The Madras High Court has dismissed a writ appeal challenging the Regulation 7(2)(ca) of Insolvency and Bankruptcy Board of India (IBBI), which specifies the prerequisite that the Insolvency Professionals (IP) should pay an expense calculated at 0.25% of the professional charge earned for services delivered as an IP in the previous money related year.
The petitoner, CA. Venkata Siva Kumar, is a CA and has enrolled himself as an IP with the IBBI. He expressed in his writ appeal that the guidelines of the IBBI (Insolvency Professionals) Regulations, 2016 are violative of Articles 14, 19 and 21 of the Constitution and has the right to be struck down.
The principle dispute of the petitoner was that Section 196 of Insolvency and Bankruptcy Code, 2016 doesn’t give power to IBBI to demand expenses based on the yearly compensation or the yearly turnover of the IP or IPE and that an enrollment fee of Rs 10,000 is charged every five years after the declaration of registration is granted.
The division bench of Chief Justice A.P. Sahi and Justice Senthilkumar Ramamoorthy held that plainly Section 196(1)(c) and 207 of the IBC and the IP Regulations are expected to satisfy the object and purpose behind the IBC with respect to the working of the IBBI.
“The IBC contains adequate safeguards to guarantee that the Parliament viably administers all rules and principles with the ability to change or even invalidate the same,” the seat said.
“The IBBI offers noteworthy types of assistance, including connections to IPs, and that there is an expansive correlation between charges and administrations. Given the way that chief arithmetical connection as between the charge got and service delivered isn’t necessary particularly with regards to administrative expenses, we are of the view that Regulation 7(2)(ca) of the IP Regulations doesn’t suffer the ill effects of constitutional infirmity by virtue of the absence of quid pro quo,” the bench said.
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