The Insolvency and Bankruptcy Board of India (IBBI), by way of its recent discussion paper dated November 19, 2024, has sought to address addresses two key areas: the Grievance Redressal and Enforcement Framework, and the Rationalization of Timelines Regarding Authorization for Assignment (AFA).

 

By way of the discussion paper, the IBBI seeks to review and clarify the following three (3) crucial areas with a view to foster a more conducive redressal and enforcement ecosystem for stakeholders and also improve operational efficiency in AFA processing:

 

1. Association of Whole-time Member in the Disciplinary Committee (DC) with Investigation or Inspection

 

  • Background: Section 220(1) of the IBBI (Inspection and Investigation) Regulations (I&I Regulations), 2017, requires that whole-time members in the DC should not be associated with investigations or inspections concerning matters subject to adjudication by the DC.
  • Issue: The IBBI recognized that there is ambiguity in interpreting the nature and scope of the association of whole-time members in the DC regarding matters subject to adjudication. This ambiguity can affect the principles of impartiality, fairness, and separation of powers in the quasi-judicial process.
  • Proposal: In view of the above, the IBBI proposed to clarify the meaning and scope of “association” by adding an explanation to the definition of DC under the I&I Regulations, stating that “associated” shall mean involvement in the conduct of investigation or inspection or consideration of the investigation or inspection report or issuance of show cause notice.

 

2. Review of Timeline for Filing of Grievance or Complaint

 

  • Background: Section 217 of the Insolvency and Bankruptcy Code, 2016 (IBC) and the IBBI (Grievance and Complaint Handling Procedure) Regulations, 2017, provide the procedure for filing and disposal of complaints and grievances against service providers, including IPs, IPAs, and IUs with IBBI.
  • Issue: The IBBI noted that the current timeline for filing grievances or complaints is forty-five (45) days from the occurrence of the cause of action, extendable by thirty (30) days, if there are sufficient justifying reasons. This timeline may not be sufficient for all stakeholders, especially those with limited awareness and resource constraints. Procedural complexities, complications in identifying the cause of action, geographical challenges, etc. further make the current timeline insufficient for adequate reporting and fair addressing.
  • Proposal: In view of the above, and in the interest of public accountability and transparency, the IBBI proposed to extend the restrictive time limit for filing grievances or complaints to thirty (30) days from the closure of the process by an order of the Adjudicating Authority, Appellate Authority, or a Court. This extension aims to enhance efficiency and responsiveness within the grievance redressal system, while preserving a reasonable period for the service provider post-closure.

 

3. Rationalisation of Timelines Regarding Authorisation for Assignment (AFA)

 

  • Background: An Insolvency Professional (IP) is required to hold a valid AFA issued by the Insolvency Professional Agency (IPA) with which they are enrolled. The IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, stipulate the eligibility requirements and timelines for submission, approval, or rejection of AFA applications, whereby an IP can submit the application for renewal of AFA only within 45 days before the expiry of ongoing AFA and the IPA is required to approve (issuance or renewal) or reject the application within fifteen (15) days of date of receipt of application, post which there is provision for deemed approval of application.
  • Issue: Given the due-diligence on IP compliances on various compliances, it was noted that the current timelines for submission and processing of AFA applications may not provide sufficient flexibility for IPs and IPAs.
  • Proposal: Based on experience gained in processing AFA applications and the due diligence required, the IBBI considered it expedient to review the abovementioned timelines and proposed to relax the timeline for submission of AFA renewal applications from forty-five (45) days to ninety (90) days before the expiry of the previous AFA. The IBBI also proposed to extend the timeline for approval or rejection of AFA applications from fifteen (15) days to forty-five (45) days from the date of receipt of the application.

Accordingly, by way of the discussion paper, the IBBI has sought public comments on the above stated proposals.

Authors & Contributors

Partner:

Abhishek Swaroop

 

 

Associates:

Bhawana Sharma

Shreya Chandhok

Kirti Talreja

Rounak Doshi

Bharath Krishna