Section 242 IBC: Power to Remove Difficulties - Meaning, Time Limit and Parliamentary Oversight
Section 242 of the Insolvency and Bankruptcy Code, 2016 authorised the Central Government to issue limited, Gazette-published orders to resolve difficulties in implementing the Code. The power is expressly subject to a five-year statutory time limit and parliamentary scrutiny.
Full text of Section 242 - Power to remove difficulties
242. Power to remove difficulties.
(1) If any difficulty arises in giving effect to the provisions of this Code, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Code as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of five years from the commencement of this Code.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
This statutory wording is retained from the original webpage. Consult the official India Code database and IBBI legal framework for the applicable consolidated legislation and notifications.
What does Section 242 mean?
Section 242 is a transitional implementation mechanism. When an unforeseen practical or legal difficulty arises in giving effect to the IBC, the Central Government was empowered to make an order addressing that difficulty. The order must be consistent with the Code and must be published in the Official Gazette.
The provision does not create a general power to rewrite the IBC, override its substantive provisions, or issue removal-of-difficulties orders indefinitely. It operates within the limits stated in Section 242 itself.
Section 242(1): Conditions for a removal-of-difficulties order
| Requirement | Legal significance |
|---|---|
| Difficulty in implementation | The order must address a difficulty in giving effect to a provision of the Code, rather than create a new policy unrelated to implementation. |
| Central Government | The statutory authority empowered to make the order under this section. |
| Order published in the Official Gazette | The prescribed formal publication mechanism for an order under Section 242. |
| Not inconsistent with the Code | The order must remain within the statutory framework and cannot contradict the Code. |
| Five-year limit | The proviso prohibits orders made after five years from commencement of the Code; commencement must be assessed from the relevant statutory commencement provisions and notifications. |
Five-year limitation: Is the power still available?
The proviso to Section 242(1) expressly states that no order shall be made after the expiry of five years from commencement of the Code. The IBC was brought into force in stages under Section 1(3); therefore, the commencement framework and relevant notifications should be checked when assessing the statutory time period for a particular provision.
Section 242 should not be described as an open-ended power available for new orders in 2026. The five-year proviso is a substantive restriction. A previously validly issued order is a different question from the authority to issue a new order after the permitted period; its continuing effect must be considered according to its terms and applicable law.
Section 242(2): Laying orders before Parliament
Every order made under Section 242 must be laid, as soon as may be after it is made, before each House of Parliament. This creates a parliamentary oversight requirement in addition to the Gazette-publication condition.
Section 242(2) does not itself prescribe the same 30-day laying period or express modification-and-annulment procedure found in Section 241 for rules and regulations. These are separate provisions with distinct wording.
Important legal terms
| Term | Meaning in this provision |
|---|---|
| Removal of difficulties | A limited statutory power to address implementation obstacles without departing from the parent legislation. |
| Official Gazette | The formal government publication in which a qualifying order must appear. |
| Commencement | The date on which the relevant statutory provisions are brought into force in accordance with Section 1(3) and applicable notifications. |
| Delegated legislation | Legally binding subordinate instruments made under authority conferred by an Act, subject to the limits of that Act. |
| Laying before Parliament | Placing a statutory instrument before both Houses as required by the relevant law. |
Illustrative example
Suppose an implementation problem arises when newly commenced IBC provisions must operate alongside existing administrative arrangements. During the period permitted by Section 242, the Central Government could consider a Gazette-published order addressing that difficulty, but only if the order remained consistent with the Code. It would then have to be laid before both Houses of Parliament. This is a hypothetical illustration, not a statement that any particular order was issued.
How Sections 239, 240, 241 and 242 differ
| Section | Subject | Key distinction |
|---|---|---|
| 239 | Power to make rules | Central Government rule-making authority for carrying out the Code. |
| 240 | Power to make regulations | IBBI power to make regulations consistent with the Code and rules. |
| 241 | Rules and regulations laid before Parliament | Prescribes the 30-day laying mechanism and possible parliamentary modification or annulment. |
| 242 | Power to remove difficulties | Time-limited Central Government order-making power, with Gazette publication and laying before both Houses. |
Frequently asked questions
Who could issue orders under Section 242?
The Central Government, subject to the conditions and time limit stated in Section 242.
Could an order under Section 242 contradict the IBC?
No. Subsection (1) expressly requires provisions made under the order to be not inconsistent with the Code.
Is there a deadline for issuing orders?
Yes. The proviso prohibits an order after five years from commencement of the Code. Because the Code commenced in stages, relevant commencement notifications should be consulted for a precise legal analysis.
Must orders be published in the Official Gazette?
Yes. Section 242(1) specifies publication in the Official Gazette.
Must Parliament examine such orders?
Section 242(2) requires every order to be laid before each House of Parliament as soon as may be after it is made.
Are Section 242 orders the same as IBBI regulations?
No. Section 242 concerns Central Government removal-of-difficulties orders; Section 240 separately authorises IBBI regulations.
Official sources and further reading
- India Code - official central legislation database
- IBBI - Acts, rules, regulations and notifications
- Ministry of Corporate Affairs - official portal
- Insolvency and Bankruptcy Code, 2016 - complete section index
Reviewed: October 23, 2026. General legal information; verify the operative statutory text and commencement notifications for any specific legal matter.