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Insolvency and Bankruptcy Board of India
7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001.
CIRCULAR
No. IBBI/IPA/43/2021 28th July, 2021
To
All Registered Insolvency Professional Agencies
All Registered Insolvency Professionals
(By mail to registered email addresses and on website of the Board)
Dear Madam /Sir,
Subject: Monetary Penalties to be imposed by an Insolvency Professional Agency.
The Disciplinary Committee of an Insolvency Professional Agency (IPA) may impose
monetary penalty on its professional members under Clause 24(2)(d) of the Schedule to the
IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies)
Regulations, 2016.
2. The Bankruptcy Law Reforms Committee, which conceptualised the Code, had envisaged:
"IP agencies will have the flexibility to impose a graduated system of penalties, where minor
non-compliances will result in monetary fines, and major violations will result in expulsion
from the agency.”
3. In the interest of objectivity and uniformity, it has been decided that an IPA shall amend its
Bye-laws to provide for the maximum and minimum monetary penalty, where the Disciplinary
Committee decides to impose such penalty on its professional members, under Clause 24(2)(d)
of the Schedule to the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional
Agencies) Regulations, 2016, as under:
Sl.
Contravention
Monetary Penalty
1. Fails to submit disclosures, returns, etc. to IPAs
or submits inadequate or incorrect disclosures,
returns, etc., relating to any assignment, as
required under the Code and Regulations made
thereunder or Bye-laws of the IPA or called
upon by the Board or the IPA.
Up to ₹ 1,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 50,000.
2. Accepts an assignment having conflict of
interests with the stakeholders.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
3. Fails to maintain records properly relating to
any of his assignments.
Up to ₹ 1,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 50,000.
4. Rejects a claim(s) without giving any proper
reason while undertaking an assignment or
fails to exercise due diligence in claim
verification.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
5. Fails to comply with directions issued by
Adjudicating Authority or the Appellant
Tribunal.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
6. Outsources his duties and obligations.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
7. Fails to appoint registered valuers, wherever
required, under the Code or Regulations made
thereunder, for conducting valuation.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
8. Fails to supply the information called for or to
comply with the requirements of information
sought by the IPA, Board, Adjudicating
Authority or the Appellant Tribunal or does not
cooperate with the inspection or investigating
authority.
Up to ₹ 1,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 50,000.
9. Fails to make public announcement in the
manner
provided
for
in
the
relevant
Regulations.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
10. Fails to provide notice regarding meetings of
creditors.
Up to ₹ 1,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 50,000.
11. Fails to reject resolution plan from ineligible
resolution applicants.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
12. Fails to take action in respect of Preferential,
Undervalued, Fraudulent or Extortionate
transactions.
Up to ₹ 2,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 1,00,000.
13. Enters into contract or agreement with
professionals in an incomplete and improper
manner.
Up to ₹ 1,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 50,000.
14. Contravenes any provision of the Bye-laws, or
Regulations for which no specific penalty has
been provided.
Up to ₹ 1,00,000 or 25% of fee, whichever is
higher, subject to a minimum ₹ 50,000.”
4. Further, the IPA shall amend its Bye- Laws to incorporate Clause 24(5) of the Schedule to
the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies)
Regulations, 2016 as inserted by IBBI (Model Bye-Laws and Governing Board of Insolvency
Professional Agencies) (Third Amendment) Regulations, 2021.
5. This circular is issued in exercise of powers under section 196 of the Insolvency and
Bankruptcy Code, 2016.
6. This Circular shall come into force with immediate effect.
Yours faithfully,
-Sd-
(Debajyoti Ray Chaudhuri)
Chief General Manager
