Sections 225 and 226 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Two sections in Part V give the Central Government control over the Insolvency and Bankruptcy Board of India (the Board). Section 225 lets it give written directions on questions of policy. Section 226 lets it supersede the Board by notification, for a period not exceeding six months, on three stated grounds. This article reads both as per the IBBI consolidated text of the Code amended up to 12 August 2021.
Section 225: the Board is bound by written directions on questions of policy from the Central Government, which should, as far as practicable, let the Board express its views first; the Government's decision on whether a question is one of policy is final. Section 226: on grave emergency, persistent non-compliance with directions, or public interest, the Government may supersede the Board for not more than six months; members vacate office, the Government's nominees exercise the Board's powers, and the Board's property vests in the Government until reconstitution.
Section 225: directions on questions of policy
(1) "Without prejudice to the foregoing provisions of this Code, the Board shall, in exercise of its powers or the performance of its functions under this Code, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time."
Four elements:
- Binding. The Board "shall ... be bound".
- Subject-matter. "questions of policy". The text does not define the phrase.
- Form. The directions are "in writing" and may be given "from time to time".
- Consultation. The proviso: "the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section". The words "as far as practicable" soften the duty to consult.
(2) "The decision of the Central Government as to whether a question is one of policy or not shall be final." The Code therefore gives the Government the last word on what counts as policy. The section does not itself say whether any other body may review that decision, and this article does not add anything.
The Board's own status and powers are set out in sections 188 to 198 (see our post on the IBBI's establishment, constitution and powers). Section 225 sits over those powers. A regulated person who wants to understand how a direction affects the Board's functions, or whether one has been issued, can take a legal consultation and bring the text of the direction.
Section 226: supersession
(1) Grounds. "If at any time the Central Government is of opinion" that one of three situations exists, it may supersede the Board "by notification ... for such period, not exceeding six months, as may be specified in the notification":
| Clause | Ground (as printed) |
|---|---|
| (a) | on account of grave emergency, the Board is unable to discharge the functions and duties imposed on it by or under the provisions of the Code |
| (b) | the Board has persistently not complied with any direction issued by the Central Government under the Code or in the discharge of its functions and duties, and as a result of such non-compliance the financial position or the administration of the Board has deteriorated |
| (c) | circumstances exist which render it necessary in the public interest so to do |
Notice the structure. Clauses (a) and (c) are separate, single-element grounds. Clause (b) has two conjoined elements: persistent non-compliance and a resulting deterioration of the financial position or the administration of the Board. The test is the Central Government's "opinion", but the text names the facts that opinion must be about.
(2) Consequences. On publication of the notification:
- (a) "all the members shall, as from the date of supersession, vacate their offices as such";
- (b) all the powers, functions and duties 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."
The text of sub-section (2) is printed as one paragraph with the clauses run together and a hyphen at its start; it is quoted here in the order printed and nothing is rearranged.
(3) Reconstitution. "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". A person who vacated office under clause (a) of sub-section (2) "shall not be deemed disqualified for appointment". The proviso lets the Government act under this sub-section "at any time, before the expiration of the period of supersession".
(4) Parliament. "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."
Example (invented). Suppose a notification supersedes the Board for four months on the ground in clause (c). From the date of supersession the Board's members vacate their offices; the Central Government directs a person to exercise the Board's powers; the Board's property vests in the Government for the time being. Before the four months end, the Government can use sub-section (3) to reconstitute the Board, and the former members are not disqualified from fresh appointment. The notification and a full report go before each House of Parliament. The period of four months is invented for illustration; the section sets only the outer limit of six months.
| Question | Section 225 | Section 226 |
|---|---|---|
| Who acts | Central Government | Central Government |
| How | Written directions | Notification |
| Limit | Questions of policy | Three grounds; period not exceeding six months |
| Board's right to be heard | "as far as practicable" before a direction | Not mentioned in the text |
| Parliament | Not mentioned | Notification and full report laid before each House |
What the Code does not say
The sections do not state whether the Board's regulations made before supersession continue during it, whether the persons who exercise the Board's functions are bound by the same procedures, or what happens to pending matters. The text is silent on those points, and this article draws no inference. Contracts and pending orders of the Board are for the provisions of the Code that deal with them. The section prints no penalty for the Board's non-compliance beyond the supersession power in clause (b).
Rules and regulations
No rule or regulation set is named here; neither section leaves a matter to rules or regulations. Section 244, on transitional provisions, is separate and is explained in article 143.
The Amendment Act, 2026
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) does not amend sections 225 or 226. It does amend several sections that govern the Board's functions, for example section 196, which is not explained here. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether this change has been notified.
Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help understanding regulator powers under the Code?
If a direction or a supersession touches your matter, you need the exact text of the notification and the date it was published. Our team can go through the provisions with you in a legal consultation and set out what the sections do and do not say.
Key takeaways
- The Board is bound by written policy directions of the Central Government, which should, as far as practicable, let it express its views first.
- The Government's decision on whether a question is one of policy is final.
- The Government may supersede the Board by notification for not more than six months on three grounds.
- On supersession the members vacate office, the Government's nominees exercise the Board's functions and the Board's property vests in the Government until reconstitution.
- The notification and a full report must be laid before each House of Parliament at the earliest.
Read next
- Sections 221 to 223: grants, the Fund of the Board, accounts and audit
- Sections 228 to 230: budget, annual report and delegation by the Board
- Sections 243 and 244: repeal of old insolvency Acts, savings and transitional provisions
- IBBI: the Insolvency and Bankruptcy Board of India
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.