Sections 146 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.
Sections 146 to 148 complete the picture of how a bankruptcy trustee leaves office. Section 146 covers resignation, section 147 covers a vacancy for any other reason, and section 148 says when the trustee is released, whether he is replaced or finishes the work.
The article follows the IBBI consolidated text of the Code amended up to 12 August 2021 (the "consolidated text").
A bankruptcy trustee may resign only if he intends to cease practising as an insolvency professional or there is conflict of interest or change of personal circumstances that precludes further discharge of his duties. A resignation or a vacancy is filled through the Adjudicating Authority and the Board on seven, ten and fourteen day limits. The trustee is released from the date the Adjudicating Authority appoints his successor, or, on completion, from the date the committee of creditors approves his report under section 137.
Section 146: resignation
Grounds, sub-section (1). A bankruptcy trustee "may resign if" either:
- (a) he intends to cease practising as an insolvency professional; or
- (b) there is conflict of interest or change of personal circumstances which preclude the further discharge of his duties as a bankruptcy trustee.
These are the only two grounds the text gives. It does not say to whom the resignation is tendered; sub-section (2) speaks of "the acceptance of the resignation" without saying who accepts it. The text is silent on that point, and this article adds nothing.
The replacement sequence, sub-sections (2) to (4).
| Sub-section | Actor | Act | Time |
|---|---|---|---|
| (2) | Adjudicating Authority | Directs the Board for the trustee's replacement | Within seven days of the acceptance of the resignation |
| (3) | Board | Recommends another bankruptcy trustee as replacement | Within ten days of the direction |
| (4) | Adjudicating Authority | Appoints the trustee recommended by the Board | Within fourteen days of receiving the recommendation |
Handover and information, sub-sections (5) and (6). The replaced trustee "shall deliver possession of the estate of the bankrupt to the bankruptcy trustee appointed under sub-section (4), on the date of his appointment". The Adjudicating Authority may also direct the trustee who has resigned to share all information with the new trustee about the bankruptcy process and to co-operate with him in such matters as may be required.
Notice, sub-section (7). The new trustee "shall give a notice of his appointment to the committee of creditors and the bankrupt within seven days of his appointment". Compare section 145(10), under which a trustee appointed on replacement gives notice to the bankrupt alone. If a resignation or handover is raising practical questions, a legal consultation with our team can help you map the steps to the text.
Release, sub-section (8). The trustee who is replaced "shall be released in accordance with the provisions of section 148".
Section 147: vacancy in the office
Section 147 applies where a vacancy occurs "for any reason other than his replacement or resignation". The reasons are not listed. The sequence is the same three steps as in section 146:
- The Adjudicating Authority directs the Board for replacement (sub-section (2)); this sub-section, unlike section 146(2), carries no seven-day limit in its words.
- The Board recommends a replacement within ten days of the direction (sub-section (3)).
- The Adjudicating Authority appoints the recommended trustee within fourteen days of receiving the recommendation (sub-section (4)).
The earlier trustee delivers possession of the estate on the date of the new appointment (sub-section (5)). The Adjudicating Authority may direct the trustee who has vacated office to share information and co-operate (sub-section (6)). The new trustee gives notice to the committee of creditors and the bankrupt within seven days of his appointment (sub-section (7)). The earlier trustee is released under section 148 (sub-section (8)).
The proviso. Section 147 "shall not apply if the vacancy has occurred due to temporary illness or temporary leave of the bankruptcy trustee". A temporary absence does not by itself start the replacement machinery.
Drafting note. Section 147(1) and (2) refer to a vacancy "for any reason other than his replacement or resignation", which is why sections 145, 146 and 147 are separate routes. The text does not say who certifies that a vacancy has arisen.
Section 148: release of the bankruptcy trustee
| Sub-section | When the trustee is released |
|---|---|
| (1) | With effect from the date on which the Adjudicating Authority passes an order appointing a new bankruptcy trustee, on replacement, resignation or vacancy under section 145, 146 or 147, as the case may be |
| (3) | A trustee who has completed the administration is released of his duties with effect from the date on which the committee of creditors approves his report under section 137 |
Duties survive release, sub-section (2). "Notwithstanding the release under sub-section (1), the bankruptcy trustee who has been so released, shall share all information with the new bankruptcy trustee in respect of the bankruptcy process and co-operate with the new bankruptcy trustee in such matters as may be required." So the trustee who leaves cannot treat release as the end of his obligations to the process.
Completion, sub-section (3). The release date is the date of the committee's approval of the trustee's report under section 137, not the date of the discharge order. The report and the committee's approval are the subject of Sections 136 and 137. The discharge order under section 138 follows separately (see the live post on the discharge order).
A worked example
Neha Banerjee, a bankruptcy trustee, takes up a new role that creates a conflict of interest with a creditor in the estate. She resigns on the ground in section 146(1)(b). Within seven days of the acceptance of her resignation the Adjudicating Authority directs the Board; within ten days the Board recommends Imran Qureshi; within fourteen days of receiving the recommendation the Adjudicating Authority appoints him. On that date Neha delivers possession of the estate, and Imran gives notice to the committee of creditors and the bankrupt within seven days. Neha is released with effect from the date of the order appointing Imran, but she must still share all information and co-operate with him. The names and facts are invented.
How this connects with the rest of Part III
- First appointment: section 125; see the live post on bankruptcy trustee appointment.
- Replacement by the committee of creditors: Sections 143 to 145.
- Offences by a bankruptcy trustee: section 187; see Section 187 in this series.
Law around these sections
The Amendment Act, 2026 (No. 6 of 2026) has no clause that amends sections 146, 147 or 148. 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 a change of bankruptcy trustee?
Handover of a bankrupt's estate, the information the departing trustee must share, and the notices to the committee of creditors and the bankrupt all carry time limits. If you act for a trustee, a creditor or a bankrupt in such a handover, our team can help you plan it through a legal consultation.
Key takeaways
- Resignation is permitted only on the two grounds in section 146(1).
- Resignation and vacancy are filled by the Adjudicating Authority and the Board on seven, ten and fourteen day limits (section 147(2) states no seven-day limit).
- The new trustee takes possession of the estate on the date of appointment and notifies the committee of creditors and the bankrupt within seven days.
- Release takes effect on the order appointing the successor, or, on completion, on the committee's approval of the report under section 137.
- A released trustee must still share information and co-operate.
- Section 147 does not apply to a vacancy caused by temporary illness or temporary leave.
Read next
- Sections 143 to 145: standard of conduct, fees and replacement of the bankruptcy trustee
- Sections 149, 151 and 152: functions, rights and general powers of the bankruptcy trustee
- Section 187 of the Insolvency and Bankruptcy Code, 2016: punishment of a bankruptcy trustee
- Personal guarantor insolvency under the IBC
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.