Authored By: Muthumala K
Thulasi College of Law for Women
Introduction
In May 2023, Go First, an Indian low-cost airline, filed for voluntary insolvency and was admitted into the corporate insolvency resolution process, triggering a moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). What followed exposed a fault line running through Indian insolvency law. Aircraft lessors who had already terminated their leases, and who held deregistration rights under the Cape Town Convention, found themselves blocked by the moratorium, and the Delhi High Court had to intervene to clarify that leased aircraft never formed part of the insolvency estate in the first place. Four years earlier, the collapse of Jet Airways had produced a comparable improvisation: faced with parallel insolvency proceedings in India and the Netherlands and no statutory mechanism to reconcile them, the National Company Law Appellate Tribunal (“NCLAT”) directed the Indian resolution professional and the Dutch bankruptcy administrator to negotiate a bespoke cooperation protocol.
Both episodes illustrate the same underlying problem: India has never had an operative framework for cross border insolvency. Sections 234 and 235 of the IBC, which contemplate bilateral treaties and letters of request respectively, have not been used once in the decade since the Code came into force. That changed, at least on paper, in April 2026, when the Insolvency and Bankruptcy Code (Amendment) Act, 2026 inserted section 240C, empowering the Central Government to frame rules for cross-border insolvency broadly aligned with the UNCITRAL Model Law on Cross-Border Insolvency. At the time of writing, those rules have not yet been notified.
This article’s central claim is a narrow one. Parliament has authorised the Central Government to make cross border insolvency rules; it has not yet written those rules, and until it does, India’s cross-border regime exists only as a possibility rather than a working mechanism. Whether that possibility becomes something practitioners can actually rely on will turn on choices that have not been made public. Drawing on the Jet Airways and Go First experiences and on the comparative practice of the United Kingdom, Singapore, Japan and the United States, this article contends that the forthcoming rules ought to track the Model Law’s structure closely, avoid conditioning recognition on reciprocity, and take seriously a problem that earlier Indian reports barely mention: what happens when Indian corporate debt is governed by foreign law.
From Dead Letter to Enabling Provision
Sections 234 and 235 were inserted into the IBC on the recommendation of the Joint Parliamentary Committee, largely as an afterthought. Section 234 allows the Central Government to enter bilateral agreements with other countries for enforcing the Code’s provisions; section 235 allows a resolution professional or liquidator to seek a letter of request to a foreign court, but only where a reciprocal arrangement already exists. Neither has ever been used. No bilateral treaty has been signed under section 234, and no letter of request has been issued under section 235.
The gap was identified early. The Insolvency Law Committee’s October 2018 report recommended that India adopt the UNCITRAL Model Law and annexed a draft “Part Z” to that effect. The Cross-Border Insolvency
Rules and Regulations Committee submitted a further report in 2020, and the Ministry of Corporate Affairs invited public comments in 2021. For several years thereafter, little visible progress followed.
That changed with the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which received presidential assent in April 2026. The Act inserts section 240C, which empowers the Central Government to prescribe the manner of administering cross-border insolvency proceedings, including recognition of foreign proceedings, the grant of relief, and judicial cooperation, for such countries and classes of debtors as it may notify. The provision overrides both the IBC and the Companies Act, 2013 to the extent of any inconsistency, and rules made under it must be laid before Parliament, although Parliament’s role is one of scrutiny rather than approval. As of mid 2026, the substantive rules remain in draft.
This is a significant, if incomplete, step. Section 240C does not itself create a recognition mechanism, define centre of main interests (“COMI”), or specify what relief a foreign representative may obtain. All of that is left to subordinate legislation that does not yet exist. The manner in which the rule-making power is eventually exercised, rather than its bare existence, will determine whether India finally acquires a workable cross-border regime.
III. Judicial Improvisation Ahead of Reform
Two episodes illustrate what Indian tribunals have done in the absence of a statutory recognition mechanism, and the limits of that improvisation.
The Jet Airways Protocol
When Jet Airways collapsed in 2019, insolvency proceedings were underway simultaneously in India, before the NCLT at Mumbai, and in the Netherlands, before a Dutch court that had appointed a bankruptcy administrator. The NCLT initially treated the Dutch proceeding as a nullity, holding that sections 234 and 235 were not in force and that it therefore possessed exclusive jurisdiction. On appeal, the NCLAT took a more constructive approach. Rather than asserting a power of recognition that the statute did not confer, it directed the Indian resolution professional and the Dutch administrator to negotiate a Cross-Border Insolvency Protocol, which it then approved. The protocol treated India as the debtor’s centre of main interests and the Dutch proceeding as non-main, required the two office-holders to cooperate and share information, and gave the Dutch administrator a right to attend committee of creditors meetings as a non-voting observer.
The protocol worked, and it is frequently cited as proof that cross-border cooperation is achievable without legislation. That is true, but the achievement rested on the goodwill of the parties and the willingness of two tribunals, in two countries, to approve a bespoke arrangement. Nothing in the protocol was owed to either office-holder as of right, and nothing about the process was guaranteed to be replicable in the next case.
