IBC Section 122: Application by debtor

Section 122 of Insolvency and Bankruptcy Code, 2016: Application by debtor

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The application for bankruptcy by the debtor shall be accompanied by-

(a) the records of insolvency resolution process undertaken under Chapter III of Part III;

(b) the statement of affairs of the debtor in such form and manner as may be prescribed, on the date of the application for bankruptcy; and

(c) a copy of the order passed by the Adjudicating Authority under Chapter III of Part III permitting the debtor to apply for bankruptcy.

(2) The debtor may propose an insolvency professional as the bankruptcy trustee in the application for bankruptcy.

(3) The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed.

(4) An application for bankruptcy by the debtor shall not be withdrawn without the leave of the Adjudicating Authority.

Legal Commentary & Landmark Judgments: Section 122

Section 122 governs the procedure and evidentiary requirements when an individual debtor initiates voluntary bankruptcy proceedings against himself.

Voluntary Debtor Petition: Allows an insolvent individual or partnership firm to apply for a bankruptcy order to achieve an orderly liquidation and clean-slate debt discharge.
Mandatory Accompanying Documents: The application must be accompanied by a comprehensive statement of financial position, list of secured and unsecured creditors, details of excluded assets, and the Section 118 failure order.
Nomination of Bankruptcy Trustee: The debtor must either propose the appointment of an eligible insolvency professional as bankruptcy trustee or request the Adjudicating Authority to nominate one through the IBBI.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court noted that voluntary insolvency and bankruptcy provisions allow genuine honest debtors an honorable exit mechanism from irrecoverable indebtedness.
Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: Underlined that voluntary applications under Section 122 require unreserved financial disclosure to prevent abusive sheltering of personal wealth under the bankruptcy umbrella.

Courtroom Practice & Strategic Litigation Guidance:

Debtors applying under Section 122 must ensure zero suppression of offshore accounts, demat holdings, or beneficial family trusts in their statement of affairs; non-disclosure attracts severe criminal sanctions under Section 186 and disentitles the debtor from a discharge.