Discharge of Bankrupt

33. Discharge of bankrupt by order of court

1. SS1- at any time after being adjudged bankrupt apply to court for an order of discharge

2. SS3- for application, court shall consider a report of the Director General of Insolvency. Court may
grant or effuse or suspend subject to any conditions with respect to any earnings or income which may
afterwards become due to the bankrupt or with respect to his after-acquired property.

3. SS4- if it was an offence under a certain section, the court shall refuse the discharge or suspend, unless
for special reasons, until 50% paid to the creditors and with proof under SS6. Suspending and discharge
may be exercised concurrently.

4. SS5- any after 2 years of any order under S33, if court satisfies no reasonable probability to comply
with the terms of order, the court shall modify the terms as it thinks fit.

5. SS6- facts herein before……

6. SS7- percentage of unsecured liabilities

7. SS8- report of Director General of Insolvency shall be prima facie evidence

8. SS9- day for hearing the application for discharge shall be published as prescribed and sent fourteen
days at least before the day so appointed to each creditor who has proved. Power to put questions to the
debtor and receive evidence.

9. SS10 WAIT

10. SS12 presumptions

Conclusion:

- the bankrupt may apply to court for discharge by complying with certain conditions.

33a. Discharge of bankrupt by Certificate of Director General of Insolvency (DGI)

1. SS1- DGI may issue a certificate to discharge a bankrupt from bankruptcy, but subject to S33B.
2. SS2- DGI shall not issue a certificate under SS1 unless a period of 5 years has lapsed since the
date of bankruptcy order.
3. SS3- Notice under SS1 shall be given by DGI to the Registrar. DGI shall advertise the notice in a
local newspaper.
4. SS4- DGI (upon the application) shall issue a copy of the certificate upon payment.

Conclusion:

- DGI has the power to grant a certificate to discharge a bankrupt after 5 years has lapsed since the
date of bankruptcy order.
 - Notice shall be given to the Registrar.

33b. Objection by creditor to discharge of bankrupt under section 33a

1. SS1- before issuing a cert, DGI shall serve on each creditor who has filed a proof of debt a notice
of his intention to issue a cert.
2. SS2- a creditor who got the notice under SS1 and who wishes to object shall within 21 days from
the date of service of the notice. Furnish a notice of the objection stating the grounds of objection.
3. SS2A- No objection shall made against
1. being a social guarantor
2. registered under Disabilities Act 2008
3. deceased
4. suffering from a serious illness certified by a Government Medical Officer.
4. SS3- creditor who does not furnish a notice with grounds according to SS2, shall be deemed to
have no objection.
5. SS4- creditor who furnishes a notice if rejected by DGI, may make an application to court for an
order prohibiting the DGI to issue a cert.
6. SS5- application under SS4 shall be served to DGI, the court shall hear the DGI and the bankrupt
before making an order.
7. SS6- application under SS4, the court has the power to dismiss the application or make an order
that DGI shall not issue a cert for not more than 2 years.

Conclusion:

- Creditors have the right to be informed by DGI before issuing a certificate.

- Creditors who wish to object to the discharge may give a notice with grounds of objection within
21 days. (By not complying this will be deemed as no objection)
- No objection can be made for 4 categories (mentioned in point No. 3)
- If creditors’ objections are rejected by DGI, he/she may apply to court. (Court has the power to
order DGI not to issue a certificate for not more than 2 years)

33c. Automatic discharge.

1. SS1- bankrupt shall be discharged on the expiration of 3 years from the date of the submission of
the statement under SS16(1)-
1. if the bankrupt has achieved amount of target contribution of his provable debt and
2. if the bankrupt has complied with the requirement to render an account of moneys and
property to DGI under paragraph 38(1)(b)
2. SS2- Contribution of the bankrupt’s provable debt shall referred by DGI, considering
1. the provable debt of the bankrupt
2. current monthly income of the bankrupt
3. extent that the current monthly income that the bankrupt’s spouse may contribute to the
maintenance of the family
4. expectation to earn considering
1. previous and current monthly income
 2. educational and vocational qualifications, age and work experience
3. the range of monthly income earned by persons who have similar role or
occupations with the bankrupt
4. the effect of the bankrupt on the earning capacity or other income
5. prevailing economic conditions
6. the period of time during which the bankrupt is likely to be capable of earning a
meaningful income
5. the reasonable expenses for the maintenance and family
6. the property of the bankrupt under para 48(1)(b) which may be realized during the period
of 3 years.
3. SS3- DGI shall serve a notice of discharge to each of his creditors not less than 6 months before
the expiration period under subsection 1, but not earlier than a year before the expiration of such
period.
4. SS4- creditor who wish to object shall within 21 days from the notice in SS3 is served, make an
application to court for an order to suspend. BUT no objection shall be made except following
grounds:
1. bankrupt committed offence under this act or S421-424 of PC
2. which would prejudice the administration of the bankrupt’s estate
3. bankrupt failed to co-operate in the administration of estate.
5. SS5- creditor who fail to apply according ss4 deemed as no objection
6. SS6- notice of application under ss4 shall be served to DGI and the bankrupt, at least 14 days
before the date of hearing of application. the court shall hear the DGI and the bankrupt before
making an order on the application.
7. SS7- upon application, the court has the power as it thinks fits
1. dismiss the application and approve the discharge OR
2. suspend the discharge for a period of 2 years
8. SS8- where the court make an order under para (7)(b), the bankrupt shall
1. continue to fulfill his duties and obligations under this act during that period AND
2. be discharged automatically at the end of 2 years of period
9. DGI upon the application and payment, shall issue a cert of automatic discharge to the applicant-
1. upon the making of an order under para 7(a) OR
2. where there is no objection under subsection (4), on the expiration of the period referred
in para(1)(a)

Conclusion:

- Bankrupt shall be discharged on the expiration of 3 years from the date of the submission of the
statement by complying with certain conditions. (First, achieved the amount of target contribution
of provable debt. Second, complied the requirement to render an account to DGI)
- Application needs to be done by any interested person with payment as mentioned on SS9.
- DGI needs to notify to all creditors within a period of time.
- Creditors is given the right to object within 21 days by applying to the court
- No objection shall be made for 3 categories. (As mentioned in point No. 4) By not complying this
will be deemed as no objection.
- For objection, the court may either dismiss the application or suspend the discharge for a period
of 2 years.
- For suspend (if granted by the court), the bankrupt shall continue for his duties during that period
and be discharged automatically at the end of 2 years period.
- DGI shall grant the certificate of discharge if the objection by creditors has been dismissed by the
court OR DGI shall grant the certificate if there is no objection by any creditors.