Section 238 of IBC : Section 238: Provisions Of This Code To Override Other Laws

Explanation using Example

Imagine a company, XYZ Corp, has defaulted on its loans and is undergoing insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The company also has tax dues, which according to the Income Tax Act, have to be paid immediately. However, Section 238 of the IBC states that the provisions of the IBC will override any inconsistencies with other laws. Therefore, despite the Income Tax Act's demands, the resolution process under the IBC will take precedence, and the tax dues will be addressed according to the IBC's rules and regulations, which may allow for a restructuring of the debt and payment over time as part of the resolution plan.