Section 35 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 35 lists what the liquidator may and must do in a liquidation: verify claims, take custody of assets, value and protect them, sell them, run the business where beneficial, investigate transactions, apply to the Adjudicating Authority and report. This article reads it as per the IBBI consolidated text of the Code amended up to 12 August 2021 and then covers the changes the Insolvency and Bankruptcy Code (Amendment) Act, 2026 makes to clauses (a), (j) and (l), an Explanation and sub-section (2). A liquidator, creditor or bidder who needs a step tested against the text can take a legal consultation.
Subject to the Adjudicating Authority's directions, the liquidator has fifteen powers and duties, including verifying creditors' claims, taking assets into custody, evaluating and protecting them, selling them by public auction or private contract (but not to a person ineligible to be a resolution applicant), and investigating undervalued or preferential transactions. He may consult stakeholders entitled to a distribution under section 53, but the consultation is not binding. The 2026 Act turns sub-section (2) into supervision by the committee of creditors.
Sub-section (1): the fifteen powers and duties
Section 35(1) opens "Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties".
| Clause | Power or duty (consolidated text) |
|---|---|
| (a) | to verify claims of all the creditors |
| (b) | to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor |
| (c) | to evaluate the assets and property of the corporate debtor in the manner specified by the Board and prepare a report |
| (d) | to take such measures to protect and preserve the assets and properties as he considers necessary |
| (e) | to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary |
| (f) | subject to section 52, to sell the immovable and movable property and actionable claims by public auction or private contract, with power to transfer to any person or body corporate, or sell in parcels in the manner specified |
| (g) | to draw, accept, make and endorse negotiable instruments in the name and on behalf of the corporate debtor |
| (h) | to take out letters of administration to any deceased contributory and do acts necessary to obtain payment due from a contributory or his estate |
| (i) | to obtain professional assistance or appoint any professional |
| (j) | to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the Code |
| (k) | to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor |
| (l) | to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions |
| (m) | to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt, document, application, petition, affidavit, bond or instrument, using the common seal if any, as may be necessary for liquidation, distribution of assets and discharge of duties |
| (n) | to apply to the Adjudicating Authority for such orders or directions as may be necessary and to report the progress of the liquidation in the manner specified by the Board |
| (o) | to perform such other functions as may be specified by the Board |
The text prints clause (k) as "in the name of on behalf of the corporate debtor"; it is a drafting slip, quoted as printed. A proviso to clause (f) says "the liquidator shall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant." Eligibility to be a resolution applicant is dealt with in section 29A; see the site's post on section 29A. Relinquishment of security interest under section 52 and distribution under section 53 are separate; see the live post on section 53. The liquidation estate is the subject of section 36; see the live post on section 36.
A liquidator, secured creditor or bidder planning a sale should test the proviso and section 52 against the facts first.
Example. Gupta Steel Limited is in liquidation. The liquidator takes the plant into custody (b), has it valued and prepares a report (c), and sells it by public auction (f). A bidder who would not be eligible to be a resolution applicant is not an eligible buyer under the proviso.
Sub-section (2): consultation in the consolidated text
"The liquidator shall have the power to consult any of the stakeholders entitled to a distribution of proceeds under section 53". Two provisos follow: "any such consultation shall not be binding on the liquidator", and "the records of any such consultation shall be made available to all other stakeholders not so consulted, in a manner specified by the Board."
What the Amendment Act, 2026 changes
Section 23 of the Amendment Act, 2026 (No. 6 of 2026) amends section 35 as follows.
| Provision | As printed in the consolidated text | After the 2026 Act |
|---|---|---|
| (1)(a) | to verify claims of all the creditors | Substituted: "to maintain an updated list of claims of creditors in such manner as may be specified" |
| (1)(j) | to invite and settle claims of creditors and claimants and distribute proceeds | The words "invite and" are omitted |
| (1)(l) | to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions | Substituted: "continue or institute proceedings in respect of an avoidance transaction or fraudulent or wrongful trading" |
| Explanation to (1) | None | "For the purposes of this Chapter, it is hereby declared that the provisions of clauses (a) and (j) of this sub-section and sections 38 to 42 as amended by the Insolvency and Bankruptcy Code (Amendment) Act, 2026, shall not apply to the liquidation process and voluntary liquidation process initiated on and before the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2026." |
| (2) | Power to consult stakeholders, with two provisos | Substituted: "The committee of creditors shall supervise the conduct of the liquidation process by the liquidator under Chapter III in such manner as may be specified." |
The Explanation says sections 38 to 42 "as amended" by the 2026 Act, while section 25 of the same Act omits those sections; the two wordings cannot be reconciled from the texts, so both are quoted as printed. See the article on sections 38 to 42. The supervisory role of the committee also appears in new section 21(11) and its Explanation, which covers sub-section (2) of this section; see the section 21 article. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether these changes have been notified. Our post on liquidation reforms deals with the wider package.
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 carry the specified detail; the copy consulted is amended up to 22-09-2026 as printed under its title. 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 in a liquidation?
A liquidator's sale, claim list or avoidance filing is easier to defend when it follows section 35 clause by clause. A legal consultation can help liquidators, creditors and bidders check a step against the text.
Key takeaways
- The liquidator has fifteen powers and duties, subject to the Adjudicating Authority's directions.
- Sales are by public auction or private contract, subject to section 52, and not to a person ineligible to be a resolution applicant.
- The liquidator investigates undervalued or preferential transactions; the 2026 Act restates this as continuing or instituting proceedings on avoidance transactions and wrongful trading.
- The consultation power in sub-section (2) is replaced by committee supervision.
- An Explanation limits the 2026 changes to clauses (a) and (j) for processes begun on and before commencement; check notification.
Read next
- Section 37: liquidator's access to information
- Sections 38 to 42: claims in liquidation
- Section 34: appointment of the liquidator
- Liquidator: appointment, powers and duties
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.