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Section 195: Power to designate financial sector regulator

Insolvency and Bankruptcy Code, 2016 • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2016
Section 194 All 255 Sections of Insolvency and Bankruptcy Code, 2016 Section 196

Legal Commentary & Landmark Judgments: Section 195

Section 195 empowers the Central Government to designate any financial sector regulator to exercise the powers and functions of the Board until the Board is formally constituted.

  • Transitional Regulatory Continuity: Allowed the Central Government to designate a financial regulator (such as MCA or RBI) to perform IBBI functions pending its initial constitution.
  • Temporary Exercise of Powers: The designated regulator enjoyed all powers of registration, framing transitional regulations, and managing early insolvency implementation.
  • Historical Transitional Character: Served as a crucial bridging provision during the operational rollout of the Code in 2016.
Key Landmark Precedents:
  • Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court noted that transitional mechanisms like Section 195 facilitated the immediate, frictionless rollout of the Code without administrative vacuums.
  • Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Observed that the rapid operationalisation of the Code's machinery was supported by comprehensive transitional provisions.
Courtroom Practice & Strategic Litigation Guidance:

While Section 195 was primarily transitional for the initial 2016 rollout, its statutory existence demonstrates the legislative intent that regulatory functions under the Code must never suffer an administrative hiatus.

Section 194 All 255 Sections of Insolvency and Bankruptcy Code, 2016 Section 196