Section 157: Acquisition of Control by Bankruptcy Trustee

Section 157 of the Insolvency and Bankruptcy Code, 2016 deals with the bankruptcy trustee taking possession and control of property and records relating to the bankrupt's estate or affairs, and with the statutory assignment of actionable claims forming part of the estate.

Text of Section 157

Meaning and Scope of Section 157

Section 157 is part of Chapter V of Part III of the Insolvency and Bankruptcy Code, 2016, which deals with administration and distribution of the estate of a bankrupt. The provision enables the bankruptcy trustee to obtain possession and control of property and records connected with the estate or affairs of the bankrupt.

Sub-section (1) covers property as well as books, papers and other records relating to the estate or affairs of the bankrupt. The provision is intended to place the relevant estate assets and records under the control of the bankruptcy trustee so that the bankruptcy process can be administered in accordance with the Code.

Actionable Claims under Section 157(2)

Sub-section (2) addresses a situation where part of the bankrupt's estate consists of things in actionable claims. Such actionable claims are deemed to have been assigned to the bankruptcy trustee without any notice of assignment. The statutory deeming provision therefore operates without requiring a separate notice of assignment for the purpose stated in Section 157(2).

What is an Actionable Claim?

The expression "actionable claim" is defined in Section 3 of the Transfer of Property Act, 1882. Broadly, it covers a claim to an unsecured debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or a beneficial interest in movable property not in the claimant's possession, where the civil courts recognise the claim as affording grounds for relief.

Related Provisions of the IBC

Section 154 - Vesting of Estate

Section 154 provides for vesting of the estate of the bankrupt in the bankruptcy trustee from the date of appointment of the trustee, subject to the provisions of the Code.

Section 155 - Estate of Bankrupt

Section 155 specifies the property and interests that form part of the estate of the bankrupt and also identifies categories that are excluded from that estate.

Section 156 - Delivery of Property and Documents

Section 156 requires the bankrupt, the bankrupt's banker or agent, or another person possessing property, books, papers or other records that the bankruptcy trustee is required to possess for the bankruptcy process, to deliver them to the bankruptcy trustee.

Section 158 - Restrictions on Disposition of Property

Section 158 deals with restrictions on dispositions of property made during the statutory period between filing of the bankruptcy application and the bankruptcy commencement date, subject to the terms of that section.

Practical Effect of Section 157

Sections 154 to 157 operate together in the administration of the bankruptcy estate. Vesting identifies the trustee's legal position in relation to the estate, delivery facilitates transfer of relevant property and records, and Section 157 requires the trustee to take possession and control while providing for deemed assignment of actionable claims.

Official Legal Resources

For authoritative and updated material, refer to India Code for the Insolvency and Bankruptcy Code, 2016 and to the Insolvency and Bankruptcy Board of India for the legal framework, regulations, notifications, circulars and other material issued under the Code.

Page reviewed: 30 September 2026.