The Go First Dispute
The Go First insolvency exposed a related but distinct weakness. Once the moratorium took effect, aircraft lessors who had already terminated their leases sought to repossess and deregister their aircraft under the Cape Town Convention, to which India is a party. The Directorate General of Civil Aviation declined to process the deregistration applications, citing the moratorium. The Delhi High Court eventually held, across a series of orders, that the leased aircraft were never part of the insolvency estate, that the leases had already been
terminated before the insolvency commencement date, and that the moratorium under section 14(1)(d) accordingly did not apply. The dispute was not, strictly speaking, one of recognising a foreign insolvency proceeding; it concerned the relationship between the IBC and India’s international treaty obligations. But it reflects the same underlying deficiency as Jet Airways: the absence of any settled framework for reconciling domestic insolvency law with cross-border commercial arrangements, leaving courts to resolve questions of basic principle through ad hoc litigation.
What Section 240C Leaves Unresolved
Four issues will largely determine whether the eventual rules produce a credible regime or merely a more elaborate version of the present uncertainty.
First, reciprocity. The Insolvency Law Committee’s 2018 recommendation was that India adopt the Model Law on a reciprocal basis, recognising foreign proceedings only from countries that would, in turn, recognise Indian proceedings. None of the major adopting jurisdictions, including the United States, the United Kingdom and Singapore, has taken this approach. A reciprocity requirement would mean that Indian tribunals could not recognise proceedings from precisely the jurisdictions where Indian companies are most likely to hold assets or have creditors, unless a separate bilateral arrangement were negotiated country by country, in effect reproducing the failure of sections 234 and 235.
Second, interim relief. The draft Part Z annexed to the 2018 report omitted any provision for interim or provisional relief pending a final recognition decision. Between the filing of a recognition application and the tribunal’s order, assets can be moved, dissipated or placed beyond reach. A regime without provisional relief invites precisely the kind of forum manipulation that a recognition framework exists to prevent.
Third, the public policy exception. The Model Law permits a court to withhold recognition or relief where doing so would be “manifestly contrary” to public policy. The word “manifestly” sets a high threshold and should be retained: a mere difference between Indian and foreign priority or limitation rules is not, on any sensible view, a matter of public policy, and a broadly drawn exception risks becoming a vehicle for resisting legitimate foreign recognition rather than a genuine safeguard.
Fourth, and least discussed in the Indian literature, the treatment of foreign-law governed debt. A substantial proportion of Indian external commercial borrowings and international bond issuances are governed by English law. Under the long-standing English rule in Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux, a debt governed by English law can be discharged only in accordance with English law, regardless of what an insolvency proceeding elsewhere purports to do. The UK Supreme Court’s decision in Rubin v Eurofinance SA confirmed that recognition under the Model Law does not, without more, extend to enforcing foreign insolvency-related judgments such as avoidance orders. If an English court applying the Gibbs rule declines to recognise the discharge of English-law debt effected by an Indian resolution plan, a creditor could in principle pursue that debt in England notwithstanding the Indian proceeding, undermining the finality the IBC’s resolution process is meant to provide. This is not a peripheral concern for a jurisdiction whose companies routinely raise capital abroad, and it merits closer attention than the 2018 and 2020 reports gave it.
Comparative Lessons
More than sixty states have enacted some version of the Model Law, a figure often cited to demonstrate how widely accepted the instrument has become. The number is a poor guide to substance, though, because the Model Law leaves each state a good deal of room to decide how, and how faithfully, to apply it. Four jurisdictions illustrate the range of choices available.
Singapore adopted the Model Law in 2017 without a reciprocity requirement and without diluting the “manifestly contrary” public policy standard, and has since become the region’s principal restructuring venue. The United Kingdom’s Cross-Border Insolvency Regulations 2006 gave the Model Law direct effect but did not make it the exclusive gateway: English courts retain a separate common law power to assist foreign proceedings on grounds of comity, alongside statutory cooperation under section 426 of the Insolvency Act 1986. That multiplicity of gateways has generally been treated as a source of flexibility rather than confusion, though Rubin v Eurofinance shows its limits, and prompted UNCITRAL to adopt a further Model Law on Recognition and Enforcement of Insolvency-Related Judgments in 2019, which India may wish to consider once the immediate reform is complete.
Japan took a more cautious path. It ratified the Model Law in 2001 through its Act on Recognition of and Assistance for Foreign Insolvency Proceedings, but deliberately dropped the automatic stay that Article 20 of the Model Law otherwise provides, leaving relief entirely to judicial discretion. Japanese courts have nonetheless granted recognition and assistance in a substantial number of cases, which suggests that an automatic stay is not indispensable provided courts can act quickly under a clear discretionary power — a middle path more attractive than the draft Part Z’s outright omission of interim relief. The United States, for its part, adopted the Model Law as Chapter 15 of its Bankruptcy Code and has since developed a considerable body of case law on the meaning of COMI, a jurisprudential resource that Indian tribunals will likely draw upon once recognition applications begin in earnest.
