Section 140 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.
Section 140 lists four offices and positions that a bankrupt may not hold. The disqualifications start from the bankruptcy commencement date and end if the bankruptcy order is modified or recalled under section 142 or if the bankrupt is discharged under section 138.
The article follows the IBBI consolidated text of the Code amended up to 12 August 2021 (the "consolidated text").
From the bankruptcy commencement date, a bankrupt is disqualified from four things: acting as trustee or representative of any trust, estate or settlement; acting as a public servant; being elected to public office where the office is filled by election; and being elected or sitting or voting as a member of a local authority. The disqualifications are in addition to any under other laws and cease if the order is modified or recalled under section 142 or the bankrupt is discharged under section 138.
Who is a bankrupt and when the clock starts
Sub-section (1) says: "The bankrupt shall, from the bankruptcy commencement date, be subject to the disqualifications mentioned in this section." Both terms come from section 79 of Part III. A "bankrupt" is a debtor adjudged bankrupt by a bankruptcy order under section 126, each of the partners of a firm where such an order is made against the firm, or any person adjudged as an undischarged insolvent. The "bankruptcy commencement date" is the date on which the Adjudicating Authority passes the bankruptcy order under section 126.
So the disqualification does not wait for the trustee's report, or for a creditors' meeting; it attaches from the day of the order. Our live post on the bankruptcy order under section 126 explains that order, and a quick check of the order date is the first step in any question under section 140. If you need to confirm where a particular office-holder stands, our legal consultation team can walk through the order and the office with you.
The four disqualifications, sub-section (2)
Sub-section (2) opens with the words "In addition to any disqualification under any other law for the time being in force". Section 140 therefore adds to, and does not replace, what other laws provide. A reader should check the current law for any other disqualification that applies to the particular office.
| Clause | A bankrupt is disqualified from |
|---|---|
| (a) | Being appointed or acting as a trustee or representative in respect of any trust, estate or settlement |
| (b) | Being appointed or acting as a public servant |
| (c) | Being elected to any public office where the appointment to such office is by election |
| (d) | Being elected or sitting or voting as a member of any local authority |
Clause (a). The word "acting" matters. A bankrupt who is already a trustee of a family trust is not only barred from being appointed afresh; he is barred from acting. The clause covers a trust, an estate or a settlement, and a trustee or "representative" in respect of any of them. The text does not define these words further.
Clause (b). "Public servant" is defined by the Explanation to the section: it "shall have the same meaning as assigned to it in section 21 of the Indian Penal Code, 1860 (45 of 1860)". The reader should check the current law for the corresponding provision of that Act.
Clause (c). The disqualification is from being elected to a public office "where the appointment to such office is by election". An office filled by nomination is outside this clause as printed, though it may fall within clause (b) or within another law.
Clause (d). This clause has three limbs: being elected, sitting, and voting as a member of a local authority. A bankrupt who is already a member is therefore barred from sitting and voting, not only from standing again. The text does not define "local authority", and this article does not supply a definition.
When the disqualification ends, sub-section (3)
Sub-section (3) says any disqualification under the section "shall cease to have effect, if" either of two things happens:
- The bankruptcy order against him is modified or recalled under section 142; or
- He is discharged under section 138.
On the first limb, see Section 142 of this series: the Adjudicating Authority may modify or recall a bankruptcy order for an error apparent on its face or where bankruptcy debts and expenses have been paid or secured. On the second limb, the discharge order is explained in the live post on section 138 and its effect in Section 139.
Printing note. Clause (a) of sub-section (3) is printed "section 142;or" with no space. It is quoted here as printed.
A worked example
Kavita Nair is a partner in a small firm and also a trustee of a family settlement. A bankruptcy order under section 126 is passed against her on a Monday. From that Monday:
- She cannot act as trustee of the settlement under clause (a).
- If she works as a public servant, clause (b) applies.
- If she holds an elected seat in a municipal body, clause (d) bars her from sitting and voting.
Two years later the Adjudicating Authority passes a discharge order under section 138. Under sub-section (3)(b) these disqualifications cease to have effect. If, alternatively, the order were recalled under section 142 within the first year, sub-section (3)(a) would end them at that point. The facts are invented and show only how the sub-sections operate together.
The offence for contravention
The text of section 140 itself prescribes no penalty. Section 186(c) is the provision that punishes a bankrupt who "has contravened the restrictions under section 140 or the provisions of section 141": imprisonment which may extend to six months, or fine which may extend to five lakh rupees, or both. That section is the subject of Section 186 in this series. Note that section 186(c) speaks of "restrictions" under section 140, while section 140 speaks of "disqualifications"; both are quoted as printed.
How it fits with section 141
Section 141 deals with a different set of limits: directorships, new charges and debts, notices to business partners, legal action and travel overseas. Section 140 is about holding offices. Both start from the bankruptcy commencement date, and both end on recall under section 142 or discharge under section 138. See Section 141.
Law around this section
The Amendment Act, 2026 (No. 6 of 2026) has no clause that amends section 140. It comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether any change to the neighbouring provisions has been notified.
For personal guarantors to corporate debtors, the Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 (the copy consulted is amended up to 02-06-2026) apply alongside Part III; no rules or regulations for other individuals or for partnership firms are in the texts consulted.
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 with a bankruptcy or an office-holding question?
If you or someone you advise holds an office that may be affected by a bankruptcy order, it helps to check the order date and the nature of the office before the next step is taken. Our team can review the position with you under section 140 through a legal consultation.
Key takeaways
- Disqualification runs from the bankruptcy commencement date, the date of the order under section 126.
- Four disqualifications: trustee or representative of a trust, estate or settlement; public servant; elected public office; local authority membership.
- They are in addition to any disqualification under other laws.
- They cease on modification or recall under section 142 or on discharge under section 138.
- Contravention is punished by section 186(c), not by section 140 itself.
Read next
- Section 141 of the Insolvency and Bankruptcy Code, 2016: restrictions on a bankrupt
- Section 142 of the Insolvency and Bankruptcy Code, 2016: modification or recall of a bankruptcy order
- Section 139 of the Insolvency and Bankruptcy Code, 2016: effect of discharge
- Individual insolvency under the IBC: Part III
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.