Section 235A 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.
Section 235A is a general penalty section. In the IBBI consolidated text of the Code amended up to 12 August 2021 it punishes any contravention for which the Code provides no specific penalty with a fine of one lakh to two crore rupees. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 substitutes the whole section: the Adjudicating Authority, on an application, may impose a penalty of not less than one lakh rupees for each day the contravention continues, up to three times the loss or the unlawful gain, with a cap of five crore rupees where neither can be quantified.
After the 2026 Act: on an application by the Board, the Central Government or a person it authorises, the Adjudicating Authority may penalise any person who has contravened a provision of the Code, the rules or the regulations. The penalty is not less than one lakh rupees for each day the contravention continues, and may extend up to the higher of three times the loss or three times the unlawful gain; where neither can be quantified, the total shall not exceed five crore rupees. It may go below one lakh rupees a day for reasons recorded in writing. Before: a fine of not less than one lakh rupees up to two crore rupees, for a contravention with no other penalty. 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.
Section 235A before the 2026 Act
The consolidated text reads: "If any person contravenes any of the provisions of this Code or the rules or regulations made thereunder for which no penalty or punishment is provided in this Code, such person shall be punishable with fine which shall not be less than one lakh rupees but which may extend to two crore rupees." The heading is "Punishment where no specific penalty or punishment is provided." A footnote shows the section as inserted by Act 8 of 2018, sec. 8 (w.r.e.f. 23-11-2017).
The features of that text are: a residual scope (only contraventions "for which no penalty or punishment is provided in this Code"); punishment with fine; and a range of one lakh rupees to two crore rupees.
Section 235A after the 2026 Act
Section 68 of the Amendment Act substitutes a new section 235A, with the marginal heading "Power of Adjudicating Authority to impose penalties." The new text:
"If a person has contravened any provision of this Code or any rules or the regulations made thereunder, the Adjudicating Authority may, on an application made by the Board or the Central Government or any person authorised by the Central Government in this behalf, impose upon such person, a penalty which shall not be less than one lakh rupees for each day during which the contravention continues, but which may extend up to—
(a) three times the amount of loss caused, or likely to have been caused, to persons concerned on account of such contravention;
(b) three times the amount of the unlawful gain made on account of such contravention,
whichever is higher:
Provided that where such loss or unlawful gain is not quantifiable, the total amount of the penalty imposed shall not exceed five crore rupees:
Provided further that where the Adjudicating Authority is of the opinion that sufficient cause exists to do so, it may, for reasons to be recorded in writing, impose a penalty which may be less than one lakh rupees for each day that the failure continues."
| Feature | Before (consolidated text) | After the 2026 Act |
|---|---|---|
| Heading | Punishment where no specific penalty or punishment is provided. | Power of Adjudicating Authority to impose penalties. |
| Scope | Contravention "for which no penalty or punishment is provided in this Code" | "any provision of this Code or any rules or the regulations made thereunder"; the words limiting it to contraventions with no other penalty are not in the new text |
| Who acts | Not stated (a fine "punishable") | The Adjudicating Authority, on an application by the Board, the Central Government or a person authorised by it |
| Amount | Fine of not less than one lakh rupees, up to two crore rupees | Not less than one lakh rupees for each day of contravention, up to three times the loss or three times the unlawful gain, whichever is higher |
| Unquantifiable loss or gain | Not addressed | Total penalty not to exceed five crore rupees |
| Lower penalty | Not addressed | For reasons recorded in writing, if sufficient cause exists, a penalty less than one lakh rupees for each day |
Reading the new text
Anyone facing a penalty application, or planning one, can seek legal dispute resolution advice to test the facts against the section. The points below follow the words in order.
- Trigger. A person "has contravened" a provision of the Code, the rules or the regulations. The new text drops the earlier requirement that the contravention be one for which no other penalty is provided. How the new section sits beside the specific penalties elsewhere in the Code is not stated in the section, and this article draws no conclusion.
- Procedure. The Adjudicating Authority acts "on an application made by" the Board, the Central Government or a person authorised by it. A private person is not named as an applicant.
- Per-day floor. "not less than one lakh rupees for each day during which the contravention continues". The floor counts days of continuing contravention.
- Ceiling. "up to" the higher of three times the loss caused or likely to have been caused to persons concerned, and three times the unlawful gain, "on account of such contravention".
- Unquantifiable cases. The first proviso caps the total at five crore rupees where the loss or gain is not quantifiable.
- Discretion to go lower. The second proviso lets the Adjudicating Authority, if it forms the opinion that sufficient cause exists and records reasons in writing, impose less than one lakh rupees for each day.
Two printing points. The first proviso speaks of the contravention continuing in the main text, while the second proviso speaks of "that the failure continues"; the words are quoted as printed. And the Explanations are printed "Explanation. I" and "Explanation. II" with a full stop after the word.
Explanation I. "For the removal of doubts, it is hereby clarified that the Adjudicating Authority for the purposes of this section shall be the same as referred to in section 60 or section 179, as the case may be." So the Adjudicating Authority for corporate persons (section 60) or for individuals and partnership firms (section 179) acts under this section, as the case may be.
Explanation II. "For the purposes of this Code, it is hereby declared that the omission of sections 74 and 76, and the amendment of this section by the Insolvency and Bankruptcy Code (Amendment) Act, 2026, shall not affect:— (i) any prosecution instituted under these sections on and before the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 and pending immediately before such date of commencement before any court, which shall continue to be heard and disposed of by the said court as if the Insolvency and Bankruptcy Code (Amendment) Act, 2026 had not been enacted; and (ii) any punishment imposed under these sections on and before the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2026."
Explanation II ties the omission of sections 74 and 76 (explained in article 058) and this amendment to the date of commencement, which is a date to be notified. The text refers to prosecutions "under these sections"; the reader should read the Explanation with care, since the phrase is not tied in the Explanation to one named section.
Example (invented). A person is alleged to have contravened a provision of the Code and the contravention is said to be continuing. After the 2026 Act, the Board applies to the Adjudicating Authority. If the Authority finds a contravention for twenty days, the penalty is not less than one lakh rupees for each of those days, subject to the second proviso, and may extend up to three times the loss or gain, whichever is higher. If neither can be quantified, the total cannot exceed five crore rupees.
Transitional and commencement points
- The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted.
- Explanation II protects prosecutions and punishments "on and before the date of commencement" of the Amendment Act, as quoted above. No commencement date is given in this article.
Rules and regulations
No rule or regulation set is named here; the section itself prescribes the penalty.
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 with a penalty application under the Code?
A penalty application turns on the contravention alleged, the days counted and the record of loss or gain. Our team can examine the papers with you in legal dispute resolution support and plan the reply or the evidence.
Key takeaways
- The consolidated text punishes a contravention with no other penalty with a fine of one lakh to two crore rupees.
- The 2026 Act substitutes a power of the Adjudicating Authority to impose a penalty on an application by the Board, the Central Government or a person it authorises.
- The penalty is not less than one lakh rupees for each day the contravention continues, up to three times the loss or the unlawful gain, whichever is higher; the cap is five crore rupees where neither is quantifiable.
- Explanation II saves prosecutions and punishments under sections 74 and 76 on and before the date of commencement.
- The Amendment Act, 2026 comes into force by notification; check whether it has been notified.
Read next
- Sections 67B and 67C: penalty for contravening a moratorium or resolution plan, and concealment by an operational creditor
- Sections 63, 64 and 64A: civil court bar and penalty for frivolous proceedings
- Sections 236 and 237: trial of offences by a Special Court, appeal and revision
- The civil penalty regime under the IBC after 2026
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.