Section 4: Application to be made for insolvency proceedings

1) Where it is required to institute insolvency proceedings against any company, any of the following persons may make an application to the Court in the prescribed form for the institution of such proceedings:

(a) A company itself which has become insolvent,

(b) Out of the total creditors of a company which has become insolvent, at least ten percent of creditors or creditors who have or have lent money,

(c) Shareholder or shareholders that has or have subscribed at least five percent of shares out of the total shareholders of a company,

(d) Debenture-holder or debenture-holders that have or have subscribed at least five percent of debentures out of the total debenture-holders of a company,

(e) A liquidator who has been appointed to liquidate a company, or

(f) In the case of a company that carries on any specific type of business set forth in Section 8, a body authorized to administer and regulate such business.

2) In order for an application to be made pursuant to sub-section (1), a period of thirty-five days shall have expired after a notice issued to pay the debt referred to in Section 5 has been duly served on the concerned company.

(3) Every application to be made pursuant to sub-section (1) shall be accompanied by the reason for making the application, a short description of the financial condition of the company and the evidence supporting the fact that the company has become insolvent and the following details, as well:

(a) Where the company itself, which has become insolvent, makes such an application:

(1) A document certified by the board of directors of the company, mentioning that the company has become insolvent,

(2) A special resolution adopted by the board of directors of the company to institute the insolvency proceedings pursuant to this Act,

(3) Certified copies of the balance sheet and audit report of the company available at the time of making application for the institution of insolvency proceedings.

(b) Where the creditor of a company which has become insolvent makes such application:

(1) A statement of the principal and interest of the debt which the creditor claims to be due and payable by the company,

(2) The date on which the company borrowed the debt claimed by the creditor and the reason why the debt was borrowed,

(3) Description that the amount referred to in Clause (1) is due and such amount is payable immediately,

(4) That the debtor believes or the reason and ground the debtor has to believe that the company in respect of which demand is made for insolvency proceedings has become insolvent.

 (c) Where the liquidator makes such application:

(1) Evidence that the company in respect of which application is made for insolvency proceedings has appointed the liquidator for the purposes of liquidation of the company and

(2) The opinion expressed by the liquidator on the matter that the company in respect of which application is made for insolvency proceedings has become insolvent and the ground for such opinion.

4) Notwithstanding anything contained elsewhere in this Section, any shareholder or debenture-holder of a company shall obtain permission from the Court to make an application for insolvency proceedings pursuant to Clause (c) or (d) of sub-section (1). The shareholder or debenture-holder may, if so permitted, make an application on such terms and conditions as may be specified by the Court.

5) The Court shall not give permission referred to in sub-section (4) unless and until sufficient evidence proving that the company has become insolvent is produced.