Sections 155 and 156 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 155 defines what the estate of a bankrupt includes and what it does not. Section 156 requires the bankrupt, his banker or agent or anyone else holding property, books, papers or records that the bankruptcy trustee must take possession of to deliver them to the trustee.
The article follows the IBBI consolidated text of the Code amended up to 12 August 2021 (the "consolidated text").
The estate includes all property belonging to or vested in the bankrupt at the bankruptcy commencement date, the capacity to exercise powers over property, and property that comes into the estate under Chapter V. It excludes excluded assets, property held on trust for another person, sums due to a workman or employee from the provident, pension and gratuity funds, and assets notified by the Central Government. Anyone holding estate property or records must deliver them to the trustee.
Section 155(1): what the estate includes
The estate of the bankrupt "shall include" three things:
| Clause | Included |
|---|---|
| (a) | All property belonging to or vested in the bankrupt at the bankruptcy commencement date |
| (b) | The capacity to exercise and to initiate proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the bankruptcy commencement date or before the date of the discharge order passed under section 138 |
| (c) | All property which by virtue of any of the provisions of Chapter V is comprised in the estate |
Clause (a) fixes the point in time: the bankruptcy commencement date, which is the date of the bankruptcy order under section 126 (section 79(6)). Clause (b) goes beyond ownership. It brings in the capacity to exercise powers over property and to start proceedings to exercise them, for the period up to the discharge order under section 138. Clause (c) is a cross-reference: other sections of Chapter V bring further property into the estate. Examples in the Chapter include after-acquired property claimed under section 159 and sums brought back under sections 164 to 167. See the live post on after-acquired property under section 159. If you are working out what a trustee can claim from a particular debtor, our legal consultation team can help you sort property into the three clauses.
Section 155(2): what the estate does not include
The estate "shall not include":
| Clause | Excluded |
|---|---|
| (a) | Excluded assets |
| (b) | Property held by the bankrupt on trust for any other person |
| (c) | All sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund |
| (d) | Such assets as may be notified by the Central Government in consultation with any financial sector regulator |
Excluded assets have their own definition in section 79(14), which includes unencumbered tools, books, vehicles and other equipment necessary for personal use or employment, business or vocation; unencumbered furniture, household equipment and provisions for basic domestic needs of the bankrupt and his immediate family; unencumbered personal ornaments of a value as may be prescribed that cannot be parted with in accordance with religious usage; any unencumbered life insurance policy or pension plan taken in the name of the debtor or his immediate family; and an unencumbered single dwelling unit of a value as may be prescribed. Each value left to be prescribed must be checked. The live post on excluded assets under section 79 covers that definition.
Trust property, clause (b). Property the bankrupt holds "on trust for any other person" stays out. A bankrupt who holds a client's money on trust therefore does not make it available to his own creditors on the face of the clause.
Funds, clause (c). The clause covers "all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund". The clause is about sums due to a workman or employee; its wording does not turn on whether the bankrupt is an employer.
Notified assets, clause (d). The Central Government may notify other assets, in consultation with any financial sector regulator. Any notification is outside the texts consulted and must be checked.
Section 156: delivery of property and documents
Section 156 says: "The bankrupt, his banker or agent or any other person having possession of any property, books, papers or other records which bankruptcy trustee is required to take possession for the purposes of the bankruptcy process shall deliver the said property and documents to the bankruptcy trustee."
Three points follow from the text.
- Who is bound. Not only the bankrupt but "his banker or agent or any other person having possession". The last phrase is wide and includes counterparties and custodians.
- What is delivered. "Any property, books, papers or other records" which the trustee is required to take possession of. The trustee's duty to take possession and control is in section 157; see Sections 157 and 158 of this series.
- What the section does not say. It sets no time limit and prescribes no procedure or consequence for failure. The text is silent on both. The only consequence elsewhere in the Code that this article can point to is for the bankrupt: section 186(d) punishes a bankrupt who has failed to deliver possession of property comprised in the estate that he is required to deliver under section 156, with imprisonment which may extend to six months, or fine which may extend to five lakh rupees, or both. See Section 186.
Grammar note. The phrase "which bankruptcy trustee is required to take possession" is printed without "the" before "bankruptcy trustee". It is quoted as printed.
A worked example
Mohan Lal is bankrupt. His property at the bankruptcy commencement date includes a shop, stock, a car and a bank balance; he also holds Rs. 4 lakh on trust for a minor nephew, has a life insurance policy in his own name that is unencumbered, and is owed gratuity dues by a former employer's fund as a workman.
- The shop, stock, car and bank balance fall within section 155(1)(a).
- The money held on trust for the nephew is excluded by section 155(2)(b).
- The unencumbered life policy is within the "excluded assets" definition in section 79(14)(d), so excluded by section 155(2)(a).
- The gratuity dues owed to Mohan as a former employee are "sums due to any workman or employee from the ... gratuity fund", so excluded by section 155(2)(c) as printed.
The trustee asks Mohan's bank to deliver the account records. Under section 156, the bank, as "his banker", must deliver the documents the trustee is required to take possession of. The names and amounts are invented.
Estate and vesting
The estate vests in the bankruptcy trustee immediately from the date of his appointment, without any conveyance, assignment or transfer (section 154). See the live post on bankruptcy estate vesting under section 154. Section 155 tells you what it is that vests.
Law around these sections
The Amendment Act, 2026 (No. 6 of 2026) has no clause that amends sections 155 or 156. 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 sorting a bankrupt's estate?
Deciding what a trustee may claim, and what a bankrupt, a bank or an agent must hand over, depends on the facts and on the definitions in sections 79 and 155. Our team can help you apply them through a legal consultation.
Key takeaways
- The estate includes property at the bankruptcy commencement date, the capacity to exercise powers over property, and property brought in by Chapter V.
- Excluded assets, trust property, provident, pension and gratuity fund sums due to workmen or employees, and notified assets are outside the estate.
- Values for some excluded assets are left to be prescribed, and notified assets must be checked.
- The bankrupt, his banker, agent or any other person in possession must deliver property, books, papers and records to the trustee.
- Section 156 sets no time limit; section 186(d) punishes a bankrupt who fails to deliver.
Read next
- Sections 157 and 158: acquisition of control by the trustee and restrictions on disposition of property
- Sections 149, 151 and 152: functions, rights and general powers of the bankruptcy trustee
- Bankruptcy estate vesting under section 154
- Excluded assets under section 79
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.