Sections 46 to 48 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 45 deals with undervalued transactions (see the live post on section 45). Sections 46 to 48 finish the picture: the period within which the transaction must have been made, who may apply if the liquidator or resolution professional does not, and what order the Adjudicating Authority can pass. This article reads them as per the IBBI consolidated text of the Code amended up to 12 August 2021 and then the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which amends section 46 and substitutes section 47. A creditor deciding whether to act on a suspect transfer can ask for financial and legal due diligence first.
The liquidator or resolution professional must show the transaction was made within one year (or two years for a related party) of the relevant date. If they have not reported it, a creditor, member or partner may apply. The Adjudicating Authority may vest property back, release security, order payment and require payment of consideration fixed by an independent expert. The 2026 Act measures the period from the initiation date to the insolvency commencement date, and widens section 47 to preferential, undervalued, extortionate and wrongful-trading cases.
Section 46: the relevant period (consolidated text)
The heading in the consolidated text is "Relevant period for avoidable transactions". Section 46(1): "In an application for avoiding a transaction at undervalue, the liquidator or the resolution professional, as the case may be, shall demonstrate that" the transaction was made (i) "with any person within the period of one year preceding the insolvency commencement date"; or (ii) "with a related party within the period of two years preceding the insolvency commencement date." Section 46(2): "The Adjudicating Authority may require an independent expert to assess evidence relating to the value of the transactions mentioned in this section."
"Related party" is defined in section 5(24) (see the related party article) and the "insolvency commencement date" is the date of admission (section 5(12)). The two-year line for related parties echoes the preference rule in section 43(4)(a).
What the Amendment Act, 2026 changes in section 46
Section 27 of the Amendment Act, 2026 (No. 6 of 2026) amends section 46.
| As printed in the consolidated text | After the 2026 Act |
|---|---|
| Marginal heading: "Relevant period for avoidable transactions" | The word "avoidable" is replaced by "undervalued" |
| Sub-section (1): "avoiding a transaction at undervalue" | Replaced by "avoidance of an undervalued transaction" |
| Clauses (i) and (ii): "within the period of one year (or two years) preceding the insolvency commencement date" | "period of" becomes "period starting from"; "insolvency commencement date" becomes "initiation date and ending on the insolvency commencement date" |
Putting the substitutions into the printed clause (i), it would read "within the period starting from one year preceding the initiation date and ending on the insolvency commencement date" (and likewise with two years for clause (ii)). The "initiation date" is the date the application is made (section 5(11)). That reading is built by applying the Act's words to the printed clause; check it against the Act.
Section 47 before the 2026 Act
The consolidated text of section 47 is headed "Application by creditor in cases of undervalued transactions". Sub-section (1): where an undervalued transaction has taken place and the liquidator or the resolution professional "has not reported it to the Adjudicating Authority, a creditor, member or a partner of a corporate debtor, as the case may be, may make an application to the Adjudicating Authority to declare such transactions void and reverse their effect in accordance with this Chapter." Sub-section (2): if the Authority is satisfied that undervalued transactions had occurred and that the liquidator or resolution professional, after having sufficient information or opportunity, did not report them, it shall pass an order (a) restoring the position and reversing the effects in the manner laid down in sections 45 and 48, and (b) requiring the Board to initiate disciplinary proceedings against the liquidator or resolution professional.
Section 47 after the 2026 Act
Section 28 of the Amendment Act, 2026 substitutes section 47, with the marginal heading "Application by creditors, member or partner in case of certain transactions or trading." The new section applies where (a) a preferential transaction under section 43; (b) an undervalued transaction under section 45; (c) an extortionate credit transaction under section 50; or (d) fraudulent or wrongful trading under section 66 "has occurred and the liquidator or the resolution professional, as the case may be, has not reported it to the Adjudicating Authority". Then "a creditor, either by itself or jointly with other creditors, a member, or a partner of the corporate debtor, as the case may be, may make an application to the Adjudicating Authority to pass orders in accordance with the respective provisions of this Chapter or Chapter VI, as the case may be."
Sub-section (2): if the Authority, after examining the application, is satisfied that the relevant transaction or trading has occurred, "it shall pass an order, for the avoidance of such transaction or trading, as the case may be, as if such an application had been filed by a liquidator or a resolution professional". Sub-section (3): after that order, where the Authority "is satisfied that the liquidator or the resolution professional, as the case may be, after having sufficient information or opportunity to avail information of such transaction or trading, did not report such transaction or trading to the Adjudicating Authority, it shall pass an order requiring the Board to initiate disciplinary proceedings against the liquidator or the resolution professional".
Read the two versions side by side: the old section covered only undervalued transactions and listed the orders itself; the new section covers four kinds and routes to "the respective provisions" for orders. 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 fraudulent and wrongful trading and the avoidance transactions overview place the new section in context.
A creditor deciding whether to apply where the professional has stayed silent should first fix the transaction and its dates.
Section 48: orders on an undervalued transaction
Section 48(1): "The order of the Adjudicating Authority under sub-section (1) of section 45 may provide for the following":
| Clause | Order |
|---|---|
| (a) | require any property transferred as part of the transaction to be vested in the corporate debtor |
| (b) | release or discharge (in whole or in part) any security interest granted by the corporate debtor |
| (c) | require any person to pay such sums, in respect of benefits received by such person, to the liquidator or the resolution professional as the Authority may direct |
| (d) | require the payment of such consideration for the transaction as may be determined by an independent expert |
Clause (d) is the link with section 46(2): the independent expert's role in valuing the transaction. Section 48 is not touched by the 2026 Act. For the orders available on a preference, see the section 44 article.
Example. Eleven months before admission, Nanda Traders Private Limited sold a warehouse to its director's brother for a price far below its value. The liquidator does not report it. Under the consolidated text a creditor may apply under section 47 and, if the Authority is satisfied, an order follows under sections 45 and 48. Under the substituted section 47 the creditor may apply, and the Authority passes the order as if the liquidator had applied.
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 provide for the liquidation process; 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 with an undervalued transaction?
Creditors, liquidators and recipients all need clean dates and valuations. Our financial and legal due diligence team can map the transaction against the relevant period and the order the section allows.
Key takeaways
- The relevant period is one year, or two years for a related party, in relation to the insolvency commencement date in the consolidated text.
- The Adjudicating Authority may require an independent expert to assess value.
- A creditor, member or partner may apply if the liquidator or resolution professional has not reported.
- The 2026 Act measures the period from the initiation date to the insolvency commencement date and substitutes section 47 to cover four kinds of case.
- Section 48 orders include payment of consideration determined by an independent expert.
Read next
- Section 49: transactions defrauding creditors
- Section 44: orders in preferential transactions
- Sections 50 and 51: extortionate credit transactions
- Avoidance transactions under sections 43 to 51
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.