Section 142 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 142 lets the Adjudicating Authority modify or recall a bankruptcy order, on an application or on its own motion, in two situations: there is an error apparent on the face of the order, or the bankruptcy debts and the expenses of the bankruptcy have been paid or secured after the order was made. The section also protects what the trustee has already done and binds creditors to the result.
The article follows the IBBI consolidated text of the Code amended up to 12 August 2021 (the "consolidated text").
The Adjudicating Authority may modify or recall a bankruptcy order, whether or not the bankrupt has been discharged, if the order has an error apparent on its face or both the bankruptcy debts and the expenses of the bankruptcy have been paid or secured to its satisfaction. Sales and payments already made by the trustee remain valid. The property then vests in a person appointed by the Adjudicating Authority or reverts to the bankrupt on terms it directs.
Sub-section (1): who can act and on what grounds
The Adjudicating Authority "may, on an application or suo motu, modify or recall a bankruptcy order, whether or not the bankrupt is discharged". Three points arise from the words.
- Either route. It can act on an application or on its own motion. The text does not say who may apply; it says only "an application".
- Discharge is no bar. The power exists "whether or not the bankrupt is discharged".
- Two grounds, and the test is "it appears". The Adjudicating Authority must be satisfied that it "appears to the Adjudicating Authority that" one of two things is so.
| Ground | Wording in the section |
|---|---|
| (a) | There exists an error apparent on the face of such order |
| (b) | Both the bankruptcy debts and the expenses of the bankruptcy have, after the making of the bankruptcy order, either been paid for or secured to the satisfaction of the Adjudicating Authority |
Ground (b) uses the word "both". Both the bankruptcy debts and the expenses of the bankruptcy must have been paid or secured; payment of one set alone does not meet the text. "Bankruptcy debt" is defined in section 79(5). The text says the payment or security must come "after the making of the bankruptcy order", and it must satisfy the Adjudicating Authority. If a dispute turns on whether an order has an apparent error, or on proof of payment, our legal dispute resolution team can assess it with you.
Sub-section (2): what survives a recall
Where the Adjudicating Authority modifies or recalls the order, "any sale or other disposition of property, payment made or other things duly done by the bankruptcy trustee shall be valid". Only things "duly done" are protected; the word is part of the text. The sub-section then deals with the property: it "shall vest in such person as the Adjudicating Authority may appoint or, in default of any such appointment, revert to the bankrupt on such terms as the Adjudicating Authority may direct".
So property still in the estate has two destinations: an appointee of the Adjudicating Authority, or, if there is no appointment, the bankrupt, on terms the Adjudicating Authority directs. Property already sold stays sold. Compare section 154, under which the estate vests in the trustee on appointment without any conveyance; the live post on vesting of the estate under section 154 deals with that side of the picture.
Sub-section (3): the Board's register
A copy of the order passed under sub-section (1) must be provided to the Board "for the purpose of recording an entry in the register referred to in section 191".
Cross-reference slip to note. In the consolidated text, section 191 is headed "Powers of Chairperson". Section 138(3), dealing with the discharge order, refers to the register "referred to in section 196", and section 196(1)(k) speaks of collecting and maintaining records relating to insolvency and bankruptcy cases. The reference in section 142(3) is quoted as printed and is not corrected here. The reader should check the official text.
Sub-section (4): binding on creditors
The modification or recall "shall be binding on all creditors so far as it relates to any debts due to them which form a part of the bankruptcy". The limit is "so far as it relates to" the debts forming part of the bankruptcy.
What recall does to the bankrupt's disqualifications
Both Section 140 and Section 141 say that the disqualifications and restrictions on a bankrupt cease to have effect if the bankruptcy order is modified or recalled under section 142. Recall under this section therefore also lifts those limits. The same sections end them on discharge under section 138.
A worked example
Pooja Menon is adjudged bankrupt by an order under section 126. A month later the trustee sells a vehicle forming part of the estate. Two months after the order, Pooja's family pays the bankruptcy debts in full and the expenses of the bankruptcy, and satisfies the Adjudicating Authority that this has been done.
Under sub-section (1)(b) the Adjudicating Authority may recall the order. Under sub-section (2) the sale of the vehicle, being a disposition duly done by the trustee, remains valid. The remaining property vests in a person the Adjudicating Authority appoints, or, if it appoints none, reverts to Pooja on the terms it directs. Under section 140(3)(a) and section 141(2)(a) her disqualifications and restrictions cease. The names and numbers are invented; the example is not a statement of how any tribunal has acted.
If instead the order was passed on a document that on its face contained a clear mistake, ground (a) is the route, and the same consequences under sub-sections (2) to (4) follow.
Related provisions
- The bankruptcy order itself is passed under section 126: see the live post on the bankruptcy order and its effect.
- The discharge order under section 138 is a separate event; section 142 operates "whether or not" it has been made. See Section 139 for its effect.
- The Adjudicating Authority in Part III is the Debt Recovery Tribunal under section 79(1) and section 179. Appeals are dealt with in sections 181 and 182; see Sections 181 to 183A of this series.
Law around this section
The Amendment Act, 2026 (No. 6 of 2026) has no clause that amends section 142. 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 a related provision 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 an application to modify or recall a bankruptcy order?
Whether you are a bankrupt who has paid the debts, or a creditor whose dues are affected, the grounds and the consequences in section 142 turn on the facts and the order. Our team can review the order and the payment position with you through our legal dispute resolution service.
Key takeaways
- Section 142 allows modification or recall on an application or suo motu, whether or not the bankrupt is discharged.
- Two grounds: an error apparent on the face of the order, or both bankruptcy debts and bankruptcy expenses paid or secured after the order.
- Things duly done by the trustee, including sales and payments, stay valid.
- Property vests in an appointee or reverts to the bankrupt on the terms directed.
- The result binds creditors so far as it relates to debts forming part of the bankruptcy.
- Disqualifications and restrictions under sections 140 and 141 cease on recall.
Read next
- Section 143 to 145: standard of conduct, fees and replacement of the bankruptcy trustee
- Section 141 of the Insolvency and Bankruptcy Code, 2016: restrictions on a bankrupt
- Section 140 of the Insolvency and Bankruptcy Code, 2016: disqualification of a bankrupt
- 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.