Secured creditor in liquidation proceedings
Section 52 of the Insolvency and Bankruptcy Code, 2016 deals with secured creditor in liquidation proceedings. A secured creditor in the liquidation proceedings may— (a) relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in section 53; The Act was enacted on 28 May 2016.
(1) A secured creditor in the liquidation proceedings may—
(a) relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in section 53; or
(b) realise its security interest in the manner specified in this section.
(2) Where the secured creditor realises security interest under clause (b) of sub-section (1), he shall inform the liquidator of such security interest and identify the asset subject to such security interest to be realised.
(3) Before any security interest is realised by the secured creditor under this section, the liquidator shall verify such security interest and permit the secured creditor to realise only such security interest, the existence of which may be proved either—
(a) by the records of such security interest maintained by an information utility; or
(b) by such other means as may be specified by the Board.
(4) A secured creditor may enforce, realise, settle, compromise or deal with the secured assets in accordance with such law as applicable to the security interest being realised and to the secured creditor and apply the proceeds to recover the debts due to it.
(5) If in the course of realising a secured asset, any secured creditor faces resistance from the corporate debtor or any person connected therewith in taking possession of, selling or otherwise disposing of the security, the secured creditor may make an application to the Adjudicating Authority to facilitate the secured creditor to realise such security interest in accordance with law for the time being in force.
(6) The Adjudicating Authority, on the receipt of an application from a secured creditor under sub-section (5) may pass such order as may be necessary to permit a secured creditor to realise security interest in accordance with law for the time being in force.
(7) Where the enforcement of the security interest under sub-section (4) yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor shall—
(a) account to the liquidator for such surplus; and
(b) tender to the liquidator any surplus funds received from the enforcement of such secured assets.
(8) The amount of insolvency resolution process costs, due from secured creditors who realise their security interests in the manner provided in this section, shall be deducted from the proceeds of any realisation by such secured creditors, and they shall transfer such amounts to the liquidator to be included in the liquidation estate.
(9) Where the proceeds of the realisation of the secured assets are not adequate to repay debts owed to the secured creditor, the unpaid debts of such secured creditor shall be paid by the liquidator in the manner specified in clause (e) of sub-section (1) of section 53.
Section 52, The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Moser Baer Karamchari Union Thr. President Mahesh Chand Sharma vs Union of India
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code 2016 represents an organic evolution of insolvency law through a consultative process involving multiple committees and expert bodies. The waterfall mechanism under Section 53 of IBC, which ranks workmen's dues for 24 months preceding liquidation commencement date pari passu with secured creditors who relinquish security, is a carefully balanced framework that adequately protects workmen's interests while promoting revival of insolvent companies and maximizing asset value for all stakeholders. This framework is not arbitrary or violative of Articles 14 and 21 of the Constitution. The two regimes - liquidation under Companies Act 2013 and liquidation under IBC - deal with different situations and cannot be compared for constitutional purposes. In economic legislation, courts should defer to legislative judgment unless the exercise of legislative judgment appears to be palpably arbitrary. The sacrifices required from workmen under IBC are not manifestly unjust or arbitrary, and the exclusion of Provident Fund, Pension Fund and Gratuity Fund from liquidation estate, combined with the 24-month protection and Regulation 21A safeguards, adequately protect workmen's dues.
On this section: Options for secured creditors to relinquish or enforce security interest; enforcement procedures and surplus payment obligations
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Raman Prakash Mangla vs Anuj Jain
Court's Decision & Legal Precedent
The Adjudicating Authority has limited jurisdiction in approving a resolution plan, circumscribed by Sections 30(2) and 31 of the Insolvency and Bankruptcy Code, 2016. The Authority cannot interfere with the commercial aspects of the decision taken by the Committee of Creditors. If the Adjudicating Authority finds shortcomings in the resolution plan vis-à-vis the specified parameters of keeping the corporate debtor as a going concern, maximizing the value of its assets, and taking care of interests of all stakeholders, it must send the plan back to the Committee of Creditors for reconsideration, not modify the plan itself. Payment to dissenting financial creditors must be in monetary terms, not in kind or through transfer of equity or land. Once homebuyers as a class vote in favor of a resolution plan through their authorized representative, individual homebuyers cannot challenge the plan as dissenting creditors or aggrieved persons. The INR 750 crores deposited by the holding company pursuant to Supreme Court orders in Chitra Sharma is the property of the holding company, not the corporate debtor, and cannot be appropriated by the corporate debtor or the resolution applicant.
