IBC Section 143: Standard of conduct

Section 143 of Insolvency and Bankruptcy Code, 2016: Standard of conduct

Official Bare Act Text

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

The bankruptcy trustee shall perform his functions and duties in compliance with the code of conduct provided under section 208.

Legal Commentary & Landmark Judgments: Section 143

Section 143 establishes the statutory standards of conduct, ethics, and care required of a Bankruptcy Trustee in the discharge of duties under Part III.

Duty of Care and Diligence: The bankruptcy trustee must exercise the reasonable care and skill of a prudent professional in managing, preserving, and realizing the bankrupt's estate.
Fiduciary Integrity: Prohibited from deriving any personal profit, commission, or collateral advantage from transactions relating to the estate.
Regulatory Accountability: Must comply with all circulars, directions, and regulatory mandates issued by the Insolvency and Bankruptcy Board of India (IBBI).

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court held that the statutory standard of conduct under Section 143 ensures that the bankruptcy trustee maintains flawless fiduciary neutrality.
ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1: Reaffirmed that the insolvency trustee is bound by high fiduciary obligations and must act transparently without external interference.

Courtroom Practice & Strategic Litigation Guidance:

Any creditor alleging a breach of Section 143 by the trustee must establish demonstrable negligence or conflict of interest with documentary proof; mere dissatisfaction with asset auction pricing does not constitute a violation of statutory conduct.