Insolvency and Bankruptcy Code, 2016 | Section 221

Section 221 of IBC, 2016: Grants by Central Government to the Insolvency and Bankruptcy Board of India

Section 221 enables the Central Government to provide grants to the Insolvency and Bankruptcy Board of India (IBBI), subject to appropriation by Parliament. It is a statutory funding provision, not an automatic entitlement to a fixed annual grant.

Section 221 - Grants by Central Government: statutory text

221. Grants by Central Government.

The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the Board grants of such sums of money as that Government may think fit for being utilised for the purposes of this Code.

This provision appears in Part IV of the Insolvency and Bankruptcy Code, 2016, which deals with regulation of insolvency professionals, insolvency professional agencies and information utilities, and the functioning of the Board.

Meaning of Section 221: key legal requirements

1. Who can provide a grant?

The Central Government is authorised to make grants to the Board, meaning the Insolvency and Bankruptcy Board of India established under Section 188 of the Code. The grant is made to the statutory regulator, not directly to an individual insolvency professional, debtor or creditor.

2. Parliamentary appropriation is required

The phrase "after due appropriation made by Parliament by law" means that the relevant public expenditure must be authorised through the parliamentary appropriation process. Section 221 does not independently permit expenditure without the necessary budgetary authority. This reflects the constitutional framework governing withdrawal of money from the Consolidated Fund of India, particularly Articles 114 and 266(3) of the Constitution.

3. A grant is discretionary, not mandatory

The word "may" confers an enabling power. The Central Government can determine whether to make a grant and the amount it considers appropriate, subject to the applicable appropriation and public-finance requirements. Section 221 does not specify a minimum amount, a fixed payment schedule or a formula for calculating grants.

4. Grants must serve the purposes of the Code

Amounts granted under this provision are intended for purposes connected with the Insolvency and Bankruptcy Code. In practice, such funding may support the Board's statutory regulatory and administrative functions, subject to the relevant financial controls and applicable provisions. The section does not authorise unrestricted spending for unrelated purposes.

  • Section 188 - Establishment and incorporation of Board: establishes the Insolvency and Bankruptcy Board of India as a statutory body corporate.
  • Section 196 - Powers and functions of Board: sets out the Board's regulatory, supervisory and administrative responsibilities.
  • Section 222 - Board's Fund: addresses the fund of the Board, including grants and other amounts received in accordance with the Code, and the purposes for which that fund may be applied.
  • Section 223 - Accounts and audit: provides the statutory framework for accounts and auditing of the Board.

Read Section 221 together with Sections 222 and 223 to understand the distinction between authorising a grant, holding and applying funds, and accountability for expenditure.

Practical example

Suppose the Central Government proposes to support the IBBI's regulatory operations through a grant in a financial year. Once the necessary parliamentary appropriation is in place, the Government may release an appropriate sum under Section 221. The receipt and use of that money remain subject to the Code's fund, accounting and audit provisions and applicable financial rules.

Important distinction: Section 221 does not establish a grant application scheme for companies, insolvency professionals or the general public. It concerns grants from the Central Government to the Board itself.

Frequently asked questions

Does Section 221 make Central Government grants compulsory?

No. It empowers the Government to make grants after due parliamentary appropriation but does not require a particular amount to be granted each year.

Can IBBI receive funds without parliamentary approval?

Section 221 specifically requires due appropriation by Parliament for Central Government grants made under this provision. Other receipts, where authorised by law, are governed by their respective provisions.

Who receives a grant under Section 221?

The recipient is the Insolvency and Bankruptcy Board of India, referred to in the Code as the "Board".

Is Section 221 a subsidy for insolvent companies?

No. It is a funding provision for the statutory regulator, not a subsidy or debt-relief scheme for corporate debtors.

Official legal references and further reading

Legal information is provided for general reference. Readers should consult the current statutory text, applicable notifications and official materials for a particular issue.