IBC Section 2: Application of the Code

Section 2 of Insolvency and Bankruptcy Code, 2016: Application of the Code

Official Bare Act Text

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

The provisions of this Code shall apply to—

(a) any company incorporated under the Companies Act, 2013 or under any previous company law;

(b) any other company governed by any special Act for the time being in force;

(c) any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008;

(d) such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf;

(e) personal guarantors to corporate debtors;

(f) partnership firms and proprietorship firms; and

(g) individuals, other than persons referred to in clause (e), in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the case may be.

Legal Commentary & Landmark Judgments: Section 2

Section 2 defines the statutory application of the Insolvency and Bankruptcy Code, 2016, delineating the commercial entities, corporate persons, personal guarantors, partnership firms, and individuals governed by the Code.

Corporate Persons & LLPs: Applies to any company incorporated under the Companies Act and any limited liability partnership (LLP) registered under the LLP Act, 2008.
Other Statutory Corporations: Governs other bodies corporate incorporated under any law for the time being in force, as the Central Government may notify.
Personal Guarantors to Corporate Debtors: Applies to personal guarantors to corporate debtors under Section 2(e) (brought into force on December 1, 2019).
Partnership Firms & Individuals: Applies to partnership firms and proprietorship firms under Section 2(f), and individuals other than personal guarantors under Section 2(g).

Key Landmark Precedents:

Lalit Kumar Jain v. Union of India (2021) 9 SCC 321: The Supreme Court upheld the Central Government notification bringing Section 2(e) into force for personal guarantors to corporate debtors, holding that the approval of a resolution plan for the corporate debtor does not automatically discharge the liability of the personal guarantor.
State Bank of India v. V. Ramakrishnan (2018) 17 SCC 394: The Supreme Court held that Section 14 moratorium applies only to the corporate debtor and does not shield the personal guarantor, affirming the distinct application of the Code under Section 2(e).

Courtroom Practice & Strategic Litigation Guidance:

When pursuing personal guarantors (promoters/directors) under Section 95 IBC before the NCLT, establish jurisdiction under Section 2(e) r/w Section 60(2). A parallel CIRP against the corporate debtor does not bar simultaneous insolvency proceedings against the personal guarantor.