Section 10 IBC: Corporate Applicant and Section 11 Cases

When the company itself applies, there is no dispute about default. The questions instead are whether the right internal approval was obtained, whether section 11 bars the application, and whether the filing is a genuine attempt at resolution or a tactic to stall creditors. The four questions below take each point in turn, ending with the company's attempt to withdraw once a buyer appears.

1. The Law in Brief

• Who may apply. A corporate applicant: the corporate debtor, an authorised member or partner, or a person in control of its management or financial affairs (section 5(5)), who must also propose an interim resolution professional (section 10(3)(b))
• Approval. A special resolution of the shareholders, or a resolution of at least three-fourths of the partners of an LLP, approving the filing (section 10(3)(c), inserted in 2018)
• Admission. The NCLT admits if the application is complete and no disciplinary proceeding is pending against the proposed interim resolution professional, after giving seven days to cure defects (section 10(4)); the CIRP begins on admission.
• Section 11. A company undergoing a CIRP or pre-pack, one that completed a CIRP or violated a plan within the last twelve months, or one in liquidation, cannot initiate a CIRP.

Figure 1: Requirements for a section 10 application

2. Is a Board Resolution Enough for a Section 10 Application?

• Issue. Whether a board resolution is enough to authorise a section 10 application.
• Law. Section 10(3)(c) requires the corporate applicant to furnish the special resolution passed by its shareholders approving the filing. The provision was added because admission takes control away from the board and affects every member. Under section 10(4)(b), the NCLT must give the applicant seven days' notice to rectify a defect before rejecting the application.
• Application. The board resolution authorises the managing director to sign and file, but there is no special resolution of the shareholders. The application is incomplete.
• Conclusion. The NCLT should not admit the application as it stands but should give JJ Ltd seven days to file the special resolution. If the members pass it in time, the application may be admitted; otherwise it must be rejected.

3. When Does Section 11 Bar a Fresh CIRP?

• Issue. Whether section 11 bars KK Ltd's application, and whether it bars LL Ltd from proceeding against its own debtor.
• Law. Section 11(b) bars a corporate debtor that has completed a CIRP twelve months before the date of the application. Explanation II, added in 2020, clarifies that section 11 does not prevent a corporate debtor referred to in it from initiating a CIRP against another corporate debtor.
• Application. KK Ltd completed its CIRP eight months ago, within the twelve-month bar. LL Ltd, by contrast, is not seeking to initiate a process against itself; it is a creditor of MM Ltd.
• Conclusion. KK Ltd's application is barred until twelve months have passed from completion of its CIRP. LL Ltd, acting through its resolution professional, may apply against MM Ltd, as Explanation II permits, subject to the usual requirements of section 9.

Figure 2: The bars in section 11

4. Can a Company File under Section 10 to Stop SARFAESI?

• Issue. Whether the NCLT may refuse a complete section 10 application because it was filed to obtain a moratorium, or because facts outside Form 6 were not disclosed.
• Law. In Unigreen Global v Punjab National Bank (2017), the NCLAT held that the NCLT must admit a complete section 10 application where there is a default and section 11 does not apply; it cannot reject it for not disclosing facts that Form 6 does not require, which is not suppression. Where the NCLT finds, on the record, that a CIRP was initiated fraudulently or with malicious intent for a purpose other than resolution or liquidation, section 65 provides a penalty, and after 2026 section 64A allows a penalty for frivolous or vexatious proceedings.
• Application. OO Ltd is in default and the application is complete. The moratorium is the statutory result of every admission, so seeking it is not by itself malicious. The DRT case was not a required disclosure. OO Ltd's promoters also gain little control, as the board is suspended and section 29A will generally bar them from bidding.
• Conclusion. The application should be admitted. NN Bank may prove its claim as a secured financial creditor in the CIRP. If later facts show the filing was collusive or fraudulent, for example with a friendly creditor to keep control, a penalty under section 65 may follow.

5. Can a Section 10 CIRP Be Withdrawn after Admission?

• Issue. Whether a CIRP initiated under section 10 may be withdrawn after admission, and the effect of the first invitation for plans.
• Law. After admission, the CIRP is a proceeding in rem for all creditors and the corporate applicant cannot withdraw it on its own. Section 12A allows withdrawal on an application with the approval of 90 per cent of the voting share of the committee, made through the resolution professional. After the 2026 Amendment, withdrawal is not permitted once the first invitation for resolution plans has been issued.
• Application. The committee's 92 per cent support would satisfy the voting requirement, but the first invitation for plans had already been issued in August 2026, and the amendment has applied since 26 May 2026.
• Conclusion. Withdrawal under section 12A is barred. The investor's offer may still be pursued by submitting a resolution plan, if the investor is eligible under section 29A, or through a settlement reflected in a plan approved by 66 per cent of the committee. Had the shareholders acted before the invitation, withdrawal would have been possible with 90 per cent approval.

6. Frequently Asked Questions

Can a solvent company apply under section 10?

No. Section 10 requires a default. A solvent company wishing to close uses voluntary liquidation under section 59, which needs a declaration of solvency.

7. Related Topics

• Topic 14: Section 10. Voluntary CIRP by the corporate debtor.
• Topic 16: Section 11. Persons not entitled to initiate.
• Topic 102: Limitation for IBC Applications. Default, acknowledgement and condonation.