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Bombay High Court upholds 0.25% IBBI fee on resolution plans
The Bombay High Court has upheld the validity of a 0.25 percent regulatory fee levied by the Insolvency and Bankruptcy Board of India (IBBI) on approved resolution plans under the Insolvency and…
The Bombay High Court has upheld the validity of a 0.25 percent regulatory fee levied by the Insolvency and Bankruptcy Board of India (IBBI) on approved resolution plans under the Insolvency and Bankruptcy Code (IBC). A division bench of Justices Manish Pitale and Shreeram Shirsat dismissed a batch of petitions that challenged the fee as an unauthorised tax.
The Court held that the levy, introduced via Regulation 31A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, falls within the statutory framework of the IBC. It ruled that a strict mathematical quid pro quo is not required for a regulatory fee, and that the IBBI provides general services to stakeholders in the corporate insolvency resolution process.
The bench rejected arguments that the fee was unconstitutionally retrospective, noting it applies prospectively to plans approved by Committees of Creditors on or after October 1, 2022. The Court said the fee is a step towards ensuring the IBBI's financial independence as a regulatory authority.
Indian Opinion Analysis
The ruling settles a key question about the IBBI's funding model. The 0.25 percent fee, though small per plan, adds up across thousands of cases and helps reduce the IBBI's reliance on government grants. This decision affects resolution applicants, homebuyers and depositors who argued the fee cut into recoveries. The court's reasoning that a regulatory fee need not match a specific service to each payer follows a 2023 Supreme Court precedent on the Real Estate Regulatory Authority fee. The next signal to watch is whether the Supreme Court admits an appeal against this order.
Source: barandbench.com
This story was synthesised by AI from the source linked above.
