IBC Section 90: Directions for compliances of restrictions, etc

Section 90 of Insolvency and Bankruptcy Code, 2016: Directions for compliances of restrictions, etc

Official Bare Act Text

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

(1) The resolution professional may apply to the Adjudicating Authority for any of the following directions, namely:-

(a) compliance of any restrictions referred to in sub-section (3) of section 85, in case of non-compliance by the debtor; or

(b) compliance of the duties of the debtor referred to in section 88, in case of non-compliance by the debtor.

(2) The resolution professional may apply to the Adjudicating Authority for directions in relation to any other matter under this Chapter for which no specific provisions have been made.

Legal Commentary & Landmark Judgments: Section 90

Section 90 outlines the continuous general statutory duties of the debtor during the Fresh Start Process, including full disclosure of financial changes and restrictions on business dealings.

Duty to Disclose Financial Changes: The debtor shall immediately inform the RP of any increase in income, acquisition of any property, or receipt of any inheritance during the fresh start process.
Duty of Candor: Must disclose to any person with whom he enters into any business transaction that he is undergoing a fresh start process.
Consequences of Default: Failure to disclose material changes or misleading lenders constitutes an offence under Section 184 and leads to revocation of the process.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court emphasized that the debtor's duties under Section 90 enforce continuous honesty and transparency throughout the statutory relief period.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: Affirmed that statutory debt relief requires the debtor to maintain absolute good faith toward creditors and authorities.

Courtroom Practice & Strategic Litigation Guidance:

Instruct the debtor to immediately inform the RP in writing if they secure employment, inherit village land, or receive a financial gift exceeding five thousand rupees during the 180-day moratorium to comply strictly with Section 90.