IBC Section 216: Rights and obligations of persons submitting financial information

Section 216 of Insolvency and Bankruptcy Code, 2016: Rights and obligations of persons submitting financial information

Official Bare Act Text

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

(1) A person who intends to update or modify or rectify errors in the financial information submitted under section 215, he may make an application to the information utility for such purpose stating reasons therefor, in such manner and within such time, as may be specified.

(2) A person who submits financial information to an information utility shall not provide such information to any other person, except to such extent, under such circumstances, and in such manner, as may be specified.

Legal Commentary & Landmark Judgments: Section 216

Section 216 defines the rights and obligations of persons submitting financial information to an Information Utility, including the right to inspect and rectify data.

Right to Access and Verify: Any person submitting financial information has the right to access, inspect, and verify the information recorded with the Information Utility.
Right to Modify or Rectify: The submitting person or the debtor may apply to the IU for modification or rectification of erroneous or outdated financial records.
Statutory Dispute Mechanism: Where a debtor disputes the accuracy of a debt or default entry, the IU must mark the record as 'Disputed' and notify both parties.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court held that Section 216 provides a built-in statutory safeguard allowing borrowers to contest, rectify, or record disputes on financial information stored in IUs.
Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Observed that the dispute recording mechanism under Section 216 prevents creditors from obtaining ex parte insolvency admissions on fabricated debt claims.

Courtroom Practice & Strategic Litigation Guidance:

Borrowers receiving an IU notice of default must respond within the prescribed window under Section 216 to register their dispute; failing to respond results in the record being marked 'Deemed Authenticated'.