IBC Section 150: Duties of bankrupt towards bankruptcy trustee

Section 150 of Insolvency and Bankruptcy Code, 2016: Duties of bankrupt towards bankruptcy trustee

Official Bare Act Text

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

(1) The bankrupt shall assist the bankruptcy trustee in carrying out his functions under this Chapter by-

(a) giving to the bankruptcy trustee the information of his affairs;

(b) attending on the bankruptcy trustee at such times as may be required;

(c) giving notice to the bankruptcy trustee of any of the following events which have occurred after the bankruptcy commencement date,-

(i) acquisition of any property by the bankrupt;

(ii) devolution of any property upon the bankrupt;

(iii) increase in the income of the bankrupt;

(d) doing all other things as may be prescribed.

(2) The bankrupt shall give notice of the increase in income or acquisition or devolution of property under clause (c) of sub-section (1) within seven days of such increase, acquisition or devolution.

(3) The bankrupt shall continue to discharge the duties under sub-section (1) other than the duties under clause (c) even after the discharge under section 138.

Legal Commentary & Landmark Judgments: Section 150

Section 150 imposes extensive statutory duties on the bankrupt to cooperate fully with the Bankruptcy Trustee and provide all information regarding his estate.

Mandatory Personal Assistance: The bankrupt must attend upon the bankruptcy trustee whenever reasonably required and provide complete assistance in administering the estate.
Surrender of Assets and Records: Must immediately surrender all books, papers, title deeds, electronic records, and property in his possession or control to the trustee.
Notice of Acquired Property: Must give immediate notice to the trustee of any property acquired by him or devolving upon him through inheritance or windfall prior to discharge.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court affirmed that the statutory duty of cooperation under Section 150 is legally enforceable, and defiance warrants contempt and penal prosecution.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: Underlined that full debtor cooperation is essential for timely discovery and liquidation of assets under individual insolvency law.

Courtroom Practice & Strategic Litigation Guidance:

If a bankrupt defaults in appearing or surrendering documents, the trustee should file an urgent application under Section 150(4) r/w Section 156 before the Adjudicating Authority for coercive summons, bailable warrants, and passport impoundment.