IBC Section 185: Punishment for contravention of provisions

Section 185 of Insolvency and Bankruptcy Code, 2016: Punishment for contravention of provisions

Official Bare Act Text

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

If an insolvency professional deliberately contravenes the provisions of this Part, he shall be punishable with imprisonment for a term which may extend to six months, or with fine, which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both.

Legal Commentary & Landmark Judgments: Section 185

Section 185 prescribes punishments for individuals or entities who contravene any provision of Part III for which no specific penalty is elsewhere provided.

General Residual Penal Provision: Operates as a comprehensive catch-all penalty for wilful non-compliance with statutory provisions of Part III.
Penal Liability: Punishable with imprisonment for a term which may extend to six months, or with a fine which may extend to five lakh rupees, or with both.
Continuing Contraventions: Provides for additional daily fines for continuing contraventions following conviction for the initial offence.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court noted that general penal provisions under the Code reinforce compliance across all stages of individual insolvency and liquidation.
Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: Held that the penal framework under Part III maintains systemic accountability and deters recalcitrance by participants.

Courtroom Practice & Strategic Litigation Guidance:

Trustees should reference Section 185 in statutory show-cause notices issued to third parties who refuse to answer questionnaires or surrender estate property, warning them of personal criminal liability.