MCQs on Insolvency and Bankruptcy Code, 2016 Part -4

Q.1:- Where an undervalued transaction has taken place and the liquidator has not reported it to the Adjudicating Authority, a creditor may make an application to the Adjudicating Authority to declare such transactions and reverse their effect in accordance with Chapter III of Part II:

• void
• illegal
• valid
• voidable

Q.2:- The liquidator may, after verification of claims under section 39, either admit or reject the claim, in whole or in part, as the case maybe and shall communicate his decision of admission or rejection of claims to the creditor and corporate debtor of such admission or rejection of claims:

• Within Fourteen days
• Within seven days
• Within ten day
• Within twenty days

Q.3:- What are powers and duties of a liquidator:

• To sell the immovable and movable property
• To investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions
• To invite and settle claims of creditors
• All of the above

Q.4:- When a liquidation order has been passed by the Adjudicating Authority:

• a suit or other legal proceeding maybe instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority
• no suit or other legal proceeding shall be instituted by or against the corporate debtor
• Both A and B are correct.
• Both A and B are incorrect.

Q.5:- What is effect when a liquidation order has been passed:

• A suit or other legal proceeding maybe instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.
• No suit or other legal proceeding shall be instituted by or against the corporate debtor.
• Suit or other legal proceeding can be instituted by or against the corporate debtor.
• Only (A) and(B) are correct.

Q.6:- What are the consequences after the appointment of the liquidator:

• All powers of the board of directors except, key managerial personnel and the partners of the corporate debtor, as the case may be, shall cease to have effect and shall be vested in the liquidator.
• All powers of the key managerial personnel and the partners of the corporate debtor, as the case maybe, shall cease to have effect and shall be vested in the liquidator.
• All powers of the board of directors, key managerial personnel and the partners of the corporate debtor, as the case maybe, shall continue to have effect and no matter shall be vested in the liquidator.
• All powers of the board of directors, key managerial personnel and the partners of the corporate debtor, as the case maybe, shall cease to have effect and shall be vested in the liquidator.

Q.7:- Liquidation Estate shall comprise all liquidation estate assets which shall include the following:

• assets subject to the determination of ownership by the court or authority
• assets of any Indian or foreign subsidiary of the corporate debtor
• assets owned by a third party which are in possession of the corporate debtor
• bailment contracts

Q.8:- A preference shall be deemed to be given at a relevant time, if:

• a preference is given to a person other than a related party during the period of one year preceding the insolvency commencement date.
• It is given to a related party (other than by reason only of being an employee), during the period of two years preceding the insolvency commencement date
• Either A or B, both are correct.
• None of the above

Q.9:- Where the enforcement of the security interest by the secured creditor yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor shall:

• Keep such excess amount with him
• Tender to the liquidator any surplus funds received from the enforcement of such secured assets.
• Account to the liquidator for such surplus
• Both B and C

Q.10:- Liquidator shall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation:

• To any person who is not eligible to be are solution applicant.
• To any person who is eligible to be a resolution applicant
• To any person who is not related to the corporate debtor.
• None of the above.

Q.11:- A creditor may with draw or vary his claim under section 38 relating to the Consolidation of claims within of its submission:

• Twenty one days
• Twenty eight days
• Seven days
• Fourteen days

Q.12:- Where an insolvency professional proposed to be appointed as a liquidator, who shall pay the fees for the conduct of the liquidation:

• The fees for the conducts of the liquidation proceedings shall be paid to the liquidator from the proceeds of the liquidation estate.
• The fees for the conducts of the liquidation proceedings shall be paid to the liquidator by the Adjudicating Authority.
• The fees for the conduct of the liquidation proceedings shall be paid to the liquidator by the Committee of Creditors.
• The fees for the conducts of the liquidation proceedings shall be paid to the liquidator by the Corporate Debtor.

Q.13:- The order for liquidation under section 33 shall be deemed to be a notice of discharge:

• To all the operational creditors of the corporate debtors.
• To the officers, employees and workmen of the corporate debtor.
• To all the financial creditors of the corporate debtors.
• None of the above.

