Insolvency and Bankruptcy Code, 2016 | Miscellaneous provisions

Section 238 IBC: Provisions of the Code to Override Other Laws

Section 238 of the Insolvency and Bankruptcy Code, 2016 (IBC) gives the Code overriding effect where a provision of another law, or an instrument operating under that law, is inconsistent with the IBC. This priority rule helps preserve the operation of the insolvency resolution and liquidation framework when legal requirements conflict.

Bare Act text of Section 238

238. Provisions of this Code to override other laws. The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

This reproduces the statutory provision in the supplied webpage. Verify the latest consolidated legislation and amendments using India Code and the IBBI legal framework.

Meaning of Section 238 of the IBC

Section 238 is a non-obstante provision, signalled by the phrase "notwithstanding anything inconsistent therewith". It directs that, to the extent another applicable law or a legally effective instrument is inconsistent with the IBC, the relevant IBC provision prevails.

The rule is not a general repeal of other laws. The existence of two statutes dealing with related subjects does not by itself establish inconsistency. The competing provisions, their purposes and the facts must be examined to determine whether they can operate together.

Important legal expressions explained

Expression	Meaning in context
Non-obstante clause	Legislative wording giving a provision priority despite conflicting legal requirements, within its proper scope.
Inconsistent	A conflict that prevents the relevant requirements from being reconciled or applied together in the circumstances.
Other law for the time being in force	Another law operative at the relevant time, whether enacted before or after the IBC, subject to applicable interpretation principles.
Instrument having effect by virtue of law	An instrument whose legal force derives from another law, to the extent it conflicts with an applicable IBC requirement.
Corporate insolvency resolution process (CIRP)	The statutory process under Part II of the IBC for resolving insolvency of a corporate debtor.

How the overriding effect operates

1. Identify the IBC requirement

First identify the precise IBC section or rule governing the insolvency issue. For example, Section 14 provides for a moratorium during CIRP, subject to its statutory terms and exceptions.

2. Identify the competing legal requirement

Determine what another statute or legally effective instrument requires or permits. Relevant disputes can arise under debt recovery legislation, company law, contractual arrangements or other regulatory regimes.

3. Establish a genuine inconsistency

Where both requirements can reasonably operate together, Section 238 should not be treated as automatically displacing the other law. Its overriding effect addresses inconsistency rather than every overlap in subject matter.

4. Apply the IBC to the extent of conflict

Where the inconsistency falls within the statutory scope, the applicable IBC requirement has priority. Any specific statutory exception, later legislative amendment or binding judicial interpretation must also be considered.

Section 238 and other laws

SARFAESI Act and secured-creditor enforcement

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) enables specified secured-creditor enforcement measures. Once a CIRP moratorium under Section 14 is operative, the IBC's statutory restrictions must be considered when assessing enforcement steps against the corporate debtor or its property. The analysis depends on the stage of proceedings, the particular asset and applicable exceptions.

Recovery of Debts and Bankruptcy Act, 1993

Debt recovery proceedings may intersect with IBC processes. Section 238 helps resolve actual statutory conflicts; it does not mean every recovery remedy becomes invalid merely because the IBC exists.

Companies Act, 2013

The IBC and the Companies Act address different, sometimes overlapping, corporate matters. Where an operative insolvency provision is inconsistent with a Companies Act requirement, Section 238 may govern priority. Provisions capable of harmonious operation can continue to apply.

Tax and government dues

Questions involving statutory dues, claims and distribution require consideration of the relevant IBC provisions, including Sections 30, 31 and 53, as applicable. Section 238 does not itself prescribe the ranking of all creditors or determine every tax dispute.

Judicial interpretation and important principles

The Supreme Court has examined the IBC's overriding effect in disputes involving other statutory regimes. Two frequently discussed decisions are Innoventive Industries Ltd. v. ICICI Bank (2017), concerning inconsistency with a State enactment, and Principal Commissioner of Income Tax v. Monnet Ispat and Energy Ltd. (2018), concerning the relationship between the IBC and income-tax law. The precise ratio and applicability of each judgment must be read in its factual and statutory context.

Judicial outcomes may also depend on specific provisions, the timing of the dispute, amendments and later decisions. Consult the Supreme Court of India for official judgments and the India Code repository for legislation.

Illustrative example

Suppose a corporate debtor enters CIRP and a creditor proposes to continue an enforcement action against the debtor's assets. The relevant questions include whether Section 14's moratorium applies, whether an exception is available, and whether the proposed action is inconsistent with the IBC. If an applicable IBC restriction conflicts with a right asserted under another law, Section 238 may give priority to the IBC restriction. This is an illustration, not a determination of any individual case.

Limits of the overriding clause

No automatic displacement: Section 238 is triggered by inconsistency, not merely by the existence of another law.
No independent cause of action: the section establishes priority; substantive rights and procedures arise under other provisions.
Context matters: applicable exceptions, later amendments and judicial interpretation remain important.
Distinct from jurisdiction: Section 238 should be read alongside, but not confused with, provisions such as Sections 60 and 231 concerning adjudicatory jurisdiction.

Section 14: moratorium in the corporate insolvency resolution process.
Section 31: approval and binding effect of a resolution plan, subject to the section.
Section 53: distribution of assets in liquidation.
Section 60: Adjudicating Authority for corporate persons.
Section 231: bar of jurisdiction of civil courts in specified matters.
Section 238A: application of the Limitation Act, 1963 to proceedings or appeals before the NCLT, NCLAT, DRT or DRAT, as the case may be.

Frequently asked questions

What does Section 238 of the IBC provide?

It provides that the IBC prevails over inconsistent provisions in another law or an instrument deriving legal effect from another law.

Does Section 238 override every other Indian law?

No. Its express operation concerns inconsistency. Laws that can operate consistently with the IBC are not automatically displaced.

Can Section 238 affect SARFAESI proceedings?

Yes, where the applicable provisions conflict, including in circumstances governed by the CIRP moratorium. The precise result depends on the applicable IBC provisions and facts.

Is Section 238 the same as Section 238A?

No. Section 238 establishes overriding effect in case of inconsistency; Section 238A concerns the application of limitation law to specified proceedings and appeals.

Does Section 238 determine priority of government dues?

Not by itself. The treatment of claims and distributions must be determined under the relevant IBC provisions and binding case law.

Official legal sources and further reading

Updated: 23 October 2026. This article provides general legal information. Verify the latest statutory amendments, notifications and binding decisions before relying on the provision in a particular matter.