MINISTRY OF CORPORATE AFFAIRS
New Delhi, the 15th November, 2016
S.O. 3453(E).— In exercise of the powers conferred by sub-section (3) of section 1 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby appoints the 15th November, 2016 as the date on which the provisions of the following sections of the said Code shall come into force:–
(1) section 199 to section 207 [both inclusive];
(2) sub-section (1) of section 208-
(i) clause (c);
(ii) clause (e);
(3) sub-section (2) of section 208;
(4) section 217 to section 220 [both inclusive];
(5) section 251;
(6) section 253;
(7) section 254; and
(8) section 255.
[F. No. 30/7/2016-Insolvency Section]
AMARDEEP SINGH BHATIA, Jt. Secy.
Extract of above Sections
No person to function as insolvency professional agency without valid certificate of registration.
199. Save as otherwise provided in this Code, no person shall carry on its business as insolvency professional agencies under this Code and enrol insolvency professionals as its members except under and in accordance with a certificate of registration issued in this behalf by the Board.
Principles governing registration of insolvency professional agency.
200. The Board shall have regard to the following principles while registering the insolvency professional agencies under this Code, namely:—
(a) to promote the professional development of and regulation of insolvency professionals;
(b) to promote the services of competent insolvency professionals to cater to the needs of debtors, creditors and such other persons as may be specified;
(c) to promote good professional and ethical conduct amongst insolvency professionals;
(d) to protect the interests of debtors, creditors and such other persons as may be specified;
(e) to promote the growth of insolvency professional agencies for the effective resolution of insolvency and bankruptcy processes under this Code.
Registration of insolvency professional agency.
201. (1) Every application for registration shall be made to the Board in such form and manner, containing such particulars, and accompanied by such fee, as may be specified by regulations:
Provided that every application received by the Board shall be acknowledged within seven days of its receipt.
(2) On receipt of the application under sub-section (1), the Board may, on being satisfied that the application conforms with all requirements specified under sub-section (1), grant a certificate of registration to the applicant or else, reject, by order, such application:
Provided that no order rejecting the application shall be made without giving an opportunity of being heard to the applicant:
Provided further that every order so made shall be communicated to the applicant within a period of fifteen days.
(3) The Board may issue a certificate of registration to the applicant in such form and manner and subject to such terms and conditions as may be specified.
(4) The Board may renew the certificate of registration from time to time in such manner and on payment of such fee as may be specified.
(5) The Board may, by order, suspend or cancel the certificate of registration granted to an insolvency professional agency on any of the following grounds, namely:—
(a) that it has obtained registration by making a false statement or misrepresentation or by any other unlawful means;
(b) that it has failed to comply with the requirements of the regulations made by the Board or bye-laws made by the insolvency professional agency;
(c) that it has contravened any of the provisions of the Act or the rules or the regulations made thereunder;
(d) on any other ground as may be specified by regulations:
Provided that no order shall be made under this sub-section unless the insolvency professional agency concerned has been given a reasonable opportunity of being heard:
Provided further that no such order shall be passed by any member except whole-time members of the Board.
Appeal to National Company Law Appellate Tribunal.
202. Any insolvency professional agency which is aggrieved by the order of the Board made under section 201 may prefer an appeal to the National Company Law Appellate Tribunal in such form, within such period, and in such manner, as may be specified by regulations.
Governing Board of insolvency professional agency.
203. The Board may, for the purposes of ensuring that every insolvency professional agency takes into account the objectives sought to be achieved under this Code, make regulations to specify—
(a) the setting up of a governing board of an insolvency professional agency;
(b) the minimum number of independent members to be on the governing board of the insolvency professional agency; and
(c) the number of the insolvency professionals being its members who shall be on the governing board of the insolvency professional agency.
Functions of insolvency professional agencies.
204. An insolvency professional agency shall perform the following functions, namely:—
(a) grant membership to persons who fulfil all requirements set out in its bye-laws on payment of membership fee;
(b) lay down standards of professional conduct for its members;
(c) monitor the performance of its members;
(d) safeguard the rights, privileges and interests of insolvency professionals who are its members;
(e) suspend or cancel the membership of insolvency professionals who are its members on the grounds set out in its bye-laws;
(f) redress the grievances of consumers against insolvency professionals who are its members; and
(g) publish information about its functions, list of its members, performance of its members and such other information as may be specified by regulations.
Insolvency professional agencies to make bye-laws.
205. Subject to the provisions of this Code and any rules or regulations made there under and after obtaining the approval of the Board,every insolvency professional agency shall make bye-laws consistent with the model bye-laws specified by the Board under sub-section (2) of section 196.
Enrolled and registered persons to act as insolvency professionals
206. No person shall render his services as insolvency professional under this Code without being enrolled as a member of an insolvency professional agency and registered with the Board.
Registration of insolvency professionals.
207. (1) Every insolvency professional shall, after obtaining the membership of any insolvency professional agency, register himself with the Board within such time, in such manner and on payment of such fee, as may be specified by regulations.
(2) The Board may specify the categories of professionals or persons possessing such qualifications and experience in the field of finance, law, management, insolvency or such other field, as it deems fit.
Functions and obligations of insolvency professionals.
