MCQs based on decisions awarded by SC and HC

Q.1:- Whether home buyers can initiate CIRP proceedings under the Code:

• Home buyers are included in the definition of ‘Financial Creditors', hence they can do so.
• No, Home buyers cannot do so
• Home buyers are neither financial creditors nor operational creditors.
• None of the above

Q.2:- Whether a demand notice under section 8 of an unpaid operational debt can be issued by a lawyer/advocate on behalf of operational creditor:

• It can be issued.
• No, it cannot be issued.
• It can be issued, subject to the admission by the Adjudicating Authority
• None of the above

Q.3:- Whether arbitration proceedings can be initiated after imposition of moratorium under section 14(l)(a):

• Yes. it can be initiated as per the decisions of the parties
• No, it cannot be initiated after imposition of moratorium
• If the Arbitrator is agreed, it can be deals with under the arbitration
• It requires the permission of the Adjudicating Authority

Q.4:- After admission of the CIRP proceedings by the Adjudicating Authority, whether compromise can be allowed:

• On the basis of the recommendation of the Committee of Creditors the Adjudicating Authority can allow the compromise.
• On the basis of the recommendation of the Resolution Professional the Adjudicating Authority can allow the compromise
• No, the Adjudicating Authority cannot allow compromise by parties after admission of matter.
• The Adjudicating Authority can allow, if the parties want to settle down the case through the compromise.

Q.5:- What will be the position where a scheme was approved by the BIFR for the demerger of two companies, but due to the intervention of the Sick Industries Companies (Special Provisions) Repel Act, 2003 and Section 252 of the Insolvency and Bankruptcy Code, 2016, the proceedings before the BIFR was abated:

• After the IB Code came into force all the previous approval of the BIFR shall come to end.
• By virtue of Notification no. SO 1683(E), scheme which was approved by BIFR was deemed to be an approved resolution under Bankruptcy Code.
• The resolution plan will be restarted as a fresh.
• None of the above.

Q.6:- Scheme sanctioned by BIFR which is under implementation:

• Shall not been deemed to have been approved under section 31(1) of the IB Code.
• Shall be deemed to have been approved under section 31(1) of the IB Code.
• After the IB Code came into force, all previous sanction shall be void.
• None of the above.

Q.7:- Whether writ petition can be made where the NCLT by its impugned order admitted insolvency petition under section 7 against petitioner-company:

• Write petition challenging NCLT's order is liable to be dismissed as effective remedy of appeal under section 61 is available.
• Yes, through the writ petition, it can be challenged.
• Both the appeal and writ petition can be made.
• None of the above.

Q.8:- What is true about the moratorium under the IB Code:

• 'Moratorium' would not affect power of High Court under article 226 of Constitution of India
• If suit was filed before any High Court under original jurisdiction which was a money suit or suit for recovery against corporate debtor, such suit could not be proceeded after declaration of moratorium
• 'Moratorium' would not affect any suit or case pending before Supreme Court under article 32 of Constitution of India or an order passed under article 136 of Constitution of India
• All are correct

Q.9:- A moratorium period as prescribed under section 14 of the Code, would be applicable to a personal guarantor of a corporate debtor:

• If the personal guarantor do not object, then it is applicable
• No, it is not applicable
• Yes it is applicable
• None of the above.

Q.10:- The provision contained in section 9(3)(c) in respect of operational debt is directory and not mandatory. Evaluate this statement:

• It is mandatory
• It is the statutory provision
• The statement is not correct.
• The statement is correct

Q.11:- An Award was passed under Arbitration Act which has shown the operational debt as disputed. Whether operational creditor can initiate CIRP proceedings under the I&B Code:

• It can be initiated under the Code.
• It cannot be initiated under the Code.
• It can be initiated under the Code, if the Adjudicating Authority admits the case.
• None of the above.

Q.12:- What is correct in case a foreign company initiates corporate insolvency resolution process (CIRP) against corporate debtor:

• It needs to obtain a certificate from Indian financial institution evidencing default in repayment of a debt.
• It needs not to obtain a certificate from Indian financial institution evidencing default in repayment of a debt.
• It needs to observe requirements of a statute
• None of the above

Q.13:- After admission of the case by the Adjudicating Authority under section 9 the parties settled the matter out of court and moved instant Special Leave Petition. Whether in view of terms of Settlement so entered into between parties the powers under Article 142 of Constitution of India had been invoked to put a quietus to matter:

• No, the Supreme Court cannot utilize the powers under Article 142 of the Constitution of India to put a quietus to the matter.
• Yes, the Supreme Court can utilize the pow ers under Article 142 of the Constitution of India to put a quietus to the matter.
• Only Supreme Court may utilise its powers under article 142 of Constitution of India to allow’ a compromise to take effect after admission of insolvency petition
• None of the above

Q.14:- Where debentures have been matured but were not paid by the corporate debtors, what is the remedy available before the debenture holders under the IB Code:

• Where debentures have been matured but were not paid by the corporate debtors, what is the remedy available before the debenture holders under the IB Code:
• Debentures come within meaning of Financial Debt, hence non-payment of it amounts to ’default’ as defined under section 3(12) of the Code.
• Debentures have been specifically excluded from the financial debts.
• None of the above

Q.15:- Once moratorium is declared, decision to continue with objections of corporate debtor need to be taken only by:

• Insolvency Resolution Professional
• Board of Directors of the Corporate Debtor
• Committee of Creditors
• None of the above

Q.16:- Whether Central Government, is empowered to remove difficulties which came to its notice upon enforcement of Code and its implementation:

• The Central Government, in exercise of the power conferred under section 242 could have removed difficulties which came to its notice upon enforcement of Code and its implementation.
• No the Central Government cannot do so.
• The IB Code do no give powers the Central Government to do so.
• None of the above.

Q.17:- Section 14 of the IB Code, which deals with the moratorium period:

• It prohibits criminal proceeding during moratorium period.
• Does not prohibits a suit or a proceeding of a like nature
• It does not prohibit any criminal proceeding during moratorium period.
• None of the above.

Q.18:- Company Court while dealing with winding up petitions shall to stay proceedings before NCLT in respect of revival or resolution issue:

• Have overriding effect
• Have jurisdiction
• Have no jurisdiction
• None of the above.

Q.19:- Classification made by the IB Code amongst creditors of a company to financial creditor and operational creditors is:

• It is unconstitutional, but Adjudicating Authority can entertain the case till it is not objected by the parties
• It is unconstitutional
• Constitutionally valid
• None of the above.

Q.20:- Any scheme sanctioned under the SICA, 1985:

• Shall not be deemed to be an approved resolution plan under section 31 (1) of the Code.
• Shall not have any effect, since it is a repealed Act.
• Shall be deemed to be an approved resolution plan under section 31(1) of the Code.
• None of the above.

Q.21:- Can a IP form a LLP using the abbreviated name of IBBI:

• Yes, he can do so, if the MCA has approved the name.
• No he cannot do so.
• It amounts to contravention of Code of Conduct for Insolvency Professionals
• Both B and C are correct.