CS Professional December 2025 Question Paper Insolvency and Bankruptcy - Law and Practice

FOR CS PROFESSIONAL EXAM PREPARATION

CS Professional 2025
Question Paper ·
Insolvency and
Bankruptcy - Law
and Practice
EXAM YEAR TYPE

CS Professional 2025 Question Paper
SUBJECT DATE

Insolvency and Bankruptcy - Law and Practice December 2025

Notes · Sample Papers · Previous Year Papers · Mock Tests

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Roll No. ..................................... : 1 : OPEN BOOK EXAMINATION

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Time allowed : 3 hours Maximum marks : 100

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l of questions : 4 ag
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Total number Total number of printed pages : 20

NOTE : Answer ALL Questions.

1. Read the following case study and answer the questions that follow :

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Arya is a Practicing Company Secretary and Insolvency Professional. She renders Corporate

Management and Law Colleges on theem
Advisory Services and very often delivers guest lectures in Financial Institutions, Banks and

la s topics of Corporate Insolvency, Restructuring and
Fund Raising.
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R. K. Institute of Management and Technology (RK-IMT) is a reputed management college
in Jaipur. RK-IMT was established in the year 2000 and this year the college in completing
its glorious 25 years. The RK-IMT planned for its Silver Jubilee and organized a whole
week of celebrations. During this week the college organized various programs / activities
viz: Sports Day, Debate Competition, Cultural Evening, Seminars, Workshop etc.
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Arya was invited to address a seminar on the topic of Corporate Insolvency. Arya explained

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the objectives and purposes of the Insolvency and Bankruptcy Code, 2016 (IBC) and touched

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the key points relating to Financial Creditor, Operational Creditor,lCorporate
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Debtor, Default,
Initiation of Corporate Insolvency, Constitution of Committee
Resolution Process Period etc. After delivering a thought-provoking lecture, Arya invited the
audiences to raise queries on the topic.

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Vedika, a student of the college, was curious to know more about Insolvency Law. She

exclaimed to know that the IBC is a totally new concept and prior to this enactment whether

there was any such law on insolvency existed in India. Arya clarified the position.

Reyansh, an Associate Professor of the college, was curious to know that whether IBC is

an effective recovery tool and the lending institution can effectively exercise its control over

the debtor through the Resolution Professional. Arya again clarified the doubts of Reyansh

referring the objectives and purpose of IBC.

As a lecturer of the Institute, Rohil shared his own experience, he booked a 2-BHK Flat

in Swarnim Galaxy, a building project of Swarnim Builders Limited (Swarnim Builders), and

paid upto 90% of the purchase price to the builder, Swarnim Builders, on various stages.

Ten per cent (10%) of the purchase price was to be paid at the time of taking the possession

which was due in December, 2023. However, the possession of the flat was not given by

the Builder to him. Rohil is not the only allottee but all the other allottees who had booked

the flat in the Swarnim Galaxy were not given the possession and the Builder was taking

excuses by narrating false reasons. Rohil narrated the whole story before the Arya and requested

if she could help him. Arya asked Rohil to let her know the details of the project and

relevant information to proceed in the case.

Rohil meets Arya at her office and submits her the details of the project available with him.

Arya studies about the project and also checks the financial statements of Swarnim Builders,

which are filed with Registrar of Companies. On scrutiny of financial statements, Arya found

out that Rishabh Suppliers Limited (RSL), one of the major suppliers of Swarnim Builders

had supplied the construction materials to Swarnim Builders amounting to ` 15 crore. On

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scrutiny of RSL’s financial statements, Arya has found out that RSL has assigned its book

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debts at a discount of 3% in favour of the Moon star Financiers Limited (MFL) a NBFC
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Company.

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a(a) Vedika, student of RK-IMT, stated that the Insolvency and Bankruptcy Code, 2016
Based on the above factual background, answer the following questions :

(IBC) has introduced the concept of the insolvency and bankruptcy in India for the
first time in India and prior to the enactment of the IBC there was no codified law
on this subject and the Courts were granting relief to the insolvent debtors as per
the customs, usage and practices prevalent in the respective regions/states. Do you

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agree with the opinion of Vedika ? Comment.

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(b) Reyansh, Associate Professor, believed that the Insolvency and Bankruptcy Code, 2016
(IBC) is a recovery legislation for creditors. Discuss this statement in light of the
decided case law.

