Section 75 of the IBC: Punishment for False Information Furnished in an Application
Section 75 of the Insolvency and Bankruptcy Code, 2016 (IBC) imposes a financial penalty where a person knowingly provides materially false information or knowingly omits a material fact in an insolvency application under Section 7.
Text of Section 75 of the Insolvency and Bankruptcy Code, 2016
75. Punishment for false information furnished in application. - Where any person furnishes information in the application made under section 7, which is false in material particulars, knowing it to be false or omits any material fact, knowing it to be material, such person shall be punishable with fine which shall not be less than one lakh rupees, but may extend to one crore rupees.
For the enacted text and subsequent legislative changes, consult the IBC on India Code and the IBBI Acts and Amendments page.
What does Section 75 mean?
Section 75 addresses the integrity of information supplied when initiating a corporate insolvency resolution process (CIRP) through a financial creditor's application. It targets knowing falsehoods and knowing omissions of material facts. A mistake or disputed assertion does not, merely by being inaccurate, establish every element of the offence.
Important expressions explained
Section 7 application: Under Section 7, a financial creditor, acting alone or jointly with other financial creditors as permitted by law, may apply to the Adjudicating Authority to initiate CIRP against a corporate debtor upon a default, subject to applicable statutory conditions.
Financial creditor: Under Section 5(7), a person to whom a financial debt is owed, including a person to whom that debt has been legally assigned or transferred.
Financial debt: Section 5(8) defines it principally as a debt, along with interest if any, disbursed against consideration for the time value of money, and includes specified categories of financial transactions.
Default: Section 3(12) concerns non-payment of debt when the whole or any part or instalment has become due and payable and is not paid by the debtor or corporate debtor, as the case may be.
Material particular or material fact: Information significant to the assessment of the application, particularly the existence of default. The statutory explanation associated with Section 77A addresses when an application is deemed false in material particulars for Sections 75, 76 and 77.
When can Section 75 apply?
The provision calls for consideration of the following: an application made under Section 7; information in that application that is false in material particulars, or omission of a material fact; and knowledge that the information is false or that the omitted fact is material. The statutory wording focuses on the person's knowledge, so the evidence surrounding the filing is important.
Penalty under Section 75
| Issue | Position under Section 75 |
|---|---|
| Nature of misconduct | Knowingly false material information or knowing omission of a material fact in a Section 7 application |
| Minimum fine | Rs. 1,00,000 (one lakh rupees) |
| Maximum fine | Rs. 1,00,00,000 (one crore rupees) |
| Imprisonment under Section 75 | Not prescribed by this section |
| Relevant applicant process | Section 7: initiation of CIRP by a financial creditor |
Related legal provisions
Section 7 - Initiation by financial creditor
Section 7 provides the application route for financial creditors to initiate CIRP. The Adjudicating Authority examines the application according to the Code, including the question of default and the applicable filing requirements.
Section 65 - Fraudulent or malicious initiation
Section 65 separately addresses initiation of insolvency resolution or liquidation proceedings fraudulently or with malicious intent for a purpose other than resolution of insolvency or liquidation, as applicable. Its requirements and penalties differ from Section 75.
Section 76 - Concealment by operational creditor
Section 76 addresses specified knowing or wilful concealment in an application under Section 9, including an existing notified dispute or full and final payment of the operational debt.
Section 77 - False information in corporate debtor's application
Section 77 concerns materially false information or material omissions in an application made by a corporate debtor under Section 10 and persons knowingly and wilfully authorising or permitting the furnishing of such information.
Section 77A - Explanation relevant to material particulars
The explanation under Section 77A, inserted in 2021, applies for purposes of Sections 75, 76 and 77. It links material falsity to facts that, if correctly stated or not omitted, would have been sufficient to determine the existence of default under the Code. Read the current legislative text for its exact scope.
Practical significance for Section 7 filings
A financial creditor preparing an application should check the debt documents, default date, amounts claimed, payments received and relevant supporting records. Statements about outstanding liability and default should be consistent with available evidence. Any material corrections should be addressed through the appropriate legal process rather than concealed.
Where a respondent alleges false information, it is important to identify the precise statement or omission, explain its materiality and consider evidence of the applicant's knowledge. Section 75 is a penal provision; a disagreement over the amount due does not automatically prove the statutory offence.
Frequently asked questions
What is the punishment under Section 75 of the IBC?
A fine of at least Rs. 1 lakh and up to Rs. 1 crore. Section 75 does not itself prescribe imprisonment.
Does Section 75 apply to an operational creditor's Section 9 application?
No. Section 75 specifically concerns an application under Section 7. Section 76 deals with certain concealment in Section 9 applications.
Is every inaccurate statement punishable under Section 75?
No. The statutory language requires material falsity or omission and knowledge of the relevant falsity or materiality.
Which provision defines a financial creditor?
Section 5(7) of the IBC defines a financial creditor; Section 5(8) defines financial debt.
Official sources and further reading
Read the Insolvency and Bankruptcy Code, 2016 (India Code PDF), check the IBBI legislative amendments, and consult the Insolvency and Bankruptcy Board of India for the regulatory framework. For related coverage, visit The Insolvency and Bankruptcy Code, 2016 - LawDadi guide.
Legal information only. Applicability depends on the statutory text in force and the facts of the particular case.