Section 46: Relevant Period for Undervalued Transactions
Section 46 of the Insolvency and Bankruptcy Code, 2016 specifies the relevant look-back period for an application seeking avoidance of an undervalued transaction. The provision was amended by the Insolvency and Bankruptcy Code (Amendment) Act, 2026.
Updated: 30 September 2026
Section 46 - Current Provision
46. Relevant period for undervalued transactions.
(1) In an application for avoidance of an undervalued transaction, the liquidator or the resolution professional, as the case may be, shall demonstrate that -
(i) such transaction was made with any person within the period starting from one year preceding the initiation date and ending on the insolvency commencement date; or
(ii) such transaction was made with a related party within the period starting from two years preceding the initiation date and ending on the insolvency commencement date.
(2) The Adjudicating Authority may require an independent expert to assess evidence relating to the value of the transactions mentioned in this section.
Meaning and Scope of Section 46
Section 46 operates with Section 45, which deals with avoidance of undervalued transactions. Where the liquidator or resolution professional seeks avoidance of such a transaction, Section 46 determines whether the transaction falls within the statutory relevant period.
The provision distinguishes between a transaction with a related party and a transaction with any other person. A longer look-back period applies to related-party transactions.
Relevant Period under Section 46
| Transaction | Relevant period |
|---|---|
| Transaction with a person other than a related party | From one year preceding the initiation date up to the insolvency commencement date |
| Transaction with a related party | From two years preceding the initiation date up to the insolvency commencement date |
Key Terms
Undervalued transaction
Under Section 45, an undervalued transaction broadly concerns a gift by the corporate debtor or a transfer of assets for consideration significantly lower than the value provided by the corporate debtor, where the transaction is not in the ordinary course of business of the corporate debtor.
Initiation date
For corporate insolvency resolution proceedings, the Code uses the initiation date to identify the date from which the amended look-back period is measured. Following the 2026 amendment, where multiple applications for initiation of the corporate insolvency resolution process are pending on the insolvency commencement date, the initiation date is the date on which the first such application was made before the Adjudicating Authority.
Insolvency commencement date
The insolvency commencement date is the date on which the corporate insolvency resolution process commences in accordance with the Code. Under the amended Section 46, the relevant period continues until this date.
Related party
The expression "related party", in relation to a corporate debtor, is defined in Section 5 of the Insolvency and Bankruptcy Code, 2016. Section 46 applies the longer two-year look-back period to transactions with a related party.
Adjudicating Authority
For insolvency resolution and liquidation of corporate persons, the Adjudicating Authority under the Code is the National Company Law Tribunal having territorial jurisdiction as provided by Section 60.
Independent Expert under Section 46(2)
Sub-section (2) permits the Adjudicating Authority to require an independent expert to assess evidence concerning the value of the transaction. This is relevant where valuation is necessary to determine whether the consideration received by the corporate debtor was significantly less than the value provided by it.
Effect of the Insolvency and Bankruptcy Code (Amendment) Act, 2026
The 2026 amendment changed the marginal heading from "avoidable transactions" to "undervalued transactions" and revised the language of sub-section (1). Most importantly, the applicable one-year or two-year period now starts before the initiation date and extends until the insolvency commencement date. The amendment therefore captures the interval between filing or initiation and commencement in addition to the specified pre-initiation look-back period.
Related Provisions
Section 46 should be read with Section 43 - Preferential transactions and relevant time, Section 45 - Avoidance of undervalued transactions, Section 47 - Application in case of certain transactions or trading, Section 48 - Orders in cases of undervalued transactions, Section 49 - Transactions defrauding creditors and Section 50 - Extortionate credit transactions.