Section 79 of the Insolvency and Bankruptcy Code, 2016: Definitions

Section 79 sets out 22 statutory definitions used in Part III of the Insolvency and Bankruptcy Code, 2016, concerning insolvency resolution and bankruptcy for individuals and partnership firms.

Commencement and jurisdiction: Section 79 was brought into force from 1 December 2019 insofar as it relates to personal guarantors to corporate debtors, under notification S.O. 4126(E) dated 15 November 2019. Part III has not thereby been made generally operational for every individual or partnership firm. For personal guarantors, Section 60 and the applicable 2019 Rules govern the relevant NCLT jurisdiction; the general definition of Debt Recovery Tribunal in Section 79(1) must be read in that context.

Meaning and scope of Section 79

The definitions apply throughout Part III unless the context otherwise requires. They identify the relevant persons, debts, assets, insolvency professionals and legal orders. The text below preserves all 22 definitions and their qualifying clauses from the source provision, followed by guidance on their application.

Section 79: All 22 statutory definitions

Opening words: 79. In this Part, unless the context otherwise requires,-

Section 79(1): Adjudicating Authority

(1) "Adjudicating Authority" means the Debt Recovery Tribunal constituted under sub-section (1) of section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993;

Section 79(2): Associate of the debtor

(2) "associate" of the debtor means- (a) a person who belongs to the immediate family of the debtor; (b) a person who is a relative of the debtor or a relative of the spouse of the debtor; (c) a person who is in partnership with the debtor; (d) a person who is a spouse or a relative of any person with whom the debtor is in partnership; (e) a person who is employer of the debtor or employee of the debtor; (f) a person who is a trustee of a trust in which the beneficiaries of the trust include a debtor, or the terms of the trust confer a power on the trustee which may be exercised for the benefit of the debtor; and (g) a company, where the debtor or the debtor along with his associates, own more than fifty per cent. of the share capital of the company or control the appointment of the board of directors of the company. Explanation.-For the purposes of this sub-section, "relative", with reference to any person, means anyone who is related to another, if- (i) they are members of a Hindu Undivided Family; (ii) one person is related to the other in such manner as may be prescribed;

Section 79(3): Bankrupt

(3) "bankrupt" means- (a) a debtor who has been adjudged as bankrupt by a bankruptcy order under section 126; (b) each of the partners of a firm, where a bankruptcy order under section 126 has been made against a firm; or (c) any person adjudged as an undischarged insolvent;

Section 79(4): Bankruptcy

(4) "bankruptcy" means the state of being bankrupt;

Section 79(5): Bankruptcy debt

(5) "bankruptcy debt", in relation to a bankrupt, means- (a) any debt owed by him as on the bankruptcy commencement date; (b) any debt for which he may become liable after bankruptcy commencement date but before his discharge by reason of any transaction entered into before the bankruptcy commencement date; and (c) any interest which is a part of the debt under section 171;

Section 79(6): Bankruptcy commencement date

(6) "bankruptcy commencement date" means the date on which a bankruptcy order is passed by the Adjudicating Authority under section 126;

Section 79(7): Bankruptcy order

(7) "bankruptcy order" means an order passed by an Adjudicating Authority under section 126;

Section 79(8): Bankruptcy process

(8) "bankruptcy process" means a process against a debtor under Chapters IV and V of this Part;

Section 79(9): Bankruptcy trustee

(9) "bankruptcy trustee" means the insolvency professional appointed as a trustee for the estate of the bankrupt under section 125;

Section 79(10): Chapter

(10) "Chapter" means a chapter under this Part;

Section 79(11): Committee of creditors

(11) "committee of creditors" means a committee constituted under section 134;

Section 79(12): Debtor

(12) "debtor" includes a judgment-debtor;

Section 79(13): Discharge order

(13) "discharge order" means an order passed by the Adjudicating Authority discharging the debtor under sections 92, 119 and section 138, as the case may be;

