When a company is liquidated, its factories, receivables, Intellectual Property, and other assets, all go into a defined pool, called the liquidation estate, for the liquidator to realise and distribute. However, a company's most valuable holding is neither of these, and increasingly so, as in the modern world, a company's most valuable resource has become its customer database. In the case of the liquidation of Jet Airways, its 49.9% stake in JetPrivilege Pvt. Ltd., the company operating its frequent-flyer programme and holding data relating to millions of travellers, represented a potentially valuable intangible interest. The liquidator however, could do nothing with the database itself, as ownership was unclear and privacy exposure was uncertain, and thus, the creditors recovered nothing from it. Similarly, in Net4India's liquidation, the liquidator went further and left domain-registration and customer data out of the estate altogether, restricting realisation to servers and physical infrastructure only.

Neither of these situations show a mature and complete legal landscape, but instead show that there exists a legal void that needs clarification. The Insolvency and Bankruptcy Code, 2016 defines “property” broadly enough that excluding data from the liquidation estate cannot be justified by statutory silence alone. Yet, till date, no Indian court has held that a corporate debtor's database is, or is not, an asset capable of liquidation, and that gap is the actual state of Indian law.

The Statutory case for inclusion

Section 3(27) of the IBC defines “property” to include money, goods, actionable claims, land, and “every description of property situated in India or outside India,” together with “every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property.” This is drafted in a way that is broad and expansive, as it is meant to catch all kinds of things that the lawmakers then could not foresee. Thus, there is no interpretation of this part that says a thing is not included just because it is not physical or was not thought of in 2016.

Section 36 goes further into what the liquidator is supposed to do. Section 36(3) identifies the assets forming part of the liquidation estate, which includes assets over which the corporate debtor has ownership rights. Clause (d) explicitly says that intangible things, like intellectual property and contractual rights are also included. A database of customers, created by the company through investment in collecting, organizing, and maintaining the information should be capable of being characterised as an intangible commercial asset.

What belongs to the company?

The issue is that Section 3(27) does not by itself say that the personal data of individuals shall be considered as property under the IBC. Indian courts, however, have seen property as a functional rather than a physical concept, as in the case of Jilubhai Nanbhai Khachar v. State of Gujarat [1995 Supp (1) SCC 596], the Supreme Court said that property is the most comprehensive of all terms, and it includes everything, physical or not that can be owned, possessed, used, disposed of, or exclude others from a thing. Another case, State of West Bengal v. Subodh Gopal Bose [1953 INSC 89] saw property as a “bundle of rights” that can be enforced against the world, irrespective of it being physical or not. These cases are important because they establish the rule that intangibility is not a reason to exclude data from being considered property. However, neither case was about data or about insolvency.

This question has to be answered by looking at what constitutes the word “data.” The personal information, like a customer's name, phone number and transaction details, and related information, originate from the individual, and cannot be said to be owned by the company. A corporate debtor collecting such information only acquires a contractual and regulatory permission to process it for a stated purpose only. What the company owns, on rules of intangible property, is what it created itself. This includes the customer database, the schema, the indexing, the aggregated and derived analytics, all generated through its own systematic investments. These are what the debtor created themselves, and is different from the personal information it uses and organizes. When seen this way the question is not “does the company own information” but instead, “does the company own the database it created” which the IBC's definition of property is well suited to answer.

What Indian court cases say

No Indian authority, dealing with insolvency, has dealt with this issue directly. The closest example comes from outside the ambit of IBC, from a court in Gujarat, where in Sadhna Shaishav Shah v. Nil, it stated that data in a person's iCloud account was part of the estate that could be passed down in inheritance, applying the residual definition of “movable property” under Section 2(36) of the General Clauses Act, 1897. This case showed that Indian law is capable of treating data as property that has value and can be transferred. This case was however, about an inheritance dispute and not a commercial dispute or insolvency proceeding.

The currently ongoing case of Digi Yatra Foundation v. Data Evolve Solutions Pvt. Ltd. [CS(COMM) 265/2024, Delhi High Court], is a commercial dispute over a database, with the Delhi High Court securing servers, source code and user pools by injunction and, in late 2025, framing formal issues for trial, on who owns the passenger database. The dispute arose from a contractual dispute and not an insolvency proceeding, and it has not yet produced a final ruling on ownership. It nevertheless shows that Indian courts are willing to grant judicial protection to database-related interests while title remains disputed.

The often-used example from outside the country, is the FTC's action in the case of In re Toysmart.com. This was a dispute regarding a company in the US that went bankrupt, and tried to sell its customer database. Toysmart was not able to sell its database as it was foundered on a pre-existing privacy promise, and thus the database was destroyed rather than sold, leaving creditors with nothing compared to what they could have gained. This serves as a case study illustrating the difference between being considered an asset, and being able to be sold legally, as a database may be considered “property” of the estate, and still be commercially worthless if the debtor cannot lawfully transfer and liquidate what it contains.

The challenge from the Digital Personal Data Protection Act

The Digital Personal Data Protection Act, 2023 is often used to argue that data cannot be part of the liquidation estate, mainly through interpretation of Section 36(4)(a) of the IBC. Section 36(4)(a) excludes from the liquidation estate, assets held by the debtor in trust or bailment for a third party, or under an arrangement that does not transfer title. A Data Fiduciary, on this argument, holds personal data on essentially the same footing, custody without title, which would place the entire database outside the estate before the liquidator ever reaches it.

This argument however is mischaracterised, when applied to the database as a whole. Section 36(4)(a) excludes assets belonging to a third party that the debtor merely possesses, but it states nothing about assets the debtor has itself created using that possession as an input.

Whether a thing is an asset of the estate, and what the liquidator may lawfully do with it once it is, are distinct issues. The stronger interpretation of the IBC says that a database that the corporate debtor has created, its structure, its aggregated analytics, its organisational architecture, should be seen as something that forms a part of the liquidation estate, distinct from the issue that whether the company owns the personal information of the people in it. This distinction however, is not tested in the courts presently.

Author is a final-year B.A. LL.B. (Hons.) student at Vivekananda Institute of Professional Studies, New Delhi. Views are personal.