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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSPECTION AND
INVESTIGATION) REGULATIONS, 20171
[AMENDED UPTO 14-06-2022]
No. IBBI/2017-18/GN/REG011 - In exercise of the powers conferred under sections 196,
217, 218, 219, 220 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31
of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following
regulations, namely-
CHAPTER I
PRELIMINARY
1. Short title, commencement and application.
(1)
These regulations may be called the Insolvency and Bankruptcy Board of India
(Inspection and Investigation) Regulations, 2017.
(2)
These regulations shall come into force on the date of their publication in the
Official Gazette.
(3)
These regulations shall apply to inspection and investigation of service providers.
2. Definitions.
(1)
In these regulations, unless the context otherwise requires –
(a)
“associated person” means a proprietor, partner, director, officer, or an
employee of a service provider, a professional or a valuer engaged by a service
provider or any other person acting for or on behalf of a service provider under
inspection or investigation;
(b)
“Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);
(c)
“Disciplinary Committee” means a committee of whole time member(s)
constituted by the Board under sub-section (1) of section 220 of the Code:
Provided that the whole time member(s) in the Disciplinary Committee
shall not be associated with the investigation or inspection;
(d)
“electronic form” shall have the same meaning as assigned to it in clause (r) of
section 2 of the Information Technology Act, 2000 (21 of 2000);
1Vide Notification No. IBBI/2017-18/GN/REG011, dated 12th June, 2017, published in the Gazette of India,
Extraordinary, Part III, Sec.4, vide No.239, dated 14th June, 2017 (w.e.f. 14.06.2017).
(e)
“Investigating Authority” means an officer or a team of officers of the Board,
which has been directed by the Board, to conduct the investigation of a service
provider;
(f)
“Inspecting Authority” means an officer or a team of officers of the Board,
which has been directed by the Board, to conduct the inspection of a service
provider;
(g)
“noticee” means a service provider or an associated person who is alleged to
have contravened any provision of the Code, or the rules, regulations or
guidelines made thereunder;
(h)
“record” means the books of accounts, registers, documents, call records and
other records, whether maintained in electronic form or otherwise, of a service
provider and its associated person;
(i)
“section” means section of the Code; 2[*]
(j)
“service provider” means insolvency professional agency, insolvency
professional, insolvency professional entity or information utility 3[; and]
4[(k) “stakeholder” means a stakeholder as defined in clause (j) of sub-regulation (1)
of regulation 2 of the Insolvency and Bankruptcy Board of India (Grievance
and Complaint Handling Procedure) Regulations, 2017.]
(2)
The words and expressions used and not defined in these regulations, but defined in
the Code, shall have the same meaning assigned to them in the Code.
CHAPTER II
INSPECTION
3. Inspection by the Board.
(1)
The Board shall conduct inspection of such number of service providers every year,
as may be decided by the Board from time to time.
(2)
Without prejudice to provisions of sub-regulation (1), the Board may conduct
inspection of a service provider under section 218.
(3)
The Board may, for the purposes of this regulation, by an order, direct an Inspecting
Authority to conduct an inspection of records of a service provider for purposes specified
under sub-regulation (4).
(4)
The purposes under sub-regulation (3) include -
2 Omitted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior to
omission, the word stood as: “and’.
3 Inserted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022).
4 Inserted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022).
(a)
to ensure that the records are being maintained by a service provider in the
manner required under the relevant regulations;
(b)
to ascertain whether adequate internal control systems, procedures and
safeguards have been established and are being followed by a service provider
to fulfill its obligations under the relevant regulations;
(c)
to ascertain whether any circumstance exists which would render a service
provider unfit or ineligible;
(d)
to ascertain whether the provisions of the Code, or the rules, regulations and
guidelines made thereunder and the directions issued by the Board, if any, are
being complied with;
(e)
to inquire into the complaints received from 5[stakeholders] or any other
person on any matter having a bearing on the activities of a service provider;
and
(f)
such other purpose as may be deemed fit by the Board in furtherance of the
objectives of the Code.
(5)
The order referred to in sub-regulation (3) shall contain-
(a)
scope of inspection;
(b)
composition of Inspecting Authority;
(c)
timelines for conducting the inspection;
(d)
reporting of progress in inspection;
(e)
submission of interim inspection report, if any; and
(f)
submission of inspection report.