(5 marks)

(c) Rohil had booked a flat from Swarnim Builders but the possession was not given

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to him on the due date. What shall be the status of Rohil in this case and whether

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he can initiate the insolvency proceedings against the Swarnim Builders ? Discuss the

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matter with decided case law.

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(5 marks)

(d) In the given case, if Corporate Insolvency Resolution Process (CIRP) is initiated against
Swarnim Builders, who can be a member of the Committee of Creditors (CoC) ?
Whether Moon Star Financiers Limited (MFL), in whose favour the RSL has assigned

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its book debts, can be treated as Financial Creditor ? Explain the relevant provisions
of the IBC.

(5 marks)

(e) Whether the Corporate Insolvency Resolution Process (CIRP) initiated against Swarnim
Builders, is required to be completed within a fixed time frame ? If so, what is
the time limit for completion of CIRP and whether any extension can be granted
by the Adjudicating Authority ? Also specify the grounds of exclusion of certain period
for the purpose of counting the total period of Insolvency Resolution Process.

(5 marks)

2. (a) Suruchi Fabrics Limited (SFL) availed term loan of ` 10 Crore and cash credit facility
of ` 2 Crore from A-One Bank Ltd. Since the SFL was unable to service the
loan, the Board of Directors of the company passed a resolution to initiate Corporate
Insolvency Resolution Process (CIRP) and proposed the name of Aneri, an Insolvency
Professional to act as Interim Resolution Professional (IRP). Apart from the credit
facility from the A-One Bank, SFL have no other financial creditor. However, SFL
have outstanding dues towards its operational creditors amounting to ` 25 Crore.

Mathew is the Company Secretary of A-One Bank. Mathew’s younger brother Thomas
is the Chief Financial Officer in the SFL. Although Mathew and Thomas are brothers
in relation, they are not in talking terms. Thomas joined the SFL after the loan was
disbursed by the Bank.

In the first meeting of the Committee of Creditors (CoC) it was decided to change
the existing IRP and to appoint Brijesh as Resolution Professional.

The Information Memorandum was prepared and expression of interest was invited
for resolution plan.

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Two Resolution Proposals were submitted, details of which are as under :

(i)
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cplan. Dinesh who is the Managing Director of the company holds 90% ofse
A company named as Dinesh Textiles Private Limited, submitted the resolution
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s em the equity and rest 10% is in the name of his wife Neeta. Dinesh Textiles
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a Private Limited has availed loan from another bank and his account has been
classified as Non-performing Account by that bank.

(ii) Harsh, another Resolution Applicant was convicted and remained in imprisonment
for two years under the provisions of the Prevention of Money Laundering
Act, 2002. He was released in December 2021.

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On the above background, referring relevant case laws, provisions of the Insolvency

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and Bankruptcy Code, 2016 and Regulations made by IBBI, answer the following
questions :
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(i)
a g information given in the case whether SFL can initiate
On the basis of the
the corporate insolvency resolution process (CIRP) ? Refer relevant provisions
of the Code.

(2 marks)

(ii) Will your answer differ, if the SFL has not defaulted in servicing the credit

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facility granted by the A-One Bank but still want to initiate the CIRP ?

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(iii) What would be your answer, if Thomas, who is the CFO (Key Managerial

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Personnel) in the SFL resigns before the initiation of the CIRP so as to give
effect to the exclusion of ‘related party’ in terms of Section 5(24A) (b) of
the Code ? Support your answer referring relevant case law.

(4 marks)

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(iv) In the given case, two resolution plans were received by the CoC. One from
Dinesh Textiles Private Limited and another one from Harsh. Examine the validity
of both the resolution plans.

(4 marks)

(b) An Asset Reconstruction Company (ARC) is a special type of financial institution that
buys the debtors of the bank at a mutually agreed value and attempts to recover
the debts or associated securities by itself.

The asset reconstruction companies or ARCs are registered under the RBI and regulated
under the Securitisation and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 (SARFAESI Act, 2002).

The ARCs take over a portion of the debts of the bank that qualify to be recognised
as Non-Performing Assets. Thus, ARCs are engaged in the business of asset
reconstruction or securitisation or both.

All the rights that were held by the lender (the bank) in respect of the debt would
be transferred to the ARC. The required funds to purchase such debts can be raised
from Qualified Buyers.

Based on the above information, answer the following questions :

(i) Who is a Qualified Buyer ?

(2 marks)

(ii) How ARCs can acquire rights or interest in financial assets from Banks or
Financial Institutions ?

