Section 150: Duties of Bankrupt Towards Bankruptcy Trustee
Section 150 of the Insolvency and Bankruptcy Code, 2016 sets out the statutory duties of a bankrupt to cooperate with the bankruptcy trustee during administration of the bankruptcy estate. It requires disclosure of relevant affairs, attendance when required, timely notice of specified post-commencement changes, and other prescribed cooperation.
Text of Section 150
(1) The bankrupt shall assist the bankruptcy trustee in carrying out his functions under this Chapter by-
(a) giving to the bankruptcy trustee the information of his affairs;
(b) attending on the bankruptcy trustee at such times as may be required;
(c) giving notice to the bankruptcy trustee of any of the following events which have occurred after the bankruptcy commencement date,-
(i) acquisition of any property by the bankrupt;
(ii) devolution of any property upon the bankrupt;
(iii) increase in the income of the bankrupt;
(d) doing all other things as may be prescribed.
(2) The bankrupt shall give notice of the increase in income or acquisition or devolution of property under clause (c) of sub-section (1) within seven days of such increase, acquisition or devolution.
(3) The bankrupt shall continue to discharge the duties under sub-section (1) other than the duties under clause (c) even after the discharge under section 138.
What Section 150 Requires
The provision creates an active duty of cooperation. A bankrupt must provide the bankruptcy trustee with information concerning his affairs and must attend before the trustee whenever required. These obligations support the trustee's statutory administration of the estate and are not limited to passive disclosure.
Seven-Day Notice for Property or Income Changes
Under section 150(1)(c) read with section 150(2), the bankrupt must notify the bankruptcy trustee when, after the bankruptcy commencement date, the bankrupt acquires property, property devolves upon the bankrupt, or the bankrupt's income increases. The notice must be given within seven days of the relevant event.
Duties Continuing After Discharge
Section 150(3) expressly provides that, even after discharge under section 138, the bankrupt continues to perform the duties in section 150(1), except the notification duties contained in section 150(1)(c). Accordingly, discharge does not end every obligation to assist the bankruptcy trustee.
Meaning of Key Terms
Bankrupt: For the purposes of Part III of the Code, the expression is governed by the definitions and bankruptcy framework contained in the Insolvency and Bankruptcy Code, 2016.
Bankruptcy trustee: The insolvency professional appointed to perform the functions assigned to a bankruptcy trustee under the Code and the applicable bankruptcy framework.
Bankruptcy commencement date: The date from which bankruptcy commences under the applicable provisions of the Code; it is the reference point used by section 150(1)(c) for later acquisition or devolution of property and increase in income.
Applicable Regulatory Framework
Section 150 should be read with the other applicable provisions of Part III of the Code and the rules and regulations brought into force for the relevant class of debtor. For personal guarantors to corporate debtors, the IBBI has notified the Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, as amended from time to time.