Section 127: Validity of Bankruptcy Order under the Insolvency and Bankruptcy Code 2016

Section 127 of the Insolvency and Bankruptcy Code, 2016 specifies how long a bankruptcy order remains effective. It connects the making of the bankruptcy order under Section 126 with the debtor's discharge under Section 138.

Text of Section 127 - Validity of bankruptcy order

The bankruptcy order passed by the Adjudicating Authority under section 126 shall continue to have effect till the debtor is discharged under section 138.

Meaning and legal effect of Section 127

Section 127 establishes the duration of a bankruptcy order. Once the Adjudicating Authority passes a bankruptcy order under Section 126, that order does not expire merely with the passage of time. Subject to other applicable provisions of the Code, it continues to operate until the debtor is discharged under Section 138.

The provision should therefore be read with the surrounding bankruptcy provisions in Part III of the Code. Section 128 sets out important consequences that follow when a bankruptcy order is passed, while Section 138 deals with the discharge order.

Key provisions linked to Section 127

Section 126 - Bankruptcy order

Section 126 governs the passing of the bankruptcy order by the Adjudicating Authority. Section 127 expressly refers to an order passed under Section 126 and determines the period for which that order continues to have effect.

Section 128 - Effect of bankruptcy order

Section 128 deals with the legal consequences of a bankruptcy order, including vesting of the bankrupt's estate in the bankruptcy trustee and restrictions on certain creditor actions, subject to the terms and exceptions stated in that section.

Section 138 - Discharge order

Section 138 provides for discharge in the bankruptcy process. For the purpose of Section 127, discharge under Section 138 marks the endpoint stated by the Code for the continuing effect of the bankruptcy order.

Important: Section 127 is a duration provision. The consequences of the bankruptcy order, the treatment of the bankrupt's estate, creditor rights, discharge and any modification or recall of an order must be considered under the other applicable provisions of the Code and the rules or regulations in force.

Practical reading of Section 127

A valid bankruptcy order must first be passed under Section 126.
Section 127 keeps that bankruptcy order in effect during the bankruptcy process.
The duration stated in Section 127 runs until discharge under Section 138.
For the consequences of the order, Section 128 and the other provisions governing administration of the bankrupt's estate should also be examined.

Official legal resources

For the authoritative statutory text and current legal framework, refer to the India Code portal and the Insolvency and Bankruptcy Board of India legal framework. The IBBI legal framework includes Acts, rules, regulations, notifications, circulars and other official materials relevant to insolvency and bankruptcy proceedings.

Updated: 30 September 2026. Readers should verify the latest statutory amendments, commencement notifications, rules, regulations and judicial decisions applicable to the facts of a particular matter.