Section 226 IBC: Power of Central Government to Supersede the Insolvency and Bankruptcy Board
Section 226 of the Insolvency and Bankruptcy Code, 2016 permits the Central Government, in specified exceptional circumstances, to supersede the Insolvency and Bankruptcy Board of India (IBBI) by notification for a period not exceeding six months. It also regulates interim management, reconstitution and reporting to Parliament.
Complete statutory text of Section 226
226. Power of Central Government to supersede Board.
(1) If at any time the Central Government is of opinion-
(a) that on account of grave emergency, the Board is unable to discharge the functions and duties imposed on it by or under the provisions of this Code; or
(b) that the Board has persistently not complied with any direction issued by the Central Government under this Code or in the discharge of the functions and duties imposed on it by or under the provisions of this Code and as a result of such noncompliance the financial position of the Board or the administration of the Board has deteriorated; or
(c) that circumstances exist which render it necessary in the public interest so to do, the Central Government may, by notification, supersede the Board for such period, not exceeding six months, as may be specified in the notification.
(2) Upon the publication of a notification under sub-section (1) superseding the Board,-
(a) all the members shall, as from the date of supersession, vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the provisions of this Code, be exercised or discharged by or on behalf of the Board, shall until the Board is reconstituted under sub-section (3), be exercised and discharged by such person or persons as the Central Government may direct; and
(c) all property owned or controlled by the Board shall, until the Board is reconstituted under sub-section (3), vest in the Central Government.
(3) On the expiration of the period of supersession specified in the notification issued under sub-section (1), the Central Government may reconstitute the Board by a fresh appointment and in such case any person or persons who vacated their offices under clause (a) of sub-section (2), shall not be deemed disqualified for appointment:
Provided that the Central Government may, at any time, before the expiration of the period of supersession, take action under this sub-section.
(4) The Central Government shall cause a notification issued under sub-section (1) and a full report of any action taken under this section and the circumstances leading to such action to be laid before each House of Parliament at the earliest.
The statutory wording above is preserved from the supplied page. Consult the India Code official legislation portal for the operative text and amendments.
What does supersession of the Board mean?
Supersession under Section 226 is a temporary statutory intervention in the governance of the IBBI. It is not the dissolution of the insolvency regulatory framework, nor does it by itself repeal the Code or cancel existing insolvency proceedings. For the notified period, the existing Board members vacate office and the persons directed by the Central Government exercise the Board's statutory powers and duties until reconstitution.
The Board means the Insolvency and Bankruptcy Board of India established under Section 188 of the Code. Its functions, including regulation and supervision of insolvency professionals, agencies and information utilities, are principally set out in Section 196.
Three statutory grounds for supersession: Section 226(1)
- Grave emergency - clause (a): an emergency makes the Board unable to discharge its statutory functions and duties.
- Persistent noncompliance and deterioration - clause (b): persistent failure to comply with government directions or discharge statutory functions, resulting in deterioration of the Board's finances or administration. Both the failure and the resulting deterioration matter to this ground.
- Public interest - clause (c): circumstances make supersession necessary in the public interest.
These are alternative statutory grounds. The Central Government must exercise the power through a notification specifying the supersession period. The statute caps that period at six months.
Legal effects of a supersession notification: Section 226(2)
| Provision | Consequence |
|---|---|
| Section 226(2)(a) | All existing Board members vacate their offices from the date of supersession. |
| Section 226(2)(b) | Persons directed by the Central Government exercise the Board's powers, functions and duties until reconstitution. |
| Section 226(2)(c) | Property owned or controlled by the Board vests temporarily in the Central Government until reconstitution. |
Vesting under clause (c) is expressly linked to the period until the Board is reconstituted. It should not be confused with a general transfer of the assets of companies undergoing insolvency proceedings.
Reconstitution and eligibility: Section 226(3)
On expiry of the notified supersession period, the Central Government may reconstitute the Board through fresh appointments. The proviso also allows reconstitution before the notified period expires. A member who vacated office because of supersession is not automatically disqualified from a fresh appointment merely for that reason. Any other statutory appointment requirements continue to apply.
Parliamentary accountability: Section 226(4)
The Central Government must arrange for both the supersession notification and a full report explaining the action taken and the circumstances leading to it to be laid before each House of Parliament at the earliest. This is a statutory reporting requirement, distinct from the notification that effects supersession.
Difference between policy directions and supersession
Section 225 concerns written Central Government directions to the Board on questions of policy. Section 226 provides the separate and more consequential power of supersession, subject to specified grounds, a notification and a maximum six-month period. Issuing a policy direction does not automatically supersede the Board.
Related provisions of the Insolvency and Bankruptcy Code
| Section | Subject |
|---|---|
| 188 | Establishment and incorporation of the Insolvency and Bankruptcy Board of India. |
| 189 | Constitution of the Board. |
| 196 | Powers and functions of the Board. |
| 221 | Grants by the Central Government. |
| 222 | The Board's Fund. |
| 223 | Accounts and audit. |
| 225 | Central Government directions on policy questions. |
| 226 | Power to supersede the Board. |
Frequently asked questions
What is the maximum period of supersession under Section 226?
A notification may specify a period not exceeding six months under Section 226(1).
Can the Board be reconstituted before six months?
Yes. The proviso to Section 226(3) expressly allows the Central Government to act before the notified period expires.
Do existing Board members become permanently ineligible?
No. Section 226(3) says a person who vacates office under Section 226(2)(a) is not deemed disqualified for appointment merely on that basis.
Must Parliament be informed of the action?
Yes. Section 226(4) requires the notification and a full report on the action and its circumstances to be laid before both Houses at the earliest.
Does supersession stop all ongoing insolvency cases?
Section 226 does not state that ongoing insolvency proceedings automatically stop. It addresses the Board's governance and continuity of its statutory functions through designated persons.
Official legal references
- India Code - Insolvency and Bankruptcy Code, 2016 and amendments
- IBBI - legal framework, statutes and notifications
- Insolvency and Bankruptcy Board of India - official website
- The Insolvency and Bankruptcy Code, 2016 - full section index
Updated: October 23, 2026. This article is for general legal information. Check the current Code and official notifications for any case-specific application.