On this section: Enforcement of security interest
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R. K. Industries (unit-ii) LLP vs Hr Commercials Private Limited
Court's Decision & Legal Precedent
Once a Liquidator, acting in consultation with stakeholders and with the permission of the Adjudicating Authority, decides to abandon an ongoing bidding process and opt for a private sale when a higher offer emerges that better serves the objective of maximizing asset value and expediting the liquidation process, such commercial decision is not amenable to judicial review by the Appellate Authority absent proof of mala fides or arbitrariness. The Liquidator's discretion to select the mode of sale and to change the sale strategy is protected by the express terms of the bidding documents and the provisions of the IBC, and no vested right accrues to a bidder merely by virtue of being selected as an Anchor Bidder in a Swiss Challenge Process.
On this section: Restrictions on sale of assets subject to security interest
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… District Aurangabad and Gat No.104/2 situated at Village Tisgaon, Taluka and District Aurangabad, more particularly described in Schedule I appended to the Petition (the secured assets). 3. Pursuant to the measures initiated under the provisions of Section 13 of the SARFAESI Act, 2002 and the orders passed under Section 52 of the Insolvency and Bankruptcy Code, 2016, the Official Liquidator had delivered possession of the secured assets to the Petitioner on 24 July 2019. While the Petitioner was in the process of selling the secured assets, the Petitioner learnt that the Sales Tax Department had marked encumbrances in the record of …
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… District Aurangabad and Gat No.104/2 situated at Village Tisgaon, Taluka and District Aurangabad, more particularly described in Schedule I appended to the Petition (the secured assets). 3. Pursuant to the measures initiated under the provisions of Section 13 of the SARFAESI Act, 2002 and the orders passed under Section 52 of the Insolvency and Bankruptcy Code, 2016, the Official Liquidator had delivered possession of the secured assets to the Petitioner on 24 July 2019. While the Petitioner was in the process of selling the secured assets, the Petitioner learnt that the Sales Tax Department had marked encumbrances in the record of …
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… Sd/- Sd/- (VENKATARAMAN SUBRAMANIAM) (SANJIV JAIN) MEMBER (TECHNICAL) MEMBER (JUDICIAL) MG IN THE NATIONAL COMPANY LAW TRIBUNAL, DIVISION BENCH – I, CHENNAI IA/2273(CHE)/2023 in CP/472/IB/2017 (filed under Section 60(5) and 52 of the Insolvency and Bankruptcy Code, 2016, R/w, Rule 11 of the NCLT Rules, 2016) In the matter of M/s. BKR Hotels and Resorts Private Limited. M/s. BKR Hotels and Resorts Private Limited, Represented by its Liquidator Dr. S.R. ShriraamShekher 11, Prayag Apartments, 15/8, Gandhi Nagar First …
Made under this section, and citing it
3 instruments name this provision in its title or its text without being made under it.
- Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024Regulation 2024
- Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2022Regulation 2022
- Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2022Regulation 2022
Questions about Section 52
What have the courts held on Section 52 of the Insolvency and Bankruptcy Code?
Moser Baer Karamchari Union Thr. President Mahesh Chand Sharma vs Union of India (02 May 2023) is the leading judgment on this section among those set out below: Options for secured creditors to relinquish or enforce security interest; enforcement procedures and surplus payment obligations. Another 2 judgments on this section are set out below, all of them from the Supreme Court. They run from 2021 to 2023.
How do I find court cases under Section 52 of the Insolvency and Bankruptcy Code?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Insolvency and Bankruptcy Code 52, section 52 Insolvency and Bankruptcy Code, section 52 of the Insolvency and Bankruptcy Code. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Moser Baer Karamchari Union Thr. President Mahesh Chand Sharma vs Union of India (02 May 2023).
What should I read with Section 52 of the Insolvency and Bankruptcy Code, and has it changed?
Its own text turns on section 53 (Distribution of assets), so none of them can safely be read on its own. 4 other provisions in this corpus refer back to it. 3 instruments name it without being made under it, most recently Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024 (2024), then Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2022 (2022).
When was Section 52 of the Insolvency and Bankruptcy Code enacted?
Section 52 of the Insolvency and Bankruptcy Code, cited as Insolvency and Bankruptcy Code 52, was enacted on 28 May 2016 as Act 31 of 2016. It is in force as at the date shown on this page.
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Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.