The non-obstante nuisance: a critique of Section 238 of the Insolvency and Bankruptcy Code

Abstract

ABSTRACT This paper argues that the non-obstante clause in the Insolvency and Bankruptcy Code 2016 (IBC), which gives supremacy to the IBC over all previous laws in case of conflict, does not serve its purpose of asset preservation, and highlights problems that arise due to its presence. The paper analyses this provision considering the test for determining inconsistency between statutes in Indian law. It argues that the impact of IBC across different fields of operation brings forth several inconsistencies when deciding a conflict between the IBC and another statute. It presents problems arising due to the supremacy given to the IBC through the non-obstante clause, and exhibits how its application sometimes defeats its purpose. Lastly, the paper analyses insolvency regimes of the UK and Singapore, as well as the UNCITRAL Guide on Insolvency, and presents an example of instituting better cooperation between authorities initiating proceedings against a company under different statutes.