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Insolvency and Bankruptcy Code, 2016

Section 159: After-Acquired Property of Bankrupt

Section 159 addresses property acquired by, or devolving upon, a bankrupt after the bankruptcy commencement date. It specifies when a bankruptcy trustee may claim such property, the notice requirement, the fifteen-day period and protections for certain third parties.

Legal reference: Part III, bankruptcy process | Reviewed: 23 October 2026

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Section 159 - Statutory provision

159. (1) The bankruptcy trustee shall be entitled to claim for the estate of the bankrupt, any after-acquired property by giving a notice to the bankrupt.

(2) A notice under sub-section (1) shall not be served in respect of-

(a) excluded assets; or

(b) any property which is acquired by or devolves upon the bankrupt after a discharge order is passed under section 138.

(3) The notice under sub-section (2) shall be given within fifteen days from the day on which the acquisition or devolution of the after-acquired property comes to the knowledge of the bankruptcy trustee.

(4) For the purposes of sub-section (3)-

(a) anything which comes to the knowledge of the bankruptcy trustee shall be deemed to have come to the knowledge of the successor of the bankruptcy trustee at the same time; and

(b) anything which comes to the knowledge of a person before he is appointed as a bankruptcy trustee shall be deemed to have come to his knowledge on the date of his appointment as bankruptcy trustee.

(5) The bankruptcy trustee shall not be entitled, by virtue of this section, to claim from any person who has acquired any right over after-acquired property, in good faith, for value and without notice of the bankruptcy.

(6) A notice may be served after the expiry of the period under sub-section (3) only with the approval of the Adjudicating Authority.

Explanation.- For the purposes of this section, the term "after-acquired property" means any property which has been acquired by or has devolved upon the bankrupt after the bankruptcy commencement date.

Reading note: Sub-section (3) in the reproduced text refers to a notice under sub-section (2), although sub-section (2) describes notices that must not be served. The wording above is retained from the supplied provision; consult the authoritative consolidated legislation when applying the cross-reference.

What is after-acquired property?

The Explanation defines after-acquired property as property acquired by, or devolving upon, the bankrupt after the bankruptcy commencement date. The expression can cover an asset received through purchase, gift or succession, depending on the facts and other applicable legal rules. The provision is not an automatic declaration that every later receipt becomes part of the estate: the trustee must invoke the statutory claim mechanism, and the exclusions and protections in Section 159 continue to apply.

Section 159(1) authorises the bankruptcy trustee to claim qualifying property for the bankrupt estate by giving notice to the bankrupt. It should be read with the rules defining the estate and the trustee's responsibilities.

Notice, knowledge and the fifteen-day period

When does the period begin?

Section 159(3) specifies a period of fifteen days beginning when the acquisition or devolution comes to the trustee's knowledge. This is a knowledge-based trigger, not simply fifteen days after the bankrupt receives the asset.

Change of bankruptcy trustee

Under Section 159(4)(a), knowledge acquired by a trustee is attributed to a successor at the same time. Under Section 159(4)(b), information learned before a person's appointment as trustee is treated as coming to that person's knowledge on the date of appointment. These rules are relevant when calculating the statutory period.

Late notice

Section 159(6) allows a notice after the prescribed period only with the approval of the Adjudicating Authority. The trustee should not assume that a late notice is effective without that approval.

Property excluded and third-party safeguards

Excluded assets

Section 159(2)(a) prohibits a claim notice for excluded assets. The definition of excluded assets is found in Section 79(14) of the Code and must be read with the applicable legal framework.

Property received after discharge

Under Section 159(2)(b), the trustee cannot use this notice procedure for property acquired by, or devolving upon, the bankrupt after a discharge order under Section 138.

Good-faith third parties

Section 159(5) protects a person who acquired a right over the after-acquired property in good faith, for value and without notice of the bankruptcy. All of those statutory conditions matter; the protection should not be treated as unconditional.

Illustration: Suppose an inheritance devolves upon a bankrupt during the relevant bankruptcy period. If the trustee learns of it, the trustee may consider a notice under Section 159(1), subject to the fifteen-day knowledge rule, excluded-asset rules, discharge timing and third-party rights. The outcome depends on the precise facts and applicable law.

Section 138 concerns the discharge order referred to in Section 159(2)(b). Section 154 deals with vesting of the bankrupt estate in the trustee. Section 155 identifies property included in, and excluded from, the estate. Sections 156 and 157 address delivery of property and documents, and acquisition of control by the trustee. Section 158 concerns restrictions on disposition of property.

Read the Insolvency and Bankruptcy Code, 2016 - overview and section index. For authoritative legal texts, amendments, regulations and notifications, refer to the India Code official portal and the Insolvency and Bankruptcy Board of India (IBBI).

Applicability: The commencement and application of Part III provisions can depend on the class of debtor and relevant government notifications. Check the current notified legal position before relying on this provision in a specific proceeding. This article is general legal information, not advice on an individual case.