Section 73 IBC: Punishment for False Representations to Creditors
Section 73 of the Insolvency and Bankruptcy Code, 2016 (IBC) creates a criminal offence where an officer of a corporate debtor makes a false representation or commits fraud for the purpose of obtaining creditor consent to an agreement concerning the affairs of the corporate debtor.
Updated: 30 September 2026
Text and scope of Section 73
Section 73 applies where an officer of the corporate debtor:
(a) on or after the insolvency commencement date, makes a false representation or commits fraud for the purpose of obtaining the consent of the creditors of the corporate debtor, or any of them, to an agreement concerning the affairs of the corporate debtor during the corporate insolvency resolution process or liquidation process; or
(b) before the insolvency commencement date, made a false representation or committed fraud for that purpose.
Essential ingredients of the offence
For Section 73 to apply, the conduct must involve an officer of the corporate debtor, a false representation or fraud, and the specified purpose of obtaining the consent of creditors to an agreement relating to the affairs of the corporate debtor. The provision covers conduct both before and on or after the insolvency commencement date, subject to the circumstances stated in clauses (a) and (b).
Meaning of important expressions
| Corporate debtor | Under Section 3(8) of the IBC, a corporate debtor means a corporate person who owes a debt to any person. |
|---|---|
| Insolvency commencement date | Section 5(12) defines this, in relation to a corporate debtor, as the date of admission of an application for initiating the corporate insolvency resolution process by the Adjudicating Authority under Sections 7, 9 or 10, as applicable. |
| Officer | Section 5(19) provides that "officer", for Chapter VII of Part II, means an officer who is in default as defined in Section 2(60) of the Companies Act, 2013, or a designated partner as defined in Section 2(1)(j) of the Limited Liability Partnership Act, 2008, as applicable. |
| Creditor | Section 3(10) broadly defines a creditor as any person to whom a debt is owed and includes financial creditors, operational creditors, secured creditors, unsecured creditors and decree-holders. |
Punishment under Section 73
An officer found guilty under Section 73 is punishable with imprisonment for not less than three years, which may extend to five years, or with a fine of not less than Rs. 1 lakh, which may extend to Rs. 1 crore, or with both.
Why Section 73 matters in insolvency proceedings
The provision protects the integrity of creditor decision-making. During a corporate insolvency resolution process or liquidation, creditor consent may affect arrangements concerning the corporate debtor. Section 73 specifically penalises the use of false representations or fraud by an officer to procure that consent.
Related IBC provisions
Chapter VII of Part II of the IBC contains offences and penalties relating to corporate persons. Readers may also refer to the linked provisions in the sidebar, including Sections 71, 72, 74, 75, 76 and 77.
Official legal resources
For the authoritative statutory framework, see the India Code portal and the IBBI Legal Framework, which publishes the Code, amendments, regulations, notifications, circulars and other insolvency materials.