(6)
The Board and the Inspecting Authority shall make every effort to keep the
inspection confidential and to cause the least burden on, or disruption to, the business of
the service provider under inspection.
4. Conduct of Inspection.
(1)
The Inspecting Authority shall serve a notice of inspection to the service provider at
least 10 days before the commencement of inspection:
Provided that where the Inspecting Authority is satisfied that the notice will cause
undue delay in inspection or there is an apprehension that records of the service provider
may be destroyed, mutilated, altered, falsified or secreted, after the notice is served, it
may, for reasons to be recorded in writing, dispense with such notice.
(2)
The Inspecting Authority may require the service provider or an associated person
to submit records, as may be required, before the commencement of inspection.
(3)
The Inspecting Authority may visit the offices of the service provider for
conducting the on-site inspection.
(4)
It shall be the duty of the service provider and an associated person to produce
before the Inspecting Authority such records in his custody or control and furnish to the
5Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior to
substitution, the word stood as: “clients”.
Inspecting Authority such statements and information relating to its activities within such
time as the Inspecting Authority may require.
(5)
The service provider shall allow the Inspecting Authority to have access to the
premises occupied by such service provider or by any other person on its behalf and
extend facility for examination of any records in the possession of the service provider or
any such other person and provide copies of records or other material which in the
opinion of the Inspecting Authority are relevant for the inspection.
(6)
The Inspecting Authority shall, in the course of inspection, may examine and record
statements of any associated person of the service provider in relation to the affairs of his
business.
(7)
It shall be the duty of the service provider and an associated person to give to the
Inspecting Authority all assistance which the Inspecting Authority may reasonably
require in connection with the inspection.
5. Interim Inspection Report.
(1)
The Inspecting Authority may submit an interim inspection report to the Board, if it
considers appropriate, keeping in view the nature and progress of inspection.
(2)
The Inspecting Authority shall submit an interim inspection report, if required by
the Board.
(3)
If the Board is satisfied from the interim inspection report that there is a gross
violation of the provisions of the Code, or the rules, regulations made thereunder, by the
service provider and an immediate action under sub-section (2) of section 220 is
warranted, the Board shall refer the matter to the Disciplinary Committee for an
appropriate action.
(4)
On consideration of the interim inspection report, the Disciplinary Committee may
pass an interim order with appropriate directions to the service provider.
(5)
The interim order referred to sub-regulation (4) shall lapse on expiry of 90 days.
6. Inspection Report.
(1)
The Inspecting Authority shall send a copy of the draft inspection report to the
service provider requiring comments of the service provider within 15 days from receipt
of the draft inspection report.
(2)
The Inspecting Authority shall submit a copy of the draft inspection report to the
Board.
(3)
The Board shall examine the draft inspection report as to whether inspection is
complete and satisfactory or requires further inspection and advise the Inspecting
Authority accordingly within 15 days of receipt of draft inspection report.
(4)
After considering the comments of the service provider and taking into account
advice of the Board, the Inspecting Authority shall prepare the inspection report and
submit it to the Board.
CHAPTER III
INVESTIGATION
7. Investigation by the Board.
(1)
The Board may conduct investigation of a service provider under section 218.
(2)
The Board may, for the purposes of this regulation, by an order, direct an
Investigating Authority to conduct an investigation of the affairs of the service provider
and to report thereon to the Board.
(3)
The order referred to in sub-regulation (2) shall contain the following particulars: -
(a)
scope of investigation in terms of records, activities, places, and persons;
(b)
composition of Investigating Authority;
(c)
timelines for conducting investigation;
(d)
reporting of progress in investigation;
(e)
submission of interim investigation report, if any; and
(f)
submission of investigation report.
(4)
The Board and the Investigating Authority shall make every effort to keep
investigation confidential and to cause the least burden on, or disruption to, the business
of the service provider under investigation.
(5)
The Board may, at any time, modify the order referred to under sub-regulation (2) to
enlarge the scope of investigation or other terms of investigation, for reasons to be
recorded in writing.
8. Conduct of Investigation.
(1)
The Investigating Authority shall serve a notice of investigation to the service
provider at least 10 days before the commencement of investigation:
Provided that where the Investigating Authority is satisfied that the notice will cause
undue delay in investigation or there is an apprehension that records of the service
provider may be destroyed, mutilated, altered, falsified or secreted, after the notice is
served, