IBBI proposes revised norms to ensure time-bound enforcement mechanism

The Insolvency and Bankruptcy Board of India (IBBI) has proposed changes to regulations to ensure a time-bound grievance redressal and enforcement mechanism, including reducing timelines with respect to disciplinary proceedings. Various amendments have been mooted by the IBBI, a key institution in implementing the Insolvency and Bankruptcy Code (IBC), with respect to norms for grievance redressal and enforcement mechanism for the service providers registered with it.

Issuing a discussion paper, the IBBI said a time-bound enforcement mechanism will have a positive impact on the transparency of the institution and stakeholder confidence.

It also noted that a delay in the enforcement mechanism may sometimes result in litigation, which involves an additional cost on the service provider as well as the board.


"Therefore, an effective enforcement mechanism will reduce the said litigation. Further, an effective and time-bound enforcement mechanism will also strengthen trust of the stakeholders in the process and the same may also result in increased stakeholder participation in the process," the IBBI said.

Among others, the IBBI has mentioned about intimating members of the Committee of Creditors (CoC) and the Adjudicating Authority regarding orders of the board's Disciplinary Committee (DC) against Insolvency Professionals (IPs).

According to the discussion paper issued on Thursday, an IP is appointed to the process with the approval of CoC/AA, and the decision to remove him or retain him after the order of DC should generally rest with it only.

"However, it will be in the interest of stakeholders, if the order is brought to the notice of AA and/or the members of the CoC by the board, so that they may take an informed decision either to retain the IP/or replace him considering inter-alia the graveness of violations, and stage of that process," it noted.

Reduction in timelines with respect to the handling of grievances and complaints as well as for inspection and investigation have been proposed.

The discussion paper has proposed that the time provided in a show-cause notice to the noticee concerned to make written submissions be reduced to 15 days from the current 21 days.

Also, disposal of show cause notice by the DC should be disposed of in 35 days instead of the present timeline of 180 days, according to the discussion paper.

Comments from stakeholders have been sought on the discussion paper till April 21.