IBC Section 233: Protection of action taken in good faith

Section 233 of Insolvency and Bankruptcy Code, 2016: Protection of action taken in good faith

Official Bare Act Text

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

No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government, or the Chairperson, Member, officer or other employee of the Board or an insolvency professional or liquidator for anything which is in done or intended to be done in good faith under this Code or the rules or regulations made thereunder.

Legal Commentary & Landmark Judgments: Section 233

Section 233 provides statutory Immunity and Protection for actions taken in good faith by the Central Government, Board, resolution professionals, liquidators, and trustees.

Protection of Action Taken in Good Faith: No suit, prosecution, or other legal proceeding lies against the government, Board, members, employees, or insolvency professionals for anything done or intended to be done in good faith.
Shield for Insolvency Practitioners: Protects interim resolution professionals, resolution professionals, liquidators, and bankruptcy trustees from personal civil damages when executing statutory orders.
Bona Fide Standard: The protection is contingent on bona fide action; gross negligence, fraud, or collusive corruption are not protected.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court highlighted that statutory immunity under Section 233 is essential to embolden insolvency professionals to take tough commercial decisions without fear of vexatious personal litigation.
Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: Affirmed that bona fide facilitator and administrative acts are fully shielded from civil or criminal liability.

Courtroom Practice & Strategic Litigation Guidance:

When sued personally by promoters or disgruntled bidders in civil courts or police complaints, the insolvency professional should immediately file a quashing petition under Section 482 CrPC / Section 528 BNSS invoking Section 233 statutory immunity.