Section 79(14): Excluded assets

(14) "excluded assets" for the purposes of this part includes- (a) unencumbered tools, books, vehicles and other equipment as are necessary to the debtor or bankrupt for his personal use or for the purpose of his employment, business or vocation, (b) unencumbered furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his immediate family; (c) any unencumbered personal ornaments of such value, as may be prescribed, of the debtor or his immediate family which cannot be parted with, in accordance with religious usage; (d) any unencumbered life insurance policy or pension plan taken in the name of debtor or his immediate family; and (e) an unencumbered single dwelling unit owned by the debtor of such value as may be prescribed;

Section 79(15): Excluded debt

(15) "excluded debt" means- (a) liability to pay fine imposed by a court or tribunal; (b) liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other legal obligation; (c) liability to pay maintenance to any person under any law for the time being in force; (d) liability in relation to a student loan; and (e) any other debt as may be prescribed;

Section 79(16): Firm

(16) "firm" means a body of individuals carrying on business in partnership whether or not registered under section 59 of the Indian Partnership Act, 1932;

Section 79(17): Immediate family

(17) "immediate family" of the debtor means his spouse, dependent children and dependent parents;

Section 79(18): Partnership debt

(18) "partnership debt" means a debt for which all the partners in a firm are jointly liable;

Section 79(19): Qualifying debt

(19) "qualifying debt" means amount due, which includes interest or any other sum due in respect of the amounts owed under any contract, by the debtor for a liquidated sum either immediately or at certain future time and does not include- (a) an excluded debt; (b) a debt to the extent it is secured; and (c) any debt which has been incurred three months prior to the date of the application for fresh start process;

Section 79(20): Repayment plan

(20) "repayment plan" means a plan prepared by the debtor in consultation with the resolution professional under section 105 containing a proposal to the committee of creditors for restructuring of his debts or affairs;

Section 79(21): Resolution professional

(21) "resolution professional" means an insolvency professional appointed under this part as a resolution professional for conducting the fresh start process or insolvency resolution process;

Section 79(22): Undischarged bankrupt

(22) "undischarged bankrupt" means a bankrupt who has not received a discharge order under section 138. The

How these definitions work in practice

Associates and immediate family: Section 79(2) reaches family relationships, partnerships, employment, trusts and companies under specified ownership or control. Section 79(17) separately defines the debtor's immediate family as spouse, dependent children and dependent parents.

Excluded assets and excluded debts: Sections 79(14) and 79(15) distinguish property that may be protected from administration from liabilities that are not treated like ordinary dischargeable debt. Prescribed monetary limits and procedural rules must be checked in the rules applicable to the relevant class of debtor.

Qualifying debt: Section 79(19) defines the debt category relevant to the fresh start framework, excluding specified debts, secured portions and debts incurred within the stated three-month period. The fresh start process was not brought into force for personal guarantors by the 2019 commencement notification.

Bankruptcy and discharge: Sections 79(3) to 79(9), 79(13) and 79(22) distinguish the bankruptcy order, commencement date, trustee, bankruptcy estate obligations and eventual discharge. These terms should not be treated as interchangeable.

Official law and regulatory sources

Frequently asked questions

Does Section 79 apply to every individual debtor?

No. Its statutory definitions are framed for Part III, but commencement notifications determine which provisions are operational for particular categories. The 2019 notification brought Section 79 into force for personal guarantors to corporate debtors.

What is an excluded asset under Section 79?

Section 79(14) includes specified unencumbered essential tools, household necessities, qualifying ornaments, insurance or pension arrangements and a single dwelling unit subject to prescribed conditions and limits.

What is the difference between bankruptcy debt and qualifying debt?

Bankruptcy debt is defined in Section 79(5) by reference to liabilities associated with bankruptcy. Qualifying debt in Section 79(19) is a distinct category used in the fresh start framework and excludes certain debts.

Legal information updated 23 October 2026. Verify later amendments, notifications and applicable rules before relying on this article in proceedings.