IBC Section 225: Power of Central Government to issue directions

Section 225 of Insolvency and Bankruptcy Code, 2016: Power of Central Government to issue directions

Official Bare Act Text

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

(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:

Provided that the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.

(2) The decision of the Central Government as to whether a question is one of policy or not shall be final.

Legal Commentary & Landmark Judgments: Section 225

Section 225 empowers the Central Government to issue binding policy directions to the Insolvency and Bankruptcy Board of India.

Central Policy Directions: The Central Government may from time to time give directions in writing to the Board on questions of policy (other than technical and administrative matters).
Binding Nature: The Board is statutorily bound to comply with such directions in the discharge of its functions.
Finality on Questions of Policy: The decision of the Central Government as to whether a question is one of policy or not is final and non-justiciable.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court recognized that executive policy direction under Section 225 ensures that the independent regulator aligns with overarching national macroeconomic goals.
Lalit Kumar Jain v. Union of India (2021) 9 SCC 321: Affirmed that the Central Government's directional powers allow phased and calibrated rollout of the Code's provisions across different sectors.

Courtroom Practice & Strategic Litigation Guidance:

Parties seeking policy clarifications or nationwide regulatory relief during national emergencies (such as pandemic relief) should petition the Ministry of Corporate Affairs for directions under Section 225.