Q.14:- Where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, who will act as the liquidator for liquidation of the corporate debtor:

• The High Court will appoint a liquidator for the purposes of liquidation.
• The Interim Resolution Professional appointed for the corporate insolvency resolution process under Chapter II shall act as the liquidator for the purposes of liquidation unless replaced by the Adjudicating Authority.
• Liquidator is separately appointed by the Adjudicating
• The resolution professional appointed for the corporate insolvency resolution process under Chapter II shall, subject to submission of a written consent by the resolution professional to the Adjudicatory Authority.

Q.15:- The liquidator shall have the power to access any information systems for the purpose of admission and proof of claims and identification of the liquidation estate assets relating to the corporate debtor from the following sources:

• any data base maintained by the Board
• an information utility;
• credit information systems regulated under any law for the time being in force
• all of the above

Q.16:- Where the corporate debtor has been a party to an extortionate credit transaction involving the receipt of financial or operational debt preceding the insolvency commencement date, the liquidator or the resolution professional as the case maybe, may make an application for avoidance of such transaction to the Adjudicating Authority if the terms of such transaction required exorbitant payments to be made by the corporate debtor:

• During the period within two years
• During the period within three years
• During the period within four years
• During the period within three years

Q.17:- The liquidator shall receive or collect the claims of creditors within a period of from the date of the commencement of the liquidation process:

• Thirty days
• Ten days
• Forty days
• Twenty days

Q.18:- Where the Adjudicating Authority is satisfied that the terms of a credit transaction required exorbitant payments to be made by the corporate debtor, it shall, by an order:

• restore the position as it existed prior to such transaction
• modify the terms of the transaction
• set aside the whole or part of the debt created on account of the extortionate credit transaction
• all of the above.

Q.19:- What re course is available to the secured creditor, if in the course of realizing a secured asset, he faces resistance from the corporate debtor or any person connected there within taking possession of, selling or other wised is posing off the security:

• The secured creditor may make an application to the Adjudicating Authority.
• The secured creditor may make an application to the Interim Resolution Professional
• The secured credit or may make an application to the Resolution Professional
• The secured creditor may make an application to the Liquidator

Q.20:- What is the next step where the assets of the corporate debtor have been completely liquidated:

• The liquidator shall make an application to the Registrar of Companies where such Corporate Debtor is registered, for dissolution.
• The liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate debtor.
• The Corporate Debtor is deemed to be dissolved.
• None of the above

Q.21:- A copy of an order given by the Adjudicating Authority in the case of voluntary liquidation shall be forwarded________ from the date of such order, to the authority with which the corporate person is registered:

• within fourteen days
• within seven days
• within seven days
• within twenty one days

Q.22:- Under voluntary liquidation of the corporate person declaration under Section 59 (a) shall be accompanied with the following:

• A report of the valuation of the assets of the company, if any prepared by a registered valuer.
• Audited financial statements
• Record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later.
• All of the above

Q.23:- Involuntary liquidation the company shall notify the Registrar of Companies and the Board about the resolution under section 59(3) to liquidate the company________ of such resolution or the subsequent approval by the creditors, as the case maybe:

• within fourteen days
• within seven days
• within eight days
• within three days

Q.24:- Under voluntary liquidation of the corporate person, majority of the directors have to give a declaration as per section 59 (a)and of such declaration a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to a ctas the liquidator.

• within five weeks
• within three weeks
• within four weeks
• within two weeks

Q.25:- In the case of voluntary liquidation of the corporate person, where the company owes any debt to any person, creditors representing of the company shall approve the resolution passed under section 59 (3) (c) within seven days of such resolution:

• One-half in value of the debt
• two-thirds in value of the debt
• One-fourth in value of the debt
• two-thirds of the strength of creditors

Q.26:- What are the penalty provisions if, any person initiates voluntary liquidation proceedings with the intent to defraud any person:

• A penalty which shall not be less than one lakh rupees, but may extend to ten crore rupees.
• A penalty which shall not be less than one lakh rupees but may extend to one crore rupees.
• A penalty which shall not be less than ten lakh rupees, but may extend to one crore rupees.
• A penalty which shall not be less than one lakh rupees, but may extend to fifty lakh rupees.

