IBC Section 11: Persons not entitled to make application

Section 11 of Insolvency and Bankruptcy Code, 2016: Persons not entitled to make application

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

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

(b) a corporate debtor having completed corporate insolvency resolution process 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.-For the purposes of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor.

Legal Commentary & Landmark Judgments: Section 11

Section 11 creates absolute statutory disqualifications barring certain corporate entities and individuals from making an application to initiate the Corporate Insolvency Resolution Process under Chapter II.

Corporate Debtor Undergoing CIRP: A corporate debtor undergoing a corporate insolvency resolution process is barred from initiating CIRP against itself or other debtors.
Completed Pre-Pack or CIRP Within 12 Months: A corporate debtor having completed CIRP twelve months preceding the date of making of the application is disqualified.
Violation of Approved Plan: A corporate debtor or financial creditor who has violated any of the terms of a resolution plan which was approved twelve months before the date of application is barred.
Liquidation Order Bar: A corporate debtor in respect of whom a liquidation order has been passed under Section 33 is barred from applying.
Carve-Out for Creditors: The Explanation clarifies that nothing in Section 11 prevents a corporate debtor referred to in clauses (a) to (d) from initiating CIRP against another corporate debtor.

Key Landmark Precedents:

Manish Kumar v. Union of India (2021) 5 SCC 1: The Supreme Court upheld the constitutional validity of Section 11, affirming that the legislative purpose is to prevent serial, collusive, or abusive insolvency filings by delinquent corporate managements.
Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. (2019) 18 SCC 549: The Supreme Court analyzed the statutory bar under Section 11, holding that an existing winding-up proceeding does not prevent an independent financial creditor from initiating CIRP under Section 7.

Courtroom Practice & Strategic Litigation Guidance:

In corporate applicant filings under Section 10, cross-check whether any Section 11 disqualification applies. If the corporate debtor is currently under an active liquidation order or breached a resolution plan within the past 12 months, Section 11 operates as an absolute jurisdictional bar.