Australia’s experience points to a different kind of lesson: a statute rarely runs itself. Alongside the Cross Border Insolvency Act 2008, the Federal Court issued its own practice note incorporating the Judicial Insolvency Network Guidelines, giving judges a settled procedure for communicating with foreign courts rather than leaving them to improvise one case at a time. A comparable practice direction, issued by whichever NCLT bench is eventually given cross-border jurisdiction, would likely do more to make cooperation routine in practice than the rules by themselves.
A Framework for the Forthcoming Rules
The rules made under section 240C should, at minimum, do the following. They should adopt the Model Law’s core architecture: direct access for foreign representatives without the intermediation of an Indian insolvency professional, a rebuttable presumption that COMI is located at the debtor’s registered office, assessed as at the date the foreign proceeding commenced rather than the date of the recognition application, so as to prevent forum shopping after the fact, and clearly available provisional relief pending a final recognition order. They should not impose reciprocity as a precondition to recognition, and should retain the “manifestly contrary” formulation of the public policy exception rather than a lower threshold that would be easier to invoke tactically.
They should also designate a specialised bench, most plausibly at Mumbai or Delhi given the existing concentration of cross-border cases, with training in COMI analysis and international judicial cooperation, and
should expressly empower tribunals to approve protocols of the kind used in Jet Airways rather than treating the statutory mechanism as a complete substitute for negotiated cooperation between office-holders. Finally, the rules should address, even if only through the scope given to the public policy exception in the first instance, the risk that foreign courts applying doctrines such as the Gibbs rule will decline to recognise discharges effected under Indian resolution plans.
None of this is especially novel; most of it restates, with India-specific adjustments, lessons that other adopting jurisdictions have already learned at some cost. What matters now is speed and fidelity to those lessons. Nine years elapsed between the enactment of sections 234 and 235 and the insertion of section 240C. A further extended delay in notifying operative rules would leave India’s insolvency framework exposed, in the meantime, to precisely the kind of ad hoc litigation that Jet Airways and Go First already illustrate.
VII. Conclusion
Section 240C of the IBC, as inserted by the 2026 Amendment Act, marks the end of India’s decade-long silence on cross-border insolvency, but it is a promise of a framework rather than the framework itself. The Jet Airways protocol showed that cooperation between Indian and foreign insolvency office-holders is achievable; the Go First litigation showed how costly its absence can be in the meantime. Whether the rules that eventually issue under section 240C convert that lesson into a predictable, statutory entitlement, or merely defer the uncertainty to another round of tribunal improvisation, will depend on choices that remain to be made — on reciprocity, on interim relief, on the true scope of the public policy exception, and on the treatment of foreign-law governed debt. India has taken the first legislative step. The rules that follow will determine whether it amounted to a meaningful one.
Reference(S):
Cases
State Bank of India v Jet Airways (India) Ltd, CP 2205 (IB)/MB/2019 (NCLT Mumbai, 20 June 2019).
Jet Airways (India) Ltd (Offshore Regional Hub) v State Bank of India, Company Appeal (AT) (Insolvency) No 707 of 2019 (NCLAT, 26 September 2019).
Go First insolvency, CP No (IB)-264(PB)/2023 (NCLT, 10 May 2023).
Order of the Delhi High Court, 2024:DHC:3279, WP(C) No 6569/2023 (26 April 2024).
Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux (1890) 25 QBD 399 (CA). Rubin v Eurofinance SA [2012] UKSC 46.
Legislation
Insolvency and Bankruptcy Code 2016 (India), ss 14, 234, 235.
Insolvency and Bankruptcy Code (Amendment) Act 2026 (India), s 240C.
Companies Act 2013 (India).
Aircraft Rules 1937 (India).
Convention on International Interests in Mobile Equipment (Cape Town Convention) 2001.
Cross-Border Insolvency Regulations 2006, SI 2006/1030 (UK).
Insolvency Act 1986 (UK), s 426.
Cross-Border Insolvency Act 2008 (Cth) (Australia).
Companies (Amendment) Act 2017 (Singapore); Insolvency, Restructuring and Dissolution Act 2018 (Singapore). Act on Recognition of and Assistance for Foreign Insolvency Proceedings 2000 (Japan).
US Bankruptcy Code, 11 USC ch 15.
UNCITRAL Model Law on Cross-Border Insolvency (1997).
UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments (2018).
Secondary Sources
Report of the Joint Committee on the Insolvency and Bankruptcy Code, 2015, Sixteenth Lok Sabha (2016).
Insolvency Law Committee, Report of the Insolvency Law Committee on Cross Border Insolvency (Ministry of Corporate Affairs, October 2018).
Cross Border Insolvency Rules/Regulations Committee, Report (Ministry of Corporate Affairs, 2020).
Judicial Insolvency Network, Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters (2016).
Rajasekhar V K, ‘Cross Border Insolvency in India: What Rules Must Say’ (LiveLaw, 10 June 2026).
