IBC Section 242: Power to remove difficulties

Section 242 of Insolvency and Bankruptcy Code, 2016: Power to remove difficulties

Official Bare Act Text

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

(1) If any difficulty arises in giving effect to the provisions of this Code, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Code as may appear to be necessary for removing the difficulty:

Provided that no order shall be made under this section after the expiry of five years from the commencement of this Code.

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.

Legal Commentary & Landmark Judgments: Section 242

Section 242 contains the statutory Henry VIII clause, empowering the Central Government to make orders for the removal of unforeseen difficulties in implementing the Code.

Removal of Implementation Bottlenecks: If any difficulty arises in giving effect to the provisions of the Code, the Central Government may make orders not inconsistent with the Code to remove the difficulty.
Five-Year Sunset Clause: No order under Section 242 could be made after the expiry of five years from the commencement of the Code.
Parliamentary Tabling: Every order made under this section was required to be laid before each House of Parliament.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court held that removal-of-difficulties powers under Section 242 are meant to iron out minor operational creases without altering the core statutory architecture.
Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Observed that the statutory sunset clause under Section 242 prevented executive overreach after the initial implementation phase.

Courtroom Practice & Strategic Litigation Guidance:

Since the 5-year sunset period under Section 242 has elapsed, any substantive difficulties in Code implementation must now be resolved through formal Parliamentary Amendment Acts or judicial interpretation.