IBC Section 149: Functions of bankruptcy trustee

Section 149 of Insolvency and Bankruptcy Code, 2016: Functions of bankruptcy trustee

Official Bare Act Text

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

The bankruptcy trustee shall perform the following functions in accordance with the provisions of this Chapter-

(a) investigate the affairs of the bankrupt;

(b) realise the estate of the bankrupt; and

(c) distribute the estate of the bankrupt.

Legal Commentary & Landmark Judgments: Section 149

Section 149 outlines the statutory functions of the Bankruptcy Trustee in administering, investigating, and realizing the bankrupt's estate.

Core Fiduciary Realization: The primary function is to investigate the financial affairs of the bankrupt, realize assets, and distribute dividends to creditors.
Investigation of Avoidance Transactions: The trustee must actively scrutinize financial history to identify undervalued, preferential, or extortionate transactions under Sections 164 to 167.
Cooperation with Authorities: Statutorily bound to assist the Adjudicating Authority, IBBI, and law enforcement agencies in all investigations concerning the bankrupt.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court held that the trustee's investigative and administrative functions under Section 149 are critical to unearthing hidden individual wealth.
Anuj Jain v. Axis Bank Ltd. (2020) 8 SCC 401: Affirmed that the statutory mandate of insolvency professionals to investigate past transactions is paramount to restore diverted assets to creditors.

Courtroom Practice & Strategic Litigation Guidance:

Trustees should engage empanelled forensic accountants at an early stage to conduct forensic audits of the bankrupt's bank statements and family dealings spanning the statutory look-back periods.