Q.27:- The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within forty-five days, allow the appeal to be filed:

• Within a further period not exceeding fifteen days.
• Within a further period not exceeding twenty five days.
• Within a further period not exceeding seven days.
• Within a further period not exceeding twenty one days.

Q.28:- An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds:

• the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board
• there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
• the approved resolution plan is in contravention of the provisions of any law for the time being in force;
• any of the grounds mentioned above

Q.29:- What are the penalty provisions if any person initiates the liquidation proceedings fraudulently for any purpose other than for the liquidation:

• A penalty which shall not be less than one lakh rupees, but may extend to fifty lakh rupees.
• A penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
• A penalty which shall not be less than one lakh rupees, but may extend to ten crore rupees
• A penalty which shall not be less than ten lakh rupees, but may extend to one crore rupees.

Q.30:- Who is the Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof:

• National Company Law Tribunal having territorial jurisdiction over the place where the CFO’s office of the corporate person is located.
• National Company Law Tribunal having territorial jurisdiction over the place where the head office of the corporate person is located.
• National Company Law Tribunal having territorial jurisdiction over the place where the Corporate office of the corporate person is located.
• National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located.

Q.31:- The National Company Law Tribunal shall have jurisdiction to entertain or dispose of:

• Any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code.
• Any claim a debt or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India
• Any application or proceeding by or against the corporate debtor or corporate person
• All of the above

Q.32:- Where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor, as the case may be, of such corporate debtor shall be filed

• No need to file case against the personal guarantor.
• Before the National Company Law Tribunal having jurisdiction of place where such personal guarantor resides.
• Before such National Company Law Tribunal.
• Before the civil court having jurisdiction of place where such personal guarantor resides.

Q.33:- National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of a period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall___________.

• Not exceed twenty five days
• Not exceed seven days
• Not exceed fifteen days
• Not exceed twenty days

Q.34:- Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code from the date of receipt of such order:

• within forty-five days
• within fifteen days
• within sixty days
• within thirty days

Q.35:- Who is appellate authority for the order of the National Company Law Tribunal:

• National Company Law Appellate Tribunal
• Securities Appellate Tribunal
• Insolvency and Bankruptcy Board of India
• High Court having jurisdiction of the place where the registered office of the corporate person is situated.

Q.36:- What will be the treatment where an insolvency resolution process or liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor pending in any court or tribunal :

• It can be transferred at the request of the personal guarantor only.
• It shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such corporate debtor.
• The case cannot be transferred to any other court since it will be a problem for the personal guarantor to attend such case.
• The court or tribunal shall continue to deals with such case.

Q.37:- Every appeal of the order of National Company Law Tribunal shall be filed______ before the National Company Law Appellate Tribunal:

• within forty five days
• Within fifteen days
• within sixty days
• within thirty days

Q.38:- An appeal against a liquidation order passed under section 33 may be filed on grounds of:

• Fraud committed in relation to such a liquidation order
• Any of the alternative mentioned above
• Material irregularity
• None of the above.

Q.39:- Where any officer of the corporate debtor has within the immediately preceeding the insolvency commencement date willfully concealed any property shall be liable for the punishment as prescribed under section 68 of the Code:

• Twelve months
• Three months
• Nine months
• Six months

Q.40:- Punishment for providing false information in application made by corporate debtor under section 10:

• Imprisonment for a term which shall not be less than two years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than four years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than three years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both.

Q.41:- Where the corporate debtor, any of its officers or creditors or any person on whom the approved resolution plan is binding under section 31, knowingly and wilfully contravenes any of the terms of such resolution plan or a bets such contravention, such corporate debtor, officer, creditor or person shall be punishable with:

• Imprisonment of not less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment of not less than one year, but may extend to two years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment of not less than one year, but may extend to four years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment of not less than one year, but may extend to three years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.

