Section 184 of the Insolvency and Bankruptcy Code, 2016: False Information and Dishonest Creditor Voting
Section 184 prescribes criminal penalties where a debtor or creditor supplies materially false information to a resolution professional, or a creditor dishonestly accepts a benefit from the debtor in exchange for supporting a repayment plan.
What does Section 184 provide?
Section 184(1): False information to the resolution professional
Where a debtor or creditor provides information that is false in any material particulars to the resolution professional, the person is punishable with imprisonment for a term that may extend to one year, or a fine that may extend to Rs. 5 lakh, or both.
The expression material particulars refers, in ordinary legal usage, to information important to the insolvency process, such as the existence or amount of a debt, assets, liabilities or facts relevant to a repayment proposal. Whether a particular statement meets the statutory test depends on the evidence and circumstances.
Section 184(2): Dishonest promise to vote for a repayment plan
Where a creditor dishonestly promises to vote in favour of a repayment plan by accepting money, property or security from the debtor, the creditor is punishable with imprisonment for a term that may extend to two years, or a fine that may extend to three times the amount or equivalent value of the benefit accepted, or both.
Proviso: If the amount or value of that benefit cannot be quantified, the total fine cannot exceed Rs. 5 lakh.
Section 184 penalties at a glance
| Provision | Conduct | Maximum imprisonment | Fine |
|---|---|---|---|
| 184(1) | Debtor or creditor gives materially false information to resolution professional | 1 year | Up to Rs. 5 lakh |
| 184(2) | Creditor dishonestly accepts a benefit for promising to support repayment plan | 2 years | Up to three times the benefit's value; if unquantifiable, up to Rs. 5 lakh |
For either offence, the provision permits imprisonment, fine or both. The applicable punishment is determined by the competent court in accordance with law.
Scope and practical significance
Section 184 falls under Part III of the Code, dealing with insolvency resolution and bankruptcy for individuals and partnership firms. It should not be confused with the separate penalties applicable to corporate insolvency proceedings under Part II.
Accurate disclosures help the resolution professional assess claims and prepare the insolvency process on a reliable factual basis. Similarly, the voting provision is intended to discourage improper inducements that could undermine fair consideration of a repayment plan.
For example, submitting a fabricated loan statement as evidence of a debt may raise issues under Section 184(1). A creditor accepting undisclosed property from the debtor in exchange for a dishonest promise to support the repayment plan may raise issues under Section 184(2). These are illustrations, not conclusions that an offence has been proved.
Related provisions of the IBC
- Section 112: Preparation of the repayment plan by the debtor in consultation with the resolution professional.
- Section 113: Report of the resolution professional on the repayment plan.
- Section 114: Meeting of creditors concerning the repayment plan, where applicable.
- Section 185: Punishment for deliberate contravention of provisions of Part III by an insolvency professional.
- Section 186: Punishment for false information, concealment and certain other misconduct by a bankrupt.
Frequently asked questions
Can a debtor also be punished under Section 184?
Yes. Section 184(1) expressly covers both debtors and creditors who provide information false in material particulars to the resolution professional. Section 184(2), by contrast, concerns the specified dishonest conduct of a creditor.
Does every inaccurate statement automatically constitute an offence?
No such automatic conclusion should be drawn. The statutory requirement that information be false in a material particular must be established in the particular case, subject to applicable criminal law and procedure.
What if the benefit received by a creditor cannot be valued?
The proviso to Section 184(2) caps the fine at Rs. 5 lakh where the amount or equivalent value is not quantifiable.
Official legal sources
Read the Insolvency and Bankruptcy Code, 2016 on India Code (official Act PDF) and the IBBI legal framework and updates. Check current notifications, commencement provisions and amendments before applying a provision to a particular proceeding.
For the full legislation and related topics, see The Insolvency and Bankruptcy Code, 2016.