IBC Section 130: Public notice inviting claims from creditors

Section 130 of Insolvency and Bankruptcy Code, 2016: Public notice inviting claims from creditors

Official Bare Act Text

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

(1) The Adjudicating Authority shall-

(a) send notices within ten days of the bankruptcy commencement date, to the creditors mentioned in-

(i) the statement of affairs submitted by the bankrupt under section 129; or

(ii) the application for bankruptcy submitted by the bankrupt under section 122.

(b) issue a public notice inviting claims from creditors.

(2) The public notice under clause (b) of sub-section (1) shall include the last date up to which the claims shall be submitted and such other matters and details as may be prescribed and shall be-

(a) published in leading newspapers, one in English and another in vernacular having sufficient circulation where the bankrupt resides;

(b) affixed on the premises of the Adjudicating Authority; and (c) placed on the website of the Adjudicating Authority.

(3) The notice to the creditors referred to under clause (a) of sub-section (1) shall include such matters and details as may be prescribed.

Legal Commentary & Landmark Judgments: Section 130

Section 130 directs the Adjudicating Authority to issue a public notice within fourteen days of the bankruptcy order, inviting claims from all creditors of the bankrupt.

Fourteen-Day Public Notice Mandate: The Adjudicating Authority must issue a public notice within 14 days of the bankruptcy order in one English and one regional language newspaper.
Invitation of Claims: The notice invites all creditors to submit their claims to the bankruptcy trustee within twenty-one days from the date of publication.
Direct Notice to Known Creditors: A copy of the notice must also be served individually on every creditor identified in the debtor's Statement of Financial Position.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court observed that wide public advertisement is essential to safeguard the collective rights of all dispersed creditors in insolvency proceedings.
Ghanashyam Mishra & Sons v. Edelweiss Asset Reconstruction (2021) 9 SCC 657: Reiterated that creditors who fail to respond to statutory claim notices within prescribed periods cannot subsequently derail settled distribution schemes.

Courtroom Practice & Strategic Litigation Guidance:

Creditors must maintain vigilant tracking of bankruptcy publications in the regional jurisdiction where the bankrupt resides or conducts business, as missing the 21-day window complicates claim admission and dividend eligibility.