Chapter 6:

1. Insolvency and Bankruptcy Fund (Section 224)

o A fund, named the Insolvency and Bankruptcy Fund, supports insolvency resolution, liquidation,
and bankruptcy under the IBC.
o It receives funds from Central Government grants, voluntary contributions, other sources, and
investment income.
o Contributors can request withdrawal (up to their contribution) during insolvency proceedings for
purposes like paying workers, protecting assets, or covering costs, subject to Adjudicating
Authority approval.
o The Central Government appoints an administrator to manage the fund as per prescribed rules.
2. Central Government’s Authority
o Directions to IBBI (Section 225): The Insolvency and Bankruptcy Board of India (IBBI) must
follow written policy directions from the Central Government, which allows IBBI to share its
views beforehand. The government’s decision on policy matters is final.
o Superseding IBBI (Section 226): The Central Government can take over IBBI’s functions for
up to 6 months if IBBI fails due to emergencies, non-compliance with directions, or public
interest needs. During this period, IBBI members vacate their posts, the government assigns
duties to others, and IBBI’s property vests with the government. The IBBI is reconstituted post-
supersession.
o Financial Service Providers (Section 227): The government, with regulators like the RBI, can
notify financial service providers (e.g., NBFCs with assets ≥ ₹500 crore) for insolvency
proceedings under the IBC. Special rules (notified on 18th Nov 2019) govern these processes,
including handling third-party assets and receivables.
o Rule-Making (Section 239): The Central Government issues rules to implement the IBC,
covering various procedural aspects.
o Regulations (Section 240): IBBI issues regulations consistent with the Code and rules to
operationalize provisions.
o MSMEs (Section 240A): MSMEs are exempt from certain Section 29A restrictions for
insolvency processes. The government can modify or exempt MSME-related IBC provisions via
notifications, subject to Parliamentary approval.
3. Administrative and Reporting Requirements
o Budget (Section 228): IBBI prepares an annual budget estimating receipts and expenditures,
submitted to the Central Government.
o Annual Report (Section 229): IBBI submits an annual report detailing its activities, which the
government lays before Parliament.
o Delegation (Section 230): IBBI can delegate its powers (except rule-making under Section 240)
to its members or officers with specified conditions.
4. Judicial and Legal Framework
o Jurisdiction Bar (Section 231): Civil courts cannot handle matters assigned to the Adjudicating
Authority or IBBI, and no injunctions can block their orders.
o Public Servants (Section 232): IBBI’s Chairperson, members, and officers are deemed public
servants under the Indian Penal Code.
o Good Faith Protection (Section 233): Actions taken in good faith by the government, IBBI, or
insolvency professionals are protected from legal proceedings.
o Cross-Border Provisions (Sections 234-235): The Central Government can sign agreements
with foreign governments to enforce IBC provisions. Resolution professionals or liquidators can
request Adjudicating Authorities to issue letters to foreign courts for assistance with assets
abroad.
o Penalties (Section 235A): Contraventions without specific penalties incur fines from ₹1 lakh to
₹2 crore.
o Special Courts (Section 236): Offences under the IBC are tried by Special Courts under the
Companies Act, 2013. Complaints must be filed by IBBI or the Central Government.
o Appeals and Revisions (Section 237): High Courts handle appeals and revisions as per the
Code of Criminal Procedure, treating Special Courts as Courts of Session.
5. Overriding Effect (Section 238)
o The IBC prevails over conflicting laws or instruments. Judicial rulings confirm this, e.g.,
overriding the Maharashtra Housing Act (Rajendra K. Bhutta case), Tea Act (Duncans
 Industries), RERA (Pioneer Urban), Income-tax Act (Monnet Ispat), and Arbitration Act (K.
Kishan).
6. Limitation (Section 238A)
o The Limitation Act, 1963, applies to IBC proceedings. Applications under Sections 7 or 9 must
be filed within 3 years from the default date (Babulal Vardharji Gurjar). Acknowledgment of
debt (e.g., in balance sheets) can extend this period (Syndicate Bank case). Delayed applications
may be condoned under Section 5 if justified (Jagdish Prasad Sarada).
7. Repeal and Savings (Section 243)
o The Presidency Towns Insolvency Act, 1909, and Provincial Insolvency Act, 1920, are repealed.
o Pending proceedings, orders, appointments, and actions under these Acts remain valid and
continue under the old laws.
8. Transitional Arrangements (Section 244)
o Until IBBI or a financial sector regulator is established, the Central Government exercises their
powers, including recognizing insolvency professionals, agencies, and information utilities.
9. Amendments to Other Laws (Sections 245-255)
o The IBC amends 11 Acts, including the Indian Partnership Act, Income-tax Act, Companies Act,
2013, and SARFAESI Act, as detailed in schedules.
10. Rules and Regulations
o Rules (Central Government): Include IBBI salary rules (2016), application to Adjudicating
Authority (2016), annual report and accounts (2018), financial service providers (2019), personal
guarantors (2019), and pre-packaged insolvency (2021).
o Regulations (IBBI): Cover insolvency professionals, agencies, corporate insolvency,
liquidation, voluntary liquidation, information utilities, fast-track processes, and pre-packaged
insolvency, among others.
o Terminology: “Prescribed” refers to Central Government rules; “specified” refers to IBBI
regulations.
11. Key Judicial Pronouncements
o Overriding Effect: IBC prevails over MHADA (Rajendra K. Bhutta), Tea Act (Duncans
Industries), RERA (Pioneer Urban), Income-tax Act (Monnet Ispat), Arbitration Act (K.
Kishan), and Maharashtra Relief Undertakings Act (Innoventive Industries).
o Limitation: Applications beyond 3 years from default are barred unless condoned or debt is
acknowledged (Babulal Vardharji Gurjar, Syndicate Bank). Article 137 of the Limitation Act
applies (Gaurav Hargovindbhai Dave).
o Jurisdiction: Civil courts lack jurisdiction (Liberty House vs. SBI). Complaints require IBBI
authorization (Alchemist vs. Hotel Gaudavan).
o Protection: IRPs acting in good faith are protected (Jaypee Kensington vs. NBCC).
o Financial Service Providers: RBI-initiated insolvency for DHFL was upheld (Vinay Kumar
Mittal case).
o Others: Winding-up proceedings do not affect IBC applications (A Navinchandra Steels vs.
SREI).