(3 marks)

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(c) “As an important stakeholder of the ecosystem, the Insolvency professionals are required

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to maintain fine balance between high degree of proficiency and ethical standards.

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Ethical standards largely entail commitment to excellence, preservation of reputation,

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a or moral turpitude. The IP is expected to act in good faith in discharge of his dues,
and requires stringent compliance to statute without any consideration of undue favours

with utmost integrity, objectivity, independence, impartiality and should make earnest
efforts to maximize the value of assets of the debtor. An IP needs to ensure that
the Corporate Insolvency Resolution Process is run in a fair and objective manner
in the best interest of the stakeholders. Thus, it is of utmost importance that the

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IPs maintain high standards of professional ethics, so as to maximise value for all

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stakeholders. The professionals are also expected to maintain the highest standards

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of professional competence and professional ethics while discharging their duties.”

Further to the above ainformation, the following are few instances of Insolvency
Professional Contraventions and his explanation thereon based on Professional and Ethical
Practices of IPs. By citing the appropriate Sections of the IBC, 2016 Act / Regulations
of IBBI, explain if the IP’s explanation is correct or otherwise.

(i) Case : Appointment of third valuer at the instance of CoC.

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Contravention :

c. o RP appointed third valuer to determine fair value m
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– and liquidation value

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of the CD at the desire of CoC.

Submission by IP : a
– The RP submitted that the third valuation was done for the satisfaction
of the stakeholder only.

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– The decision of the CoC to get a third valuation done was in exercise
of its commercial wisdom to better equip the CoC to take a final
call on resolution plans.

– That the conduct of the third valuation at the desire of the CoC does
not invalidate the decisions or actions taken by the RP and has not,
in any way, affected the acceptance or rejection of resolution plan.

(4 marks)

(ii) Case : Failure to represent on behalf of the CD in an arbitration proceeding.

Contravention :

– Arbitration petition was filed by an Insurance Company against the CD.
Matter was heard during CIRP and was awarded in favour of the
CD. Consequently, the insurer handed a cheque of ` 8.3 Crore in
the hands of the Ex-director of the CD, who accepted it as full and
final settlement of the claim (thus foregoing an amount of ` 2.3 Crore),
the correspondence in respect of claim by Insurance Company to the
residential address of the Ex-Director instead of CD Address.

– The amount of ` 8.3 Crore was duly deposited by the Ex-director
in the accounts of the CD. Only after the Investigating Authority raised
its concern in this issue the RP filed application before NCLT claiming
an additional amount of ` 2.3 Crore from insurer and initiated appropriate
actions against the ex-director and promoter of the CD u/s 66 and
67 of the Code.

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Submission by IP :
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RP regarding settlement of the insurance claim and had filed necessary

ag affidavits in this regard in a wrongful and clandestine manner keeping
the RP in dark. Dealings with the insurer in this regard were without
the prior knowledge, consent or permission of the RP.

– Upon being aware of the claim settlement, RP took necessary actions
to file claims against the insurer and promoter and ex-director, claiming

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the amount of ` 2.3 Crore.
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That the amount of .` 8.3 Crore was deposited by the Ex-director
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s account without RP’s knowledge and the entire sum
–

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in the Company’s
so received

(4 marks)

3. (a) The financial creditors initiated the corporate insolvency resolution process (CIRP) against
Romi Digital Publications Ltd. (RDPL) under Section 7 of the Insolvency and Bankruptcy

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Code, 2016, since it defaulted in payment of the dues. Whereas the application for

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initiation of CIRP before the NCLT was under the ‘pre-admission stage’ the RDPL

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(the Corporate Debtor) started the process of settlement talks with the financial creditors.

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The RDPL requested before the NCLT that since matter is under negotiation with

the financial creditors and likely to settle the matter through compromise with the

financial creditors, within a period of 3 months, therefore the initiation of the CIRP

may be kept in abeyance.

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Whether the NCLT can keep the matter of initiation of CIRP application of the financial

creditors in abeyance looking to the fact that the corporate debtors is under the

process of negotiations with the financial creditors ? Substantiate your answer with

the decided case law.

(5 marks)

(b) In Corporate Insolvency Resolution Process (CIRP) the management of Corporate

Debtors vests with the Resolution Professional whereas in case of Pre-packaged

Insolvency Resolution Process (PPIRP) it vests with the Corporate Debtors itself.

Elucidate this statement. Also discuss the circumstances when the management of the

corporate debtors shall vest with the Resolution Professional in PPIRP.

