| The petitions sought a declaration striking down Regulation 31A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, introduced with effect from 01.10.2022, which levies a regulatory fee at 0.25% of the realisable value to creditors under a resolution plan approved under section 31 where that value exceeds the liquidation value. The grounds of challenge were that the levy lies beyond the powers and functions of the Board under section 196 of the Code, that it is ultra vires sections 5(13), 30(2)(a), 31(1), 53(1)(a) and 240, that it is in substance a tax rather than a fee for want of quid pro quo, that the proviso renders it retrospective, that the amount is grossly disproportionate, and that it violates Article 14 of the Constitution. The HC rejected the attempt to confine the Board's regulatory role to insolvency professionals, insolvency professional agencies and information utilities, holding on a reading of the Bankruptcy Law Reforms Committee report of November 2015 together with sections 196 and 240 that the Board performs executive, quasi-judicial and quasi-legislative functions throughout the CIRP. HC upheld the validity of Regulation 31A and dismissed the petitions, holding that the levy is neither ultra vires the Code nor violative of Article 14 of the Constitution. |