Q.42:- What are the penal provisions where any officer of the corporate debtor makes a false representation or commits any fraud for the purpose of obtaining the consent of the creditors of the corporate debtor or any of them to an agreement with reference to the affairs of the corporate debtor, during the corporate insolvency resolution process, or the liquidation process:

• he shall be punishable with imprisonment for a term which shall not be less than four years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• he shall be punishable with imprisonment for a term which shall not be less than three years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• he shall be punishable with imprisonment for a term which shall not be less than two years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• he shall be punishable with imprisonment for a term which shall not be less than one year, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.

Q.43:- If an insolvency professional deliberately contravenes the provisions of this Part 112 he shall be punishable with:

• Imprisonment for a term which may extend to nine months, or with fine which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both.
• Imprisonment for a term which may extend to one month, or with fine which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both.
• Imprisonment for a term which may extend to three months, or with fine which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both.
• Imprisonment for a term which may extend to six months, or with fine which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both.

Q.44:- What punishment is prescribed, where any officer of the corporate debtor has at any time after the insolvency commencement date, taken in pawn or pledge, or otherwise received the property knowing it to be so secured, transferred or disposed, such officer shall be punishable with:

• Imprisonment for a term which shall not be less than three years but which may extend to five years, or with fine, which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year but which may extend to five years, or with fine, which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than four years but which may extend to five years, or with fine, which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than two years but which may extend to five years, or with fine, which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both

Q.45:- What is the punishment for falsification of books of corporate debtor:

• Punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Punishable with imprisonment for a term which shall not be less than two years, but which may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Punishable with imprisonment for a term which shall not be less than four years, but which may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Punishable with imprisonment for a term which shall not be less than one year, but which may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.

Q.46:- Where any creditor violates the provisions of section 14, any person who knowingly and willfully authorized or permitted such contravention by a creditor shall be punishable with:

• Imprisonment for a term which shall not be less than one year, but may extend to four years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year, but may extend to three years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year, but may extend to Two years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.

Q.47:- Where any person furnishes information in the application made under section 7, which is false in material particulars, knowing it to be false or omits any material fact, knowing it to be material, such person shall be:

• Punishable with fine which shall not be less than three lakh rupees, but may extend to one crore rupees.
• Punishable with fine which shall not be less than two lakh rupees, but may extend to one crore rupees.
• Punishable with fine which shall not be less than Fifty thousand rupees, but may extend to one crore rupees.
• Punishable with fine which shall not be less than one lakh rupees, but may extend to one crore rupees.

Q.48:- Where an operational creditor has willfully or knowingly concealed in an application under section 9 the fact that the corporate debtor had notified him of a dispute inrespect of the unpaid operational debtor the full and final payment of the unpaid operational debt, such operational creditor or person, as the case may be, shall be punishable with:

• Imprisonment for a term which shall not be less than one year but may extend to five years or with fine which shall not be less than four lakh rupees but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year but may extend to five years or with fine which shall not be less than three lakh rupees but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year but may extend to five years or with fine which shall not be less than two lakh rupees but may extend to one crore rupees, or with both.
• Imprisonment for a term which shall not be less than one year but may extend to five years or with fine which shall not be less than one lakh rupees but may extend to one crore rupees, or with both.

Q.49:- Where the corporate debtor or any of its officer violates the provisions of section143, any such officer who knowingly or wilfully committed or authorized or permitted such contravention shall be punishable with:

• Imprisonment for a term which shall not be less than four years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to three lakh rupees, or with both.
• Imprisonment for a term which shall not be less than three years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to three lakh rupees, or with both.
• Imprisonment for a term which shall not be less than two years, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to three lakh rupees, or with both.
• Imprisonment for a term which shall not be less than one year, but may extend to five years or with fine which shall not be less than one lakh rupees, but may extend to three lakh rupees, or with both.

Q.50:- For the matters relating to fresh start, insolvency and bankruptcy of individuals and partnership firms what is the minimum amount of default:

• The amount of the default is not less than ten thousand rupees.
• The amount of the default is not less than fifty thousand rupees.
• The amount of the default is not less than one thousand rupees.
• The amount of the default is not less than five hundred rupees.