IBC Section 83: Examination of application by resolution professional

Section 83 of Insolvency and Bankruptcy Code, 2016: Examination of application by resolution professional

Official Bare Act Text

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

(1) The resolution professional shall examine the application made under section 80 within ten days of his appointment, and submit a report to the Adjudicating Authority, either recommending acceptance or rejection of the application.

(2) The report referred to in sub-section (1) shall contain the details of the amounts mentioned in the application which in the opinion of the resolution professional are-

(a) qualifying debts; and

(b) liabilities eligible for discharge under sub-section (3) of section 92.

(3) The resolution professional may call for such further information or explanation in connection with the application as may be required from the debtor or any other person who, in the opinion of the resolution professional, may provide such information.

(4) The debtor or any other person, as the case may be, shall furnish such information or explanation within seven days of receipt of the request under sub-section (3).

(5) The resolution professional shall presume that the debtor is unable to pay his debts at the date of the application if-

(a) in his opinion the information supplied in the application indicates that the debtor is unable to pay his debts and he has no reason to believe that the information supplied is incorrect or incomplete; and

(b) he has reason to believe that there is no change in the financial circumstances of the debtor since the date of the application enabling the debtor to pay his debts.

(6) The resolution professional shall reject the application, if in his opinion-

(a) the debtor does not satisfy the conditions specified under section 80; or

(b) the debts disclosed in the application by the debtor are not qualifying debts; or

(c) the debtor has deliberately made a false representation or omission in the application or with respect to the documents or information submitted.

(7) The resolution professional shall record the reasons for recommending the acceptance or rejection of the application in the report to the Adjudicating Authority under sub-section (1) and shall give a copy of the report to the debtor.

Legal Commentary & Landmark Judgments: Section 83

Section 83 defines the statutory duty of the Resolution Professional to examine the fresh start application and verify the debtor's eligibility within thirty days of appointment.

Mandatory 30-Day Examination Limit: The resolution professional shall examine the application within thirty days of his appointment and submit a report to the Adjudicating Authority.
Verification of Thresholds: Verify whether the debtor satisfies the four cumulative financial thresholds of Section 80 (income, assets, debts, dwelling unit).
Power to Require Information: The RP may require the debtor to produce additional information, bank statements, or explanations regarding qualifying debts.
Creditor Information Check: Check whether all qualifying debts are unsecured and properly disclosed.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court held that the RP's function under Section 83 is investigatory and recommendatory, designed to assist the Adjudicating Authority with an objective factual evaluation.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: Affirmed that the statutory verification under Section 83 filters out unmerited debt waiver claims.

Courtroom Practice & Strategic Litigation Guidance:

The debtor must promptly respond to all Section 83 queries within 7 days. Failure to furnish documents requested by the RP will lead to an adverse recommendation under Section 84.