(5 marks)

(c) Bharti Gym Equipment Limited is a profit making, dividend paying company. In January

2024 the company decided to initiate voluntary liquidation proceedings. After completing

the required process, the company filed an application before the NCLT which was

accepted and with due process of law, it ordered for its liquidation. However, some

of the shareholders of the company have not claimed the dividend declared by the

company in previous years and were lying in the ‘Unclaimed Dividend Account’.

The Liquidator of the company wants to seek your advice on how to deal with

such unclaimed dividend ? Give your answer in light of the provisions of the Code.

(5 marks)

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(d)
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Pluto Infrastructures Limited filed an application for initiation of CIRP under Section
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.co Code. The NCLT admitted the application and moratorium was imposed.sem
em an Insolvency Professional was appointed as Interim Resolution Professional
10 of the

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la (IRP) who was confirmed to continue as Resolution Professional in the first meeting
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Padam,

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of the Committee of Creditors (CoC). The Resolution Plan submitted by one of the

Resolution Applicant was placed before the CoC and thereafter before the NCLT

for its final approval. The NCLT observed that the Resolution Plan do not meet

all the requirements as per the provisions of the Code and removed Padam and

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appointed another Resolution Professional. Aggrieved from the order to the NCLT,

m . NCLAT taking the plea that NCLT have no
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Padam preferred an appeal before the

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powers to remove Resolutiona Professional since it vests only with the CoC. Whether

NCLT is empowered toaremove a Resolution Professional ? Substantiate your answer

with the decided case law.

(5 marks)

(e) Reyas Paper Limited (RPL) was incorporated in 2005. The promoters of the RPL

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had put their maximum effort and energy for 10 years to set-up this paper plant.

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of the financial creditor. The financial creditor initiated corporate insolvency resolution

process against the company. In the absence of approved

days having completed, the ‘Adjudicating Authority passed an order of liquidation of

the RPL.

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The promoter of the RPL preferred an appeal before the NCLAT requesting therein

that the promoter should be given an opportunity to settle the dues through compromise

or arrangement under Section 230 of the Companies Act, 2013. Whether the promoter’s

application to settle the dues through compromise or arrangement can be entertained

after the order liquidation ?

(5 marks)

4. (a) PQR Private Limited (PQR) has requested the Managing Director of MNC Private

Limited (MNC), who is good friend of PQ, who is Managing Director of PQR to

invest in the shares of PQR. On the request of PQR, the funds were infused by

the MNC, as share application money. In return, the PQR had allotted 3000 equity

shares for an amount of ` 6.97 Lakh in the share capital of the PQR to the MNC.

Subsequently, another sum of ` l.32 Crore was paid as share application money by
the MNC for allotment of equity shares as share application money. No shares were
however allotted by the PQR but ` 40 Lakh was refunded by the PQR from the
said share application money. The PQR was not able to refund the balance amount
of ` 92 Lakh. The PQR not being in a position to refund the balance amount of
share application money purportedly on account of liquidity crunch, instead agreed
to allot shares for the balance amount subject to the MNC providing additional funds
to the PQR. The MNC thereafter provided additional funds of ` 79.60 Lakh which
were paid in several instalments. Since neither the shares were allotted not the share

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application money was refunded, the MNC sent a Demand Notice to the PQR for
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.co of the share application money. Since the Corporate Debtors failed to repaysem
repayment

s emamount, the MNC filed an application under Section 7 of the Code beforeglthea
la Adjudicating Authority. a
the

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Whether the share application money which was deposited with the PQR by the MNC

fell in the category of Section 5(8) of the Insolvency and Bankruptcy Code, 2016.

(5 marks)

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(b) DSP Private Limited (the Corporate Debtor) underwent a corporate insolvency resolution

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process (CIRP) in 09.12.2021 initiated by a financial creditor. A Resolution Plan was

e m Applicant which was approved by the
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put forth by MM Limited, a Resolution

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Adjudicating Authority.

Prior to the commencement of the CIRP, on 20.10.2017 various First Information

Reports (FIR) alleging offenses including cheating and criminal breach of trust were

filed against the Corporate Debtor and its former promoters.

These offenses fell under the “schduled offenses” as per Prevention of Money Laundering

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was filed by the Enforcement Directorate (ED) on 08.03.2018. The. ECIR estimated
Act, 2002 (PMLA). Consequently, an Enforcement Case Information Report (ECIR)

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s em the “proceeds of crime” to be approximately ` 9000 Crore.aAs a result of the ECIR,
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the ED filed an “original complaint,” leading to attachment proceedings against the

assets of the Corporate Debtor. This included four bank accounts and 14 flats constructed

by the Corporate Debtor valued at ` 35 Crore referred to as the “Attached Properties”.

