IBC Section 152: General powers of bankruptcy trustee

Section 152 of Insolvency and Bankruptcy Code, 2016: General powers of bankruptcy trustee

Official Bare Act Text

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

The bankruptcy trustee may while discharging his functions under this Chapter,-

(a) sell any part of the estate of the bankrupt;

(b) give receipts for any money received by him;

(c) prove, rank, claim and draw a dividend in respect of such debts due to the bankrupt as are comprised in his estate;

(d) where any property comprised in the estate of the bankrupt is held by any person by way of pledge or hypothecation, exercise the right of redemption in respect of any such property subject to the relevant contract by giving notice to the said person;

(e) where any part of the estate of the bankrupt consists of securities in a company or any other property which is transferable in the books of a person, exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt; and

(f) deal with any property comprised in the estate of the bankrupt to which the bankrupt is beneficially entitled in the same manner as he might have dealt with it.

Legal Commentary & Landmark Judgments: Section 152

Section 152 sets forth the general administrative and operational powers of the Bankruptcy Trustee to manage and realize the estate of the bankrupt.

Asset Liquidation Powers: The trustee has full power to sell all or any part of the bankrupt's property by public auction or private treaty, with power to transfer title.
Carrying on Business: Empowered to carry on any business of the bankrupt so far as may be necessary for the beneficial winding up of the business.
Claims Settlement and Realization: Authorized to prove, rank, claim, and draw dividends in respect of any debt owed to the bankrupt by third parties or co-debtors.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court held that dynamic managerial powers are essential for insolvency trustees to preserve enterprise and asset value during liquidation.
ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1: Emphasized that asset monetization by court-appointed trustees must adhere strictly to transparent auction protocols to maximize realizations.

Courtroom Practice & Strategic Litigation Guidance:

When selling high-value properties of the bankrupt, trustees must conduct e-auctions following IBBI pricing and valuation guidelines to safeguard the sale against creditor challenges on grounds of undervaluation.