Sections 149 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 149 gives the bankruptcy trustee three functions: investigate the affairs of the bankrupt, realise his estate and distribute it. Section 151 lists seven rights he may exercise in his official name, and section 152 lists six general powers over the estate. Section 150, which sits between them, is on the duties of the bankrupt and has its own live post.
The article follows the IBBI consolidated text of the Code amended up to 12 August 2021 (the "consolidated text").
The bankruptcy trustee investigates, realises and distributes. To do so he may, by his official name, hold property, make contracts, sue and be sued, employ persons and execute instruments. He may also sell any part of the estate, give receipts, prove and draw dividends, redeem pledged or hypothecated property, transfer securities and deal with property in which the bankrupt is beneficially entitled. Acts that need the committee's approval are in section 153, not here.
Section 149: the three functions
Section 149 is short: "The bankruptcy trustee shall perform the following functions in accordance with the provisions of this Chapter", namely (a) investigate the affairs of the bankrupt, (b) realise the estate of the bankrupt and (c) distribute the estate of the bankrupt. "This Chapter" is Chapter V of Part III, running from section 149 to section 178.
A bankruptcy trustee is the insolvency professional appointed under section 125 (section 79(9)). The three functions map to the rest of the Chapter:
| Function | Where the Chapter develops it |
|---|---|
| Investigate the affairs of the bankrupt | The bankrupt's duty to give information and attend on the trustee (section 150); the trustee's right to take possession and control (section 157) |
| Realise the estate | Vesting (section 154), what the estate includes (section 155), delivery of property (section 156), disclaimer of onerous property (sections 160 to 163), recovery from undervalued and preference transactions (sections 164 to 167) |
| Distribute the estate | Proof of debt (sections 171 to 173), dividends (sections 174 to 177), priority of payment (section 178) |
Section 187(1)(b) makes it an offence for a bankruptcy trustee wilfully to act in a manner that the estate has suffered loss "in consequence of breach of any duty of the bankruptcy trustee in carrying out his functions under section 149". That section is covered in Section 187 of this series. If a creditor or a bankrupt wants to know how a trustee's functions apply to a particular estate, our legal consultation team can help read the Chapter against the facts.
Section 150 in one line
Section 150 sits between the functions and the rights: it sets out what the bankrupt must do to assist the trustee, including attending on him, giving information and giving notice within seven days of an increase in income or acquisition or devolution of property. It has its own live post, Section 150: duties of the bankrupt, and is not re-explained here.
Section 151: rights of the bankruptcy trustee
The opening words: "For the purpose of performing his functions under this Chapter, the bankruptcy trustee may, by his official name –". Two phrases matter. The rights are tied to his functions ("for the purpose of performing his functions"), and they are exercised "by his official name", not in his personal name.
The seven rights in clauses (a) to (g):
- hold property of every description;
- make contracts;
- sue and be sued;
- enter into engagements in respect of the estate of the bankrupt;
- employ persons to assist him;
- execute any power of attorney, deed or other instrument; and
- do any other act which is necessary or expedient for the purposes of or in connection with the exercise of his rights.
Clause (g) is a residual clause: it reaches any other act "necessary or expedient" for the purposes of, or in connection with, the exercise of his rights. It is tied to the rights, not directly to the functions.
Compare the live post on committee approval under section 153: even though the trustee may carry on business, bring legal actions and mortgage property, those particular acts need the committee of creditors' approval under section 153. Section 151 does not remove that requirement.
Section 152: general powers
"The bankruptcy trustee may while discharging his functions under this Chapter," do six things:
| Clause | Power |
|---|---|
| (a) | Sell any part of the estate of the bankrupt |
| (b) | Give receipts for any money received by him |
| (c) | Prove, rank, claim and draw a dividend in respect of such debts due to the bankrupt as are comprised in his estate |
| (d) | Where property in the estate is held by any person by way of pledge or hypothecation, exercise the right of redemption in respect of it, subject to the relevant contract, by giving notice to that person |
| (e) | Where part of the estate consists of securities in a company or any other property which is transferable in the books of a person, exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt |
| (f) | Deal with any property comprised in the estate to which the bankrupt is beneficially entitled in the same manner as he might have dealt with it |
Points to note:
- Clause (a) gives a power of sale of "any part of the estate". Sections 153 and 175 add approval requirements for certain dealings, such as accepting deferred consideration or dividing property in its existing form. The two sets of provisions should be read together.
- Clause (c) lets the trustee "prove, rank, claim and draw a dividend" on debts due to the bankrupt. It covers debts owed to the bankrupt that form part of his estate.
- Clause (d) is subject to "the relevant contract", and the right of redemption is exercised by giving notice to the person holding the pledged or hypothecated property.
- Clause (e) puts the trustee in the bankrupt's shoes for transferring securities and other property transferable in the books of a person. The words "to the same extent" mean the trustee does not get more than the bankrupt had.
A worked example
Vikram Desai is bankrupt. His trustee, Anita Rao, investigates his affairs (section 149(a)). She finds that Vikram pledged a set of shares in an unlisted company to a lender. Under section 152(d), subject to the pledge contract, she may redeem the shares by giving notice to the lender; under section 152(e) she may then transfer them in the company's books as Vikram could have done had he not become bankrupt; under section 152(a) she may sell them. She uses her official name to sign the sale agreement and to employ a valuer (section 151(b) and (e)). If she wanted instead to carry on Vikram's business for a time, section 153(a) would require the committee's approval. The names and facts are invented.
Where these sections stand after 2026
The Amendment Act, 2026 (No. 6 of 2026) has no clause that amends sections 149, 151 or 152. 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 understanding what a bankruptcy trustee may do?
Creditors, bankrupts and counterparties dealing with a trustee often need to know whether an act is within his functions, rights or powers, or needs the committee's approval. Our team can help you test an act against sections 149, 151, 152 and 153 through a legal consultation.
Key takeaways
- Three functions under section 149: investigate, realise, distribute.
- Section 151 rights are exercised in the trustee's official name and are tied to his functions.
- Section 152 powers include sale, receipts, proving debts, redeeming pledged property, transferring securities and dealing with property in which the bankrupt is beneficially entitled.
- Acts listed in section 153 need the committee of creditors' approval.
- Breach of duty in carrying out the section 149 functions is relevant to the offence in section 187(1)(b).
Read next
- Sections 155 and 156: estate of the bankrupt and delivery of property and documents to the trustee
- Sections 146 to 148: resignation, vacancy and release of the bankruptcy trustee
- Committee approval under section 153
- Bankruptcy estate vesting under section 154
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.