IBC Section 93: Standard of conduct

Section 93 of Insolvency and Bankruptcy Code, 2016: Standard of conduct

Official Bare Act Text

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

The resolution professional shall perform his functions and duties in compliance with the code of conduct provided under section 208.

Legal Commentary & Landmark Judgments: Section 93

Section 93 defines the legal standard and comprehensive scope of the discharge order, providing that discharge of the debtor does not release co-debtors, guarantors, or partners from their independent liabilities.

Permanent Release of Debtor: The discharge order shall have the effect of releasing the debtor from all qualifying debts specified in the discharge order.
Preservation of Third-Party Liability: The discharge of the debtor shall not release any other person from any liability in respect of the qualifying debt, including a partner, co-debtor, or guarantor.
Non-Discharge of Fines & Fraud Debts: Court fines, tort damages, child maintenance, and fraud debts remain fully recoverable despite the discharge order.

Key Landmark Precedents:

Lalit Kumar Jain v. Union of India (2021) 9 SCC 321: The Supreme Court held that statutory discharge provisions under Section 93 embody the settled principle of insolvency law: the discharge of the principal debtor does not extinguish the independent contractual liability of co-debtors or personal guarantors.
State Bank of India v. V. Ramakrishnan (2018) 17 SCC 394: Affirmed that guarantors remain liable to the creditor notwithstanding the debtor's statutory discharge under Section 93.

Courtroom Practice & Strategic Litigation Guidance:

When representing a creditor whose debtor obtained a fresh start discharge, look for co-borrowers, joint signatories, or personal guarantors. Under Section 93, the discharge of the primary debtor leaves the liability of co-debtors and guarantors completely intact.