208. (1) Where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated, it shall be the function of an insolvency professional to take such actions as may be necessary, in the following matters, namely:—
(a) a fresh start order process under Chapter II of Part III;
(b) individual insolvency resolution process under Chapter III of Part III;
(c) corporate insolvency resolution process under Chapter II of Part II;
(d) individual bankruptcy process under Chapter IV of Part III; and
(e) liquidation of a corporate debtor firm under Chapter III of Part II.
(2) Every insolvency professional shall abide by the following code of conduct:—
(a) to take reasonable care and diligence while performing his duties;
(b) to comply with all requirements and terms and conditions specified in the bye-laws of the insolvency professional agency of which he is a member;
(c) to allow the insolvency professional agency to inspect his records;
(d) to submit a copy of the records of every proceeding before the Adjudicating Authority to the Board as well as to the insolvency professional agency of which he is a member; and
(e) to perform his functions in such manner and subject to such conditions as may be specified.
Complaints against insolvency professional agency or its member or information utility.
217. Any person aggrieved by the functioning of an insolvency professional agency or insolvency professional or an information utility may file a complaint to the Board in such form, within such time and in such manner as may be specified.
Investigation of insolvency professional agency or its member or information utility.
218. (1) Where the Board, on receipt of a complaint under section 217 or has reasonable grounds to believe that any insolvency professional agency or insolvency professional or an information utility has contravened any of the provisions of the Code or the rules or regulations made or directions issued by the Board there under, it may, at any time by an order in writing, direct any person or persons to act as an investigating authority to conduct an inspection or investigation of the insolvency professional agency or insolvency professional or an information utility.
(2) The inspection or investigation carried out under sub-section (1) of this section shall be conducted within such time and in such manner as may be specified by regulations.
(3) The Investigating Authority may, in the course of such inspection or investigation, require any other person who is likely to have any relevant document, record or information to furnish the same, and such person shall be bound to furnish such document, record or information:
Provided that the Investigating Authority shall provide detailed reasons to such person before requiring him to furnish such document, record or information.
(4) The Investigating Authority may, in the course of its inspection or investigation, enter any building or place where they may have reasons to believe that any such document, record or information relating to the subject-matter of the inquiry may be found and may seize any such document, record or information or take extracts or copies therefrom, subject to the provisions of section 100 of the Code of Criminal Procedure, 1973, insofar as they may be applicable.
(5) The Investigating Authority shall keep in its custody the books, registers, other documents and records seized under this section for such period not later than the conclusion of the investigation as it considers necessary and thereafter shall return the same to the concerned person from whose custody or power they were seized:
Provided that the Investigating Authority may, before returning such books, registers, other documents and record as aforesaid, place identification marks on them or any part thereof.
(6) A detailed report of inspection or investigation shall be submitted to the Board by the Investigating Authority.
Show cause notice to insolvency professional agency or its member or information utility.
219.The Board may, upon completion of an inspection or investigation under section 218, issue a show cause notice to such insolvency professional agency or insolvency professional or information utility, and carry out inspection of such insolvency professional agency or insolvency professional or information utility in such manner, giving such time for giving reply, as may be specified by regulations.
Appointment of disciplinary committee.
220. (1) The Board shall constitute a disciplinary committee to consider the reports of the investigating Authority submitted under sub-section (6) of section 218:
Provided that the members of the disciplinary committee shall consist of whole-time members of the Board only.
(2) On the examination of the report of the Investigating Authority, if the disciplinary committee is satisfied that sufficient cause exists, it may impose penalty as specified in sub-section (3) or suspend or cancel the registration of the insolvency professional or, suspend or cancel the registration of insolvency professional agency or information utility as the case may be.
(3) Where any insolvency professional agency or insolvency professional or an information utility has contravened any provision of this Code or rules or regulations made there under, the disciplinary committee may impose penalty which shall be—
(i) three times the amount of the loss caused, or likely to have been caused, to persons concerned on account of such contravention; or
(ii) three times the amount of the unlawful gain made on account of such contravention,
whichever is higher:
Provided that where such loss or unlawful gain is not quantifiable, the total amount of the penalty imposed shall not exceed more than one crore rupees.
(4) Notwithstanding anything contained in sub-section (3), the Board may direct any person who has made unlawful gain or averted loss by indulging in any activity in contravention of this Code, or the rules or regulations made there under, to disgorge an amount equivalent to such unlawful gain or aversion of loss.
(5) The Board may take such action as may be required to provide restitution to the person who suffered loss on account of any contravention from the amount so disgorged, if the person who suffered such loss is identifiable and the loss so suffered is directly attributable to such person.
(6) The Board may make regulations to specify—
(a) the procedure for claiming restitution under sub-section (5);
(b) the period within which such restitution may be claimed; and
(c) the manner in which restitution of amount may be made.
Amendments of Act 54 of 2002.
251. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 shall be amended in the manner specified in the Seventh Schedule.
Amendments of Act 51 of 2007.
253. The Payment and Settlement Systems Act, 2007 shall be amended in the manner specified in the Ninth Schedule.
Amendments of Act 6 of 2009.
254. The Limited Liability Partnership Act, 2008 shall be amended in the manner specified in the Tenth Schedule.
Amendments of Act 18 of 2013.
255. The Companies Act, 2013 shall be amended in the manner specified in the Eleventh