Supreme Court on Tuesday allowed the Insolvency and Bankruptcy Board of India (IBBI) petition and transferred to the Bombay High Court various petitions pending before the high courts of Delhi and Madhya Pradesh. This was done after the IBBI pleaded that such transfer either to the apex court or to any of the HCs was necessary to avoid multiplicity of proceedings and confusion caused by possible divergence of opinions by different HCs.
The three petitions pending before the HCs of Bombay, Delhi and Madhya Pradesh have challenged the vires of the Regulation 31 A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016 by questioning the powers of the board to issue sub-ordinate legislation.
The Fifth amendment to the CIRP Regulations, which was notified on September 20, 2022 and came into force from October 10, last year, had inserted the provision relating to the payment of regulatory fees to IBBI under the Regulation 31(ba) read with Regulation 31A of the CIRP Regulation.
As per the provision, regulatory fee is payable as CIRP cost to the IBBI at the rate of 0.25% realisable value to the creditors under the resolution plan approved under Section 31 of the IBC. This regulation fee is payable only if the realisable value is more than the liquidation value.
«Any interpretation to such powers of the Board will have wide consequences on varied stakeholders such as financial creditors, creditors providing operational services, employees of the companies facing insolvency resolution process, various government departments having financial claim on such companies, investors who are willing to rescue debt-ridden companies, etc.