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The attachment was initially provisional under Section 5 of the PMLA on 14.02.2019

and later confirmed by an order dated 05.08.2019 passed by the Adjudicating Authority.
The attachment persisted even after the initiation of the CIRP and continued after
the approval of the Resolution Plan.

MM Limited, the Resolution Applicant had filed Writ Petition in the High Court against
the Adjudicating Authority under the PMLA, 2002 and the Deputy Director, Enforcement
Directorate to quash the ECIR, the orders attaching the Attached Properties and the
“original complaint”, based on which the attachment was effected as they relate to
the Corporate Debtor and its assets and to release the Attached Properties.

On the above background, referring to the High Court’s decision state whether the
NCLT has the jurisdiction to direct the Enforcement Directorate to release the attached
properties once the Resolution Plan in respect of said Corporate Debtor is approved ?

(5 marks)

(c) The City Development Authority (CDA / Lessor) entered into a lease deed with ABC
Private Limited (the Corporate Debtor / Lessee) in respect of a piece of land for
the purpose of constructing residential flats according to the setbacks and building
plan approved by the lessor.

The lessee was to pay the lease premium of ` 24.29 Crore, out of which 10%
i.e. ` 2.42 Crore was paid by the lessee to the lessor with a moratorium of 24
months from the date of allotment and after the expiry of moratorium period, the
balance 90% premium i.e. ` 21.86 Crore of the plot along with interest was to
be paid in the manner provided in the lease deed.

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In the meantime, an application filed under Section 7 of the Code against the Corporate

o admitted on 10.10.2019. The CDA put up its claim of ` 32.96 Crore em
debtor cwas
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e m on 10.10.2019 to the RP on 31.12.2019. l a s
la sassessed
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ag The RP invited for Expression of Interest (EOI) and Resolution Plans were submitted
by few Resolution Applicants. Resolution Plan submitted by the consortium of home

buyers’ association, namely, Crossroad Welfare Society was approved by the CoC

and thereafter, the RP filed an application before the Adjudicating Authority seeking

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its approval. The said application is pending.

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Meanwhile, CDA submitted a letter dated 04.06.2021 to the RP highlighting its dues

l a s from 11.10.2019 to 30.06.2021 amounting to ` l6.15
towards lease premium calculated

agwithin a period of 15 days. However, the said dues were
Crore, which is payable

not paid within the stipulated period, therefore, the CDA presumed that the RP has

declined the same and filed the application before the Adjudicating Authority on

27.09.2021.

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The Adjudicating Authority stated that in terms of explanation of Section 14(1) of

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the Code, the applicant is entitled to get lease premium amount as well as lease

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rent arising for the use or continuation of the lease during the moratorium period

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and in case of non-payment the moratorium benefit will not apply for the suspension

or termination of lease. The Adjudicating Authority ordered that the Resolution Professional

has failed to pay the lease premium and lease rent due to the CDA, therefore, the

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Resolution Professional is directed to make the payment of the lease amount within

6 months or else include the said amount as Insolvency Resolution Process Cost under

Regulation 31 of the IBBI (Insolvency Resolution Process of Corporate Person).

On the above background, state whether the Adjudicating Authority has rightly applied

the explanation under Section 14(1)(d) of the Code for the purpose of directing the

Resolution Professional to pay the lease premium amount and the lease rent to the

CDA ?

(5 marks)

(d) The Insolvency and Bankruptcy Code, 2016 (IBC/Code) creates an ecosystem for

maximizing the value of assets of the corporate debtor (CD) and balancing the interests

of all stakeholders in a time-bound manner. A significant value of insolvent entities

is often locked in assets underlying avoidance transactions which are undertaken by

the CD prior to the initiation of the Corporate Insolvency Resolution Process (CIRP).

The resolution professional (RP) or the liquidator is obliged to file applications, in

respect of avoidance transactions (preferential, undervalued, extortionate and fraudulent

transactions) found by him during CIRP and liquidation processes before the Hon’ble

Adjudicating Authority (AA), seeking appropriate relief permissible under the Code.

