IBC Section 224: Insolvency and Bankruptcy Fund

Section 224 of Insolvency and Bankruptcy Code, 2016: Insolvency and Bankruptcy Fund

Official Bare Act Text

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

Part V

Miscelleneaous

224. Insolvency and Bankruptcy Fund.-

(1) There shall be formed a Fund to be called the Insolvency and Bankruptcy Fund (hereafter in this section referred to as the "Fund") for the purposes of insolvency resolution, liquidation and bankruptcy of persons under the Code.

(2) There shall be credited to the Fund the following amounts, namely-

(a) the grants made by the Central Government for the purposes of the Fund;

(b) the amount deposited by persons as contribution to the Fund;

(c) the amount received in the Fund from any other source; and

(d) the interest or other income received out of the investment made from the Fund.

(3) A person who has contributed any amount to the Fund may, in the event of proceedings initiated in respect of such person under this Code before an Adjudicating Authority, make an application to such Adjudicating Authority for withdrawal of funds not exceeding the amount contributed by it, for making payments to workmen, protecting the assets of such persons, meeting the incidental costs during the proceedings or such other purposes as may be prescribed.

(4) The Central Government shall, by notification, appoint an administrator to administer the fund in such manner as may be prescribed.

Legal Commentary & Landmark Judgments: Section 224

Section 224 establishes the Insolvency and Bankruptcy Fund, created by the Central Government to support insolvency processes, education, research, and public interest initiatives.

Creation of Fund: The Central Government creates a dedicated statutory fund known as the Insolvency and Bankruptcy Fund.
Sources of Inflow: Credited with grants made by the Central Government, voluntary donations, contributions from stakeholders, and interest earned on investments of the Fund.
Permissible Application: Applied for meeting expenses of insolvency resolution, relief to affected persons, training, research, and advancing statutory objectives under the Code.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court noted that the creation of the Insolvency and Bankruptcy Fund reflects a welfare-oriented statutory framework supporting systemic stability.
Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Observed that statutory funding mechanisms under the Code ensure adequate capital for institutional and developmental reforms in insolvency administration.

Courtroom Practice & Strategic Litigation Guidance:

Contributions made by entities towards the Insolvency and Bankruptcy Fund can qualify under Corporate Social Responsibility (CSR) allocations where designated by Central Government notifications.