the National Company Law Tribunal has jurisdiction over insolvency and bankruptcy proceedings of personal guarantors to corporate debtors in the circumstances provided there. Applicability and commencement of Part III provisions must be checked for the relevant category of debtor.

Practical significance

Section 116 provides a route for resolving implementation difficulties without leaving the resolution professional to make contested legal decisions alone. Records of payments, compliance with plan terms and emerging disputes may be relevant to an application for directions. The precise relief available depends on the approved plan, applicable regulations and the facts of the case.

Official references and further reading

Read the Insolvency and Bankruptcy Code, 2016 on India Code, the official statutory PDF and the IBBI legal framework for relevant regulations, amendments and notifications. For the wider legislative context, see The Insolvency and Bankruptcy Code, 2016.

Legal information only. Statutory applicability, amendments and relevant case law should be checked for the particular matter.