Insolvency and Bankruptcy Code, 2016 | Part III

Section 156: Delivery of Property and Documents to Bankruptcy Trustee

Section 156 of the Insolvency and Bankruptcy Code, 2016 (IBC) imposes a duty to hand over property and records needed by the bankruptcy trustee for administering the bankruptcy process. The obligation extends beyond the bankrupt to banks, agents and other persons holding relevant assets or documents.

Text of Section 156

156. Delivery of property and documents to bankruptcy trustee. - The bankrupt, his banker or agent or any other person having possession of any property, books, papers or other records which bankruptcy trustee is required to take possession for the purposes of the bankruptcy process shall deliver the said property and documents to the bankruptcy trustee.

Meaning and scope of Section 156

The provision is part of Chapter V of Part III of the IBC, dealing with administration and distribution of the bankrupt's estate. Its purpose is to enable the trustee to obtain custody of the material needed to identify, safeguard, realise and distribute estate assets in accordance with the Code.

Who is required to deliver property and records?

The bankrupt: the individual subject to the bankruptcy process must hand over relevant property and documents in their possession.
The bankrupt's banker: a bank holding property or records that the trustee is required to possess must comply with the statutory delivery obligation.
An agent: a person holding assets, books or records on behalf of the bankrupt falls within the express wording.
Any other person in possession: the section is not limited to these named categories; it extends to other holders of the relevant property or documents.

What must be delivered?

The section covers property, books, papers and other records which the trustee is required to take possession of for the bankruptcy process. This may include records evidencing ownership, transactions, receivables or liabilities, to the extent they fall within the statutory requirement. The section does not itself make every asset held by a third party part of the bankrupt's estate; the estate's scope is governed by other provisions, including Section 155.

When does the duty arise?

Section 156 does not prescribe a standalone number of days for delivery. Its obligation must be read alongside the trustee's appointment, the statutory vesting of the estate and the trustee's duty to take possession and control. Any applicable procedural directions or orders must also be considered.

Section 149 - Functions of bankruptcy trustee: investigation of the bankrupt's affairs, realisation of the estate and distribution of the estate.
Section 150 - Duties of bankrupt towards bankruptcy trustee: assistance, information and specified notices required from the bankrupt.
Section 151 - Rights of bankruptcy trustee: legal capacity to hold property, contract, sue or be sued and perform related acts in the trustee's official name.
Section 154 - Vesting of estate: the bankrupt's estate vests in the bankruptcy trustee immediately upon appointment, without a separate conveyance, assignment or transfer.
Section 155 - Estate of bankrupt: identifies what forms part of the estate and what is excluded, including property held on trust for others.
Section 157 - Acquisition of control: requires the trustee to take possession and control of relevant property, books, papers and records, and addresses actionable claims.
Section 186 - Punishment for false information, concealment, etc., by bankrupt: sets out offences in the circumstances specified by that section; a failure to deliver should not automatically be treated as a criminal offence without checking its statutory elements.

Practical implications for the bankruptcy process

Identify the holder: establish who actually possesses the asset or document.
Confirm relevance: determine whether the trustee is required to take possession for the bankruptcy process.
Arrange documented handover: maintain an inventory and acknowledgement of what is delivered, as a sound administrative practice.
Protect third-party interests: distinguish estate property from assets excluded by law or held on trust for someone else.
Preserve records: retain an accurate trail of transfers and supporting documents for later verification.

Important: Section 156 concerns delivery to the bankruptcy trustee in a bankruptcy process under Part III of the IBC. It should not be confused with the separate powers and procedures applicable to corporate insolvency resolution or corporate liquidation.

Frequently asked questions

Can a bank be required to deliver documents to the bankruptcy trustee?

Yes. Section 156 expressly refers to the bankrupt's banker where that banker possesses property or records which the trustee is required to take possession of for the bankruptcy process.

Does Section 156 apply only to the bankrupt?

No. It expressly covers the bankrupt, the bankrupt's banker or agent, and any other person possessing the relevant property, books, papers or records.

Does Section 156 specify a deadline?

No specific delivery period is stated in the text of Section 156 itself. The wider legal and procedural context must be considered.

Official legislation and further reading

Legal information only. Consult the latest applicable notifications, rules, regulations and judicial decisions before relying on a provision in a particular proceeding.