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Section 238 of The Insolvency and Bankruptcy Code, 2016.

The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

Summary

This provision establishes that the rules of this insolvency law override, which means take priority over and replace, any other conflicting laws that are currently in force.
If there is any inconsistency between this Code and any other law, the provisions of this Code will prevail.
This overriding power also applies to any legal instrument or document, which is a formal legal paper like a contract or deed, that has legal effect because of any other law.

Practical examples

1A state tax department tries to seize the office building of a company in default under a local land revenue law. Since the company is undergoing insolvency under this Code, the freeze on lawsuits and asset seizures under this insolvency law overrides the local tax law, preventing the seizure.

2A commercial bank has an agreement under a special banking law that allows them to take control of a debtor company's factory immediately. Once the corporate insolvency process starts under this Code, the bank cannot enforce that contract because the provisions of this insolvency law override the other banking law and contract.

FAQ

1. What happens if another central or state law conflicts with the Insolvency and Bankruptcy Code, 2016?

Under Section 238 of the Insolvency and Bankruptcy Code, 2016, the provisions of this Code will override any other inconsistent law in force in India.

2. Does a contract or agreement lose its effect if it is inconsistent with the Insolvency and Bankruptcy Code, 2016?

Yes, under Section 238 of the Insolvency and Bankruptcy Code, 2016, any legal instrument or contract having effect by virtue of any other law is overridden to the extent it is inconsistent with this Code.

3. Can a local municipality claim priority for tax recovery over the bankruptcy process?

No, Section 238 of the Insolvency and Bankruptcy Code, 2016, makes it clear that the provisions of this Code have overriding effect over any other local or state laws that are inconsistent with it.

Test yourself

Q1.Under Section 238 of the Insolvency and Bankruptcy Code, 2016, what happens when there is an inconsistency between this Code and any other law currently in force?

Q2.Under Section 238 of the Insolvency and Bankruptcy Code, 2016, what type of documents or instruments are overridden if they are inconsistent with this Code?

Q3.Under Section 238 of the Insolvency and Bankruptcy Code, 2016, which authority is protected from other conflicting laws?

Q4.If a state government law has a provision that is inconsistent with Section 238 of the Insolvency and Bankruptcy Code, 2016, how is the conflict resolved?

237PreviousSection 237 Appeal and revision.238ANextSection 238A Limitation.

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