Sections 118 and 120 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Not every repayment plan runs to completion. Section 118 says when a plan is deemed to have come to an end prematurely, what the resolution professional must report, and how the debtor or an unpaid creditor can move to bankruptcy. Section 120 requires the professional to follow the code of conduct. Between them lies section 119, the discharge order, which is covered by a separate article. This article reads sections 118 and 120 as printed in the IBBI consolidated text of the Code amended up to 12 August 2021. If a plan is failing, a legal dispute resolution adviser can help you plan for what follows.
A repayment plan is deemed to have come to an end prematurely if it has not been fully implemented in respect of all persons bound by it within the period in the plan. The resolution professional then reports the receipts and payments, the reasons for the premature end and the creditors whose claims are unsatisfied. The Adjudicating Authority passes an order that the plan has not been completely implemented, and the debtor or any creditor whose claims are not fully satisfied may apply for a bankruptcy order under Chapter IV. Section 120 binds the professional to the code of conduct under section 208.
Section 118(1): the deemed premature end
"A repayment plan shall be deemed to have come to an end prematurely if it has not been fully implemented in respect of all persons bound by it within the period as mentioned in the repayment plan."
The test has three parts.
- Full implementation: partial performance is not enough.
- All persons bound: the plan must have been performed for every person bound by it (see section 115).
- Within the period in the plan: the period is the one "mentioned in the repayment plan", not a period fixed by the Code.
If any one part fails, the deeming applies. The word "deemed" means that no finding of default by the debtor is required; the arithmetic of the plan decides.
Section 118(2): the report
Where a plan comes to an end prematurely, "the resolution professional shall submit a report to the Adjudicating Authority which shall state":
| Clause | Content |
|---|---|
| (a) | The receipts and payments made in pursuance of the repayment plan |
| (b) | The reasons for the premature end of the repayment plan |
| (c) | The details of the creditors whose claims have not been fully satisfied |
The section prints no period for this report. Compare section 117, which gives fourteen days where a plan is completed; see our article on sections 116 and 117. Under the Explanation to section 110, the "period of the repayment plan" ends on the report submitted under section 118, which matters for secured creditors who voted; see our article on section 110.
Section 118(3) and (4): the order and the bankruptcy route
Sub-section (3): the Adjudicating Authority "shall pass an order on the basis of the report submitted under sub-section (2) by the resolution professional that the repayment plan has not been completely implemented."
Sub-section (4): "The debtor or the creditor, whose claims under repayment plan have not been fully satisfied, shall be entitled to apply for a bankruptcy order under Chapter IV."
Two details deserve notice. First, the entitlement belongs to "the debtor or the creditor, whose claims under repayment plan have not been fully satisfied". A creditor who was paid in full under the plan is not within the description. Second, the sub-section does not itself state a filing period. Section 121(2) provides that an application for bankruptcy "shall be filed within a period of three months of the date of the order" under the sections referred to in section 121(1), and section 121(1)(c) refers to an order under sub-section (3) of section 118. See our article on sections 121 and 122.
Section 118(5) and (6): copies and the register
Sub-section (5): the Adjudicating Authority "shall forward to the persons bound by the repayment plan under section 115, a copy of the" (a) report submitted by the resolution professional under sub-section (2), and (b) order passed under sub-section (3).
Sub-section (6): the Authority "shall forward a copy of the order passed under sub-section (4) to the Board, for the purpose of recording entries in the register referred to in section 196."
Printing slip: sub-section (6) speaks of "the order passed under sub-section (4)". Sub-section (4) states an entitlement to apply for a bankruptcy order; the order that the Authority passes is the one in sub-section (3). We quote the text as printed and do not correct it.
Example. Under the repayment plan of Zoya Hussain, instalments are to be paid over eighteen months to three creditors. In month fourteen, Zoya's income falls and payments stop. At the end of the eighteen months two creditors have been paid in full and one has been paid in part. The plan is deemed to have come to an end prematurely, because it has not been fully implemented in respect of all persons bound by it. The professional reports the receipts and payments, the reasons and the details of the unpaid creditor. The Authority passes an order on that report. Zoya, and the creditor who has not been fully paid, are each entitled to apply for a bankruptcy order under Chapter IV.
Section 120: the standard of conduct
"The resolution professional shall perform his functions and duties in compliance with the code of conduct provided under section 208." The same words appear in section 93 for the fresh start process; see our article on sections 91 to 93. The code of conduct itself is discussed in our article on section 208. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) amends section 208 (section 60 of that Act); that change is not explained here.
Section 119 in between
Section 119 provides for the discharge order on the basis of the repayment plan. It is the subject of an existing article on the discharge order under section 119 and the end of the repayment plan, and is not repeated here.
The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 is the regulation set for this process for personal guarantors; the copy consulted is amended up to 02-06-2026. No rules or regulations on other individuals or on partnership firms are in the texts consulted.
The Amendment Act, 2026
The Amendment Act, 2026 does not amend sections 118 or 120 as printed in the texts consulted. It amends section 121, which is the route onward from section 118(3), and section 208, to which section 120 refers. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether those changes have been notified.
Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help when a repayment plan is slipping?
If a plan is falling behind, early steps can matter to the debtor and to the creditors who remain unpaid. Our legal dispute resolution team can help you read the plan's period against section 118 and prepare for a report and a possible bankruptcy application.
Key takeaways
- A plan is deemed to end prematurely if it is not fully implemented for all persons bound within the plan's own period.
- The resolution professional reports receipts and payments, reasons and details of unsatisfied creditors.
- The Authority passes an order on that report; the debtor or an unpaid creditor may apply for bankruptcy under Chapter IV.
- Section 121(2) gives three months from the order to file.
- Section 120 binds the professional to the code of conduct under section 208.
Read next
- Sections 121 and 122: application for bankruptcy
- The discharge order under section 119
- Sections 116 and 117: implementation and completion of the repayment plan
- Section 123: application for bankruptcy by a creditor
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.