2019 (9) TMI 844 - HC - Insolvency and Bankruptcy

Constitutional validity of amendment introduced to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations 2016 (IBBI Regulations, 2016) notified on 27.03.2018 - HELD THAT - Having regard to the fact that the applicant made the application on 29.03.2018 which was received by respondent No. 2 prior to the last date before the amendment came into effect, but the applicant could not be enrolled only for the reason that 30th 31st March were holidays, respondent No. 2 is directed to enrol the applicant as an insolvency professional on requisite fees being deposited within 3 days from today. The application would be forwarded to respondent No. 2 who would consider the same as having been received prior to the cut-off date. Petition disposed off.

Summary

Issues:
Challenge to the constitutionality of an amendment to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations 2016 regarding the Limited Insolvency Examination criterion.

Analysis:
The petitioner filed a writ petition challenging the amendment to the IBBI Regulations, 2016, which required the Limited Insolvency Examination to be cleared within the last 12 months before applying for enrollment as an insolvency professional. The petitioner's application was submitted before the amendment came into force, but due to holidays, it could not be processed in time. Respondent No. 1 acknowledged the delay was due to holidays and advised Insolvency Professional Agencies to forward applications of individuals who had enrolled by the deadline. The court directed respondent No. 2 to enroll the applicant as an insolvency professional within three days, considering the application as received before the cut-off date.

The counter-affidavit explained that the delay in processing the application was due to holidays, and respondent No. 1 granted registrations to all applicants enrolled before the deadline, including those from respondent No. 2. The court clarified that its order should not set a precedent, as it was based on the specific circumstances of the case, emphasizing the impact of holidays on the enrollment process. The writ petition was disposed of with these directions, ensuring the applicant's enrollment as an insolvency professional.

This judgment highlights the importance of considering exceptional circumstances, such as holidays affecting administrative processes, in determining the timeliness of applications. It underscores the need for flexibility in enforcing regulatory requirements, especially when external factors beyond the applicant's control impact the application process. The court's decision to direct enrollment based on the application's timely submission and the acknowledgment of the holiday-related delay sets a practical precedent for addressing similar issues in the future.