Insolvency and Bankruptcy Code, 2016 | Part III

Section 87: Application Against Decision of Resolution Professional

Section 87 provides a statutory mechanism for a debtor or creditor to challenge specified actions of a resolution professional taken under Section 86 during the fresh start process. It sets out the permitted grounds, the filing period and the Adjudicating Authority's role.

Commencement and applicability: The fresh start provisions in Chapter II of Part III should not be assumed to be operational for every individual debtor. Their practical availability depends on the applicable commencement notifications and rules. The notified personal-guarantor insolvency framework is distinct from the fresh start procedure described here. Check the current notifications before relying on this process.

What does Section 87 provide?

Under the Insolvency and Bankruptcy Code, 2016 (official India Code text), Section 87 permits a debtor or creditor aggrieved by action taken under Section 86 to approach the Adjudicating Authority on three specified grounds. It does not create a general appeal against every act of a resolution professional.

Section 87(1): Who may challenge and on what grounds?

A debtor or creditor aggrieved by action of the resolution professional under Section 86 may apply to the Adjudicating Authority within ten days of the decision, relying on one or more of these grounds:

Denial of opportunity: the resolution professional did not give the debtor or creditor an opportunity to make a representation.
Collusion: the resolution professional colluded with the other party in reaching the decision.
Non-compliance with Section 86: the resolution professional failed to follow the statutory requirements governing creditor objections and their examination.

These grounds are expressly limited by the provision. A challenge should identify the particular Section 86 action and explain how it falls within one of the three grounds.

Section 87(2): Decision by the Adjudicating Authority

The Adjudicating Authority must decide the application within fourteen days of the application and make such order as it considers fit. The statute does not prescribe a single mandatory outcome; the order depends on the challenge and the circumstances.

Section 87(3): Referral to the Insolvency and Bankruptcy Board

If the Adjudicating Authority allows the application, it must forward its order to the Insolvency and Bankruptcy Board of India (IBBI). The Board may then take action against the resolution professional as required under Chapter VI of Part IV of the Code, which addresses inspection, investigation and disciplinary proceedings. Allowing a Section 87 challenge does not itself mean that a particular disciplinary penalty automatically follows.

Key statutory time limits

Stage	Time limit	Provision
Debtor or creditor challenges the Section 86 decision	Within 10 days of the decision	Section 87(1)
Adjudicating Authority decides the challenge	Within 14 days of the application	Section 87(2)
Order forwarded to IBBI if challenge is allowed	No separate number of days specified in Section 87(3)	Section 87(3)

Section 79: defines terms used in Part III, including qualifying debt and excluded debt.
Section 80: lays down eligibility requirements for a debtor seeking a fresh start.
Section 84: addresses admission or rejection of the fresh start application.
Section 86: governs objections by creditors to qualifying debts and their examination by the resolution professional.
Section 88: imposes general duties on the debtor during the fresh start process.
Section 90: concerns directions to ensure compliance with applicable restrictions.
Section 92: provides for a discharge order in the fresh start process.
Chapter VI, Part IV: concerns regulatory oversight and disciplinary action in appropriate cases.

Practical considerations when preparing a challenge

A party considering a Section 87 application should retain the Section 86 decision, the date on which it was made, the original objection and supporting records, and any correspondence showing an opportunity to be heard or an alleged failure to comply with Section 86. The application should identify the exact statutory ground and the relief requested. Procedural requirements and the correct forum must be checked against the law actually in force.

Frequently asked questions

Who can file under Section 87?

A debtor or creditor aggrieved by an action of the resolution professional under Section 86, on one of the three statutory grounds.

What is the deadline for challenging the decision?

Section 87(1) specifies ten days from the decision being challenged.

Can the resolution professional face disciplinary proceedings?

Where the challenge is allowed, the order is forwarded to IBBI, which may take appropriate action under Chapter VI of Part IV.

Is Section 87 the same as an appeal under Section 61?

No. Section 87 is a specific challenge mechanism within the fresh start chapter; Section 61 concerns appeals against certain orders of the National Company Law Tribunal.

Official legal sources

This article explains the statutory text and is for general legal information. Commencement notifications, procedural rules and later amendments should be checked before taking action.