Hazel Mercantile Limited & others Vs Insolvency and Bankruptcy Board of India & ors. (Bombay High Court)
Summary: The Bombay High Court considered four writ petitions challenging Regulation 31A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which introduced a regulatory fee calculated at 0.25% of the realisable value to creditors under an approved resolution plan where that value exceeded the liquidation value. The challenge principally contended that the levy was beyond the Board’s powers under Section 196 of the Insolvency and Bankruptcy Code, 2016 (IBC), ultra vires Sections 5(13), 30(2)(a), 31(1), 53(1)(a) and 240, actually a tax rather than a fee, unsupported by quid pro quo, retrospective, excessive and arbitrary in violation of Article 14.
Writ Petition No.703 of 2023 was filed by successful resolution applicants in the CIRP of Reliance Naval and Engineering Limited. The CoC approved their resolution plan on 17.03.2022 with 94.86% voting share and the resolution professional sought approval under Section 31 on 24.03.2022. Regulation 31A was notified on 20.09.2022 with effect from 01.10.2022. The NCLT approved the plan on 23.12.2022 and the Board thereafter sought compliance with the regulatory-fee provision. The other connected petitions concerned Vineet Shrivastava, Yadubir Singh Sajwan and Suraksha Realty Limited. The Supreme Court had transferred the Madhya Pradesh and Delhi petitions to the Bombay High Court, noting that Writ Petition No.703 of 2023 was first in point of time.
