Back
IN THE HIGH COURT OF JUDICATURE AT MADRAS
A.P. SAHI, SENTHILKUMAR RAMAMOORTHY, JJ.
CA V. Venkata Sivakumar - Appellant
Versus
Insolvency and Bankruptcy Board of India (IBBI), Rep. by Deputy General Manager, New Delhi & Others – Respondents
W.P. No. 13229 of 2020
Decided on : 03-11-2020
Limitation Act – Section 5 – Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 – Regulations 7, 12 – Constitution of India, 1950 – Articles 226, 14, 19, 21 – Constitutional validity of Regulation 7A – Petition filed under Article 226 of the Constitution of India, praying to issue a writ of declaration declaring Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, inserted by Notification No. IBBI/2019-20/GN/REG-045, dated 23.07.2019 (w.e.f. 23.07.2019), read with Bye-law 12A IBBI (Model Bye laws and Governing Board of Insolvency Professional Agencies) Regulations 2016 (Inserted by Notification No.IBBI/2019-20/GN/REG-043, dated 23.07.2019 (w.e.f. 23.07.2019) of (C) of I and B Code 2016, issued by the first Respondent, as improper exercise of discretion, patently unrelated to or inconsistent with the purpose or policy of the statute, acting unreasonably and arbitrarily violating Article 14,19 and 21 of our Constitution with mala fide intention and hence an abuse of process of law becomes void and inoperative, impose costs – Held, While the learned ASGI contended that Section 5 of the Limitation Act would be applicable and that an application to condone the delay would be maintainable, we find that Section 238A of the IBC only applies to proceedings before the Adjudicating Authority under the IBC and to proceedings under the IBC before the NCLT, NCLAT, DRT and DRAT. – Therefore, Section 238 A of the IBC does not apply in this situation. – However, the time limit under Regulation 12 A(7) of the Model Bye-Laws IPA Regulations clearly runs from the date of receipt of the order, and the Petitioner would be entitled to reckon limitation from 16.07.2020 if that were indeed the date of receipt of the order of rejection as alleged. – More importantly, in contrast to a withdrawal of registration or loss of professional membership as an IP, the rejection of the application for an AFA is not final and apart from the appellate remedy, it is always open to the IP concerned to remedy the non-compliance, as cited in the order of rejection, and re-apply. – For all the reasons set out above, court conclude that Regulation 12A is not unconstitutional. – Court is of the view that the time limit prescribed in Regulation 12A(7) may be revisited by the IBBI by considering an appropriate amendment either providing for a larger time limit or by conferring power to condone delay for sufficient cause. – Court find that the Petitioner has failed to make out a case to declare the impugned regulations as unconstitutional. – Needless to say, this decision will not preclude the Petitioner from prosecuting the pending appeal in respect of the rejection of his application for AFA or from submitting a fresh application for an AFA upon remedying the stated defects in the order of rejection provided he retains his professional membership and registration as an IP. – Writ Petition Dismissed
JUDGMENT :
Senthilkumar Ramamoorthy, J.
(Prayer: Petition filed under Article 226 of the Constitution of India, praying to issue a writ of declaration declaring Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, inserted by Notification No. IBBI/2019-20/GN/REG-045, dated 23.07.2019 (w.e.f. 23.07.2019), read with Bye-law 12A IBBI (Model Bye laws and Governing Board of Insolvency Professional Agencies) Regulations 2016 (Inserted by Notification No.IBBI/2019-20/GN/REG-043, dated 23.07.2019 (w.e.f. 23.07.2019) of (C) of I and B Code 2016, issued by the first Respondent, as improper exercise of discretion, patently unrelated to or inconsistent with the purpose or policy of the statute, acting unreasonably and arbitrarily violating Article 14,19 and 21 of our Constitution with mala fide intention and hence an abuse of process of law becomes void and inoperative, impose costs.)
1. In this writ petition, the Petitioner challenges the constitutional validity of Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (the IP Regulations) read with Bye-Law 12A of the Insolvency and Bankruptcy Board of India (IBBI) (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 (Model Bye-Laws IPA Regulations).
2. The Petitioner is a practicing chartered accountant who is a member of the Institute of Chartered Accountants of India. In addition, he is an insolvency professional (IP) under the IP Regulations. In order to qualify as an IP, as required, he is enrolled as a professional member of the Indian Institute of Insolvency Professionals of the ICAI (IIIPI), which is an Insolvency Professional Agency(IPA). The IIIPI is a not-for-profit company incorporated under Section 8 of the Companies Act 2013 and functions in terms of Regulation 12(2) of the IP Regulations. The Petitioner is also registered as an IP by the Insolvency and Bankruptcy Board of India (the IBBI) under the IP Regulations. By Notification No.IBBI/2019-20/GN/REG-045, dated 23.07.2019, Regulation 7A was introduced in the IP Regulations. The said Regulation 7A deals with authorisation for assignment (AFA) and reads as under:
“IBBI (INSOLVENCY PROFESSIONALS)
REGULATIONS, 2016
7A. Authorisation for assignment.
An insolvency professional shall not accept or undertake an assignment after 31st December, 2019 unless he holds a valid authorization for assignment on the date of such acceptance or commencement of such assignment, as the case may be:
Provided that provisions of this regulation shall not apply to an assignment which an insolvency professional is undertaking as on-
(a) 31st December, 2019; or
(b) the date of expiry of his authorization for assignment.”
Thus, upon the insertion of Regulation 7A in the IP Regulations, it became necessary for IPs to obtain a valid AFA before taking up assignments as an IP with effect from 01.01.2020. For purposes of giving effect to Regulation 7A, Regulation 12A was inserted in the Model Bye-Laws IPA Regulations by Notification No. IBBI/2019-20/GN/REG-043, dated 23.07.2019. The said Regulation 12A thereof deals with AFA and reads as under:
“12A Authorisation for Assignment.
(1) The Agency, on an application by its professional member, may issue or renew an authorization for assignment.
(2) A professional member shall be eligible to obtain an authorization for assignment, if he-
(a) is registered with the Board as an insolvency professional;
(b) is a fit and proper person in terms of the Explanation to clause (g) of regulation 4 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016;
(c) is not in employment;
(d) is not debarred by any direction or order of the Agency or the Board;
(e) has not attained the age of seventy years;
(f) has no disciplinary proceeding pending against him before the Agency or the Board;
(g) complies with requirements, as on the date of application, with respect to-
(
SupremeToday
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