While the RP/Liquidator may have filed an application with the AA based on his

determination, it may not always be possible for the AA to consider and dispose

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of the application during the tenure of the CIRP or the liquidation process. Section
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.co Code clarifies that the filing of an avoidance application by the RP shallsem
emaffect the proceedings of CIRP. Avoidance applications and CIRP are a separate
26 of the

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la set of proceedings and avoidance applications can be continued post-completion
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not

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CIRP. The IBC provides that the resolution / liquidation process should not be held

up if avoidance transaction applications are pending. During CIRP, if the decision on

avoidance transactions is pending before resolution is finalised, the amount would claw

back to CD for the benefit of creditors. The CIRP Regulations mandate that a resolution

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plan should contain the details of the party / person who will pursue these avoidance

transactions after the approval ofm
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s if any, from such proceedings will be distributed.
the resolution plan, who will get the proceeds and

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the manner in which the proceeds,

Consequently, after the resolution plan is approved, the RP has no role in pursuing

these transactions and creditors/successful resolution applicant (SRA) will have to make

their own arrangements to pursue them before the AA.

The amount clawed back would reflect in higher bids. In cases where decision on

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. applicants
avoidance transactions is not available, the avoidance transactions being assets of the

c. o s e m
em
CD, could be permitted by the CoC to be bid by prospective resolution

s g lato assign the avoidance
la a
(PRAs) in the resolution plan. In case the CoC decides

transactions to a resolution applicant (RA), the specifics of avoidance transactions should

be made explicit in the Information Memorandum (IM) and Request for Resolution

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.co s e
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Plan (RFRP), allowing prospective RAs to account for the value of avoidance transactions

while submitting their plan. The CoC in the resolution plan should not give the proceeds

of avoidance transactions to the RA without detailing such transactions in the IM or

RFRP and without transparent bidding for such transactions. Another option could be

to invite bids for avoidance transactions separately after obtaining the approval of AA

and the amount recovered could be appropriated by the creditors post-approval from

the AA.

Since avoidance transactions involve significant sums and potentially result in large

recoveries, creditors should keep these avoidance transactions to themselves and benefit

from the upside.

XYZ Company Limited, who is now under CIRP, The Committee of Creditors on

the advice of Resolution Professional as appointed Forensic Auditor to track the

transactions and to identify whether any transactions had been done in violations of

the Code. The Transactional Auditor has identified few of the transactions under Sections

43, 45, 66 and 50 of the IBC, 2016. Before, the Transactional Auditor submit his

report, the Resolution Professional as a Company Secretary sort your suggestions on

how the following “Transactions” be divided under four separate categories viz., (a)

Preferential Transactions (b) Undervalued Transactions (c) Fraudulent Transactions and

(d) Extortionate Transactions, based on the above information.

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om
List of transactions (assume that these transactions are carried within the timelines
. co
.c e m
e m
specified under the Code) :
l a s
la s a g
ag (i) Payment to unsecured family loans during the look back period, while the

debt of secured creditors is outstanding.

(ii) Payment of old operational creditors (other than regular business payments against

supply of goods or services), while the debt of secured creditors or unsecured

m
financial creditors are outstanding.

c o
. Creditor, may be as per pre-fixed loan
e m
s
(iii) Payment to an Unsecured Financial

instalments, while l
g a
a
the debt of secured creditors is still outstanding.

(iv) Sale of fancy and expensive cars owned by the Corporate Debtor to related

parties or unrelated parties at a value which is much less than the market

value of the car.

o m
c
(v) Six months before initiation of Corporate Insolvency Resolution Process, the

m Managing Director has availed a private finance of ` 5 Crore. from his relative
c. o s em
s em a 5 years.
at the interest rate of 60% p.a. and repayable lwithin
g
la a
(vi) Payment to those creditors who have security of post-dated cheques signed

by the directors.

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(vii) Payment of old tax dues where there exists a risk of prosecution without any

order from a court or authority.

(viii) Transfer of good franchisees to another person at a value which is much lower

than the actual value.

(ix) Transfer of shares of subsidiary companies where the business is lucrative at

a price which is less than the actual value.

(x) Corporate Debtor had bought new Machinery worth ` 2 Crore, just one year

before initiation of Corporate Insolvency Resolution Process (CIRP), the Chairman

of the Company, in order to protect the machinery being part of CIRP, transferred

the same to a Company in which majority stake is held by his brother’s son

for a value of ` 50 Lakh payable in 2 instalments.

Write the transaction and then identify the category of each of the transaction.

(1×10=10 Marks)

————— o —————

2/2025/INBLP/OBE Contd. ........

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