Section 226: Power of Central Government to Supersede Board
Section 226 of the Insolvency and Bankruptcy Code, 2016 (IBC) empowers the Central Government, in specified exceptional circumstances, to supersede the Insolvency and Bankruptcy Board of India (IBBI) for a limited period. The provision also specifies the consequences of supersession, reconstitution of the Board and the requirement to report the action to Parliament.
Meaning and scope of Section 226
The expression Board in this provision refers to the Insolvency and Bankruptcy Board of India constituted under the IBC. Section 226 is a supervisory provision dealing with extraordinary circumstances in which the Central Government may temporarily supersede the Board by notification. The maximum period specified by sub-section (1) is six months.
The power is not unrestricted. Sub-section (1) identifies the statutory grounds on which supersession may take place, while sub-sections (2) to (4) regulate the legal consequences, reconstitution and Parliamentary accountability that follow.
Statutory text of Section 226
(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.
When can the Central Government supersede IBBI?
Section 226(1) provides three statutory situations: a grave emergency that prevents the Board from discharging its functions and duties; persistent non-compliance with a Central Government direction resulting in deterioration of the Board's financial position or administration; or circumstances making supersession necessary in the public interest.
Effect of a supersession notification
Once a notification under Section 226(1) is published, the members of the Board vacate office from the date of supersession. Until reconstitution, the Board's statutory powers, functions and duties are exercised or discharged by the person or persons directed by the Central Government. Property owned or controlled by the Board temporarily vests in the Central Government.
Reconstitution of the Board
Under Section 226(3), the Central Government may reconstitute the Board through fresh appointments on expiry of the notified supersession period. A person who vacated office because of supersession is not, merely for that reason, disqualified from being appointed again. The proviso also permits reconstitution before the supersession period expires.
Parliamentary reporting requirement
Section 226(4) requires the Central Government to place before each House of Parliament, at the earliest, the supersession notification together with a full report of the action taken and the circumstances that led to it. This creates an express statutory reporting requirement for exercise of the supersession power.
Related provision: Section 225
Section 225 - Power of Central Government to issue directions deals with written policy directions to the Board. Section 226 separately provides for supersession of the Board when the conditions specified in that section are satisfied.
Updated: 30 September 2026