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Madras HC strikes down objection to fees for insolvency pros

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New Delhi: The Madras High Court has dismissed a writ petition challenging the Regulation 7(2)(ca) of Insolvency and Bankruptcy Board of India (IBBI), which stipulates the requirement that the Insolvency Professionals (IP) should pay a fee calculated at 0.25% of the professional fee earned for services rendered as an IP in the preceding financial year.

The petitioner, CA. Venkata Siva Kumar, is a chartered accountant and has registered himself as an IP with the IBBI. He stated in his writ petition that the regulations of the IBBI (Insolvency Professionals) Regulations, 2016 are violative of Articles 14, 19 and 21 of the Constitution and deserves to be struck down.

The main contention of the petitioner was that Section 196 of Insolvency and Bankruptcy Code, 2016 does not empower IBBI to levy fees on the basis of the annual remuneration or the annual turnover of the IP or IPE and that a registration fee of Rs 10,000 is charged every five years after the certificate of registration is granted.


The division bench of Chief Justice A.P. Sahi and Justice Senthilkumar Ramamoorthy held that it is clear that Section 196(1)(c) and 207 of the IBC and the IP Regulations are intended to fulfill the object and purpose of the IBC as regards the functioning of the IBBI.

“The IBC contains adequate safeguards to ensure that the Parliament effectively supervises all rules and regulations with the power to modify or even annul the same,” the bench said.

“The IBBI does provide significant services, including in relation to IPs, and that there is a broad correlation between fees and services. Given the fact that director arithmetical correlation as between the fee received and service rendered is not necessary especially in the context of regulatory fees, we are of the view that Regulation 7(2)(ca) of the IP Regulations does not suffer from any constitutional infirmity on account of the absence of quid pro quo,” the bench observed.

Read Also: Madras HC allows advocates to apply for presiding officer post in Debt Recovery Tribunal

Read the order here;


-India Legal Bureau

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