IBC Section 189: Constitution of Board

Section 189 of Insolvency and Bankruptcy Code, 2016: Constitution of Board

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The Board shall consist of the following members who shall be appointed by the Central Government, namely:-

(a) a Chairperson;

(b) three members from amongst the officers of the Central Government not below the rank of Joint Secretary or equivalent, one each to represent the Ministry of Finance, the Ministry of Corporate Affairs and Ministry of Law, ex officio;

(c) one member to be nominated by the Reserve Bank of India, ex officio;

(d) five other members to be nominated by the Central Government, of whom at least three shall be the whole-time members.

(2) The Chairperson and the other members shall be persons of ability, integrity and standing, who have shown capacity in dealing with problems relating to insolvency or bankruptcy and have special knowledge and experience in the field of law, finance, economics, accountancy or administration.

(3) The appointment of the Chairperson and the members of the Board other than the appointment of an ex officio member under this section shall be made after obtaining the recommendation of a selection committee consisting of-

(a) Cabinet Secretary-Chairperson;

(b) Secretary to the Government of India to be nominated by the Central Government-Member;

(c) Chairperson of the Insolvency and Bankruptcy Board of India (in case of selection of members of the Board)-Member;

(d) three experts of repute from the field of finance, law, management, insolvency and related subjects, to be nominated by the Central Government-Members.

(4) The term of office of the Chairperson and members (other than ex officio members) shall be five years or till they attain the age of sixty-five years, whichever is earlier, and they shall be eligible for reappointment.

(5) The salaries and allowances payable to, and other terms and conditions of service of, the Chairperson and members (other than the ex officio members) shall be such as may be prescribed.

Legal Commentary & Landmark Judgments: Section 189

Section 189 prescribes the constitution, composition, and appointment framework of the Governing Board of the Insolvency and Bankruptcy Board of India.

Multi-Disciplinary Board Structure: Comprises a Chairperson, three members from Central Government ministries (Finance, Corporate Affairs, Law), one nominee from the RBI, and five other members nominated by the Central Government.
Professional Qualifications: Members must be persons of ability, integrity, and standing with specialized knowledge in insolvency, finance, law, economics, or accountancy.
Term and Tenure: The Chairperson and whole-time members hold office for a term of up to five years or until attaining the age of sixty-five years, whichever is earlier.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court observed that the balanced composition of the IBBI ensures institutional independence and multi-sectoral expertise in economic governance.
ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1: Emphasized that statutory regulators under the Code possess the institutional capacity to adapt regulatory policy to market dynamics.

Courtroom Practice & Strategic Litigation Guidance:

Administrative challenges to appointments or policy decisions of the Board must be instituted before the High Court under Article 226, establishing patent lack of qualification or procedural invalidity.