Section 47 IBC: Application by Creditors, Member or Partner in Case of Certain Transactions or Trading

Section 47 of the Insolvency and Bankruptcy Code, 2016 provides a statutory remedy where specified avoidance transactions or fraudulent or wrongful trading have occurred but have not been reported to the Adjudicating Authority by the liquidator or resolution professional.

Current law: Section 47 was substituted by section 28 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026. The substituted provision expands the earlier section beyond undervalued transactions and covers preferential transactions, undervalued transactions, extortionate credit transactions, and fraudulent or wrongful trading.

Section 47 - Application by creditors, member or partner in case of certain transactions or trading

(1) Where-

(a) a preferential transaction under section 43;

(b) an undervalued transaction under section 45;

(c) an extortionate credit transaction under section 50; or

(d) fraudulent or wrongful trading under section 66,

has occurred and the liquidator or the resolution professional, as the case may be, has not reported it to the Adjudicating Authority, a creditor, either by itself or jointly with other creditors, a member, or a partner of the corporate debtor, as the case may be, may make an application to the Adjudicating Authority to pass orders in accordance with the respective provisions of this Chapter or Chapter VI, as the case may be.

(2) Where the Adjudicating Authority, after examination of the application made under sub-section (1), is satisfied that the relevant transaction or trading under clause (a) or (b) or (c) or (d) of sub-section (1) has occurred, it shall pass an order, for the avoidance of such transaction or trading, as the case may be, as if such an application had been filed by a liquidator or a resolution professional in accordance with the relevant provisions of this Chapter or Chapter VI.

(3) After passing an order under sub-section (2), where Adjudicating Authority is satisfied that the liquidator or the resolution professional, as the case may be, after having sufficient information or opportunity to avail information of such transaction or trading, did not report such transaction or trading to the Adjudicating Authority, it shall pass an order requiring the Board to initiate disciplinary proceedings against the liquidator or the resolution professional, as the case may be.

Meaning and Scope of Section 47

The provision gives a creditor, a member, or a partner of the corporate debtor an independent route to approach the Adjudicating Authority when the resolution professional or liquidator has not reported a transaction or trading falling within the categories specified in Section 47(1). A creditor may apply alone or jointly with other creditors.

Transactions Covered by Section 47

Preferential transaction under Section 43: broadly concerns a transfer of property or an interest of the corporate debtor for the benefit of a creditor, surety, or guarantor on account of an antecedent financial or operational debt or other liability, where the statutory conditions of Section 43 are met.
Undervalued transaction under Section 45: covers specified gifts or transfers of assets for consideration significantly lower than the value provided by the corporate debtor, subject to the statutory requirements and ordinary-course exception in Section 45.
Extortionate credit transaction under Section 50: concerns credit received by the corporate debtor on terms requiring exorbitant payments or otherwise meeting the statutory test and applicable regulatory requirements.
Fraudulent or wrongful trading under Section 66: addresses business carried on with intent to defraud creditors or for a fraudulent purpose and the circumstances of wrongful trading specified by the Code.

Who Can Apply Under Section 47?

An application may be made by a creditor acting individually or jointly with other creditors, or by a member or partner of the corporate debtor, as applicable. The remedy arises where the relevant transaction or trading has occurred and the liquidator or resolution professional has not reported it to the Adjudicating Authority.

Power of the Adjudicating Authority

If the Adjudicating Authority is satisfied that a transaction or trading specified in Section 47(1) occurred, Section 47(2) requires it to pass the appropriate avoidance order as though the application had been filed by the liquidator or resolution professional under the relevant provisions of Chapter III or Chapter VI.

Disciplinary Proceedings Against the Insolvency Professional

After an order under Section 47(2), if the Adjudicating Authority is satisfied that the liquidator or resolution professional had sufficient information, or sufficient opportunity to obtain information, but failed to report the transaction or trading, Section 47(3) requires an order directing the Insolvency and Bankruptcy Board of India to initiate disciplinary proceedings against that professional.

Related IBC Provisions

Section 47 should be read with Section 43 on preferential transactions, Section 45 on undervalued transactions, Section 46 on the relevant period for undervalued transactions, Section 48 on orders concerning undervalued transactions, Section 50 on extortionate credit transactions, and Section 66 concerning fraudulent or wrongful trading.

Official Legal Resources

For the authoritative statutory framework and subsequent notifications, amendments, regulations, circulars, and updates, refer to the official Insolvency and Bankruptcy Board of India Legal Framework and India Code.

This page is intended as a general legal reference. The statutory text, commencement notifications, applicable regulations, and binding judicial decisions should be checked for the facts and date relevant to a particular matter.