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CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy Order for Individuals and Partnership Firms

Ramesh Iyer was adjudged bankrupt by the Debt Recovery Tribunal on 1 March. His bankruptcy trustee has not obtained any earlier approval from the committee of creditors regarding completion of administration of the estate. Under section 138, when must the trustee apply for a discharge order?

The trustee must apply for the discharge order on the expiry of one year from the bankruptcy commencement date, because no earlier committee of creditors approval of completed estate administration exists. The seven-day route applies only where such approval has been obtained before the one-year period ends.

  1. AOn the expiry of one year from the bankruptcy commencement dateCorrect
  2. BOn the expiry of six months from the bankruptcy commencement date
  3. COn the expiry of two years from the bankruptcy commencement date
  4. DWithin seven days of the bankruptcy order being passed

Explanation

Section 138(1)(a) requires the bankruptcy trustee to apply for a discharge order on the expiry of one year from the bankruptcy commencement date. The alternative route in clause (b) applies only where the committee of creditors has approved completion of administration earlier. Here no such approval exists, so the one-year rule applies.

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