IBBI charges on IPs: Madras Excessive Courtroom dismisses plea difficult levy


The Madras Excessive Courtroom has dismissed a writ petition that challenged and sought the placing down of insolvency regulator IBBI’s regulation requiring Insolvency Professionals (IPs) to pay a levy of 0.25 per cent of their skilled payment earned from providers rendered the previous monetary 12 months.

The rules stipulated that this payment needed to be paid to IBBI earlier than April 30 yearly. Nevertheless, for the monetary 12 months 2019-20, an IP needed to pay the payment on or earlier than June 30.

In its verdict on the petition filed by Venkata Siva Kumar, a chartered accountant and a registered IP, the Madras Excessive Courtroom concluded that the Insolvency and Chapter Board of India (IBBI) is duly empowered below Sections 196 and 207 of the IBC to levy a payment on IPs, together with as a proportion of the annual remuneration as an IP within the previous monetary 12 months.

Reacting to this ruling, M.S.Sahoo, Chairman, IBBI advised BusinessLine: “Regulators often get well part of their price from the regulated. Not like each different occupation, the IBBI supervises and screens providers rendered by an Insolvency Skilled. Regulatory burden that an Insolvency Skilled imposes on IBBI corresponds to the amount of providers he renders. Subsequently, IBBI levies a nominal payment on Insolvency Professionals, utilizing quantity of providers as measure”.

The petitioner had three important contentions—First competition was that Part 196 of IBC doesn’t empower IBBI to levy charges on the premise of the annual remuneration or the annual turnover of the IP or IPE and {that a} registration payment of ₹10,000 is charged each 5 years after the certificates of registration is granted. His second competition was there may be extreme delegation and due to this fact the regulation is liable to be struck down.

The third competition was that the IBBI has not offered providers to IPs and due to this fact there isn’t any quid professional quo to justify the charging of charges as a proportion of the annual remuneration/turnover.

The Madras Excessive Courtroom dominated that there will be no query in any way with regard to the powers of the IBBI to border rules on the payment payable by IPs and insolvency skilled businesses.

Dwelling on the facet of quid professional quo, the Excessive Courtroom famous that given the truth that direct or arithmetical correlation as between the payment obtained and repair rendered isn’t crucial particularly within the context of regulatory charges, the related IP regulation doesn’t endure from any constitutional infirmity on account of the absence of quid professional quo.

The Supreme Courtroom ruling within the BSE Brokers’ Discussion board case was cited to focus on that quid professional quo isn’t a situation precedent for the levy of regulatory charges and that it’s enough if there’s a broad correlation as between providers offered and the payment charged.

The Madras Excessive Courtroom additionally held that there isn’t any extreme delegation to IBBI. Taking all these collectively, the Madras Excessive Courtroom held that the writ petition has failed and due to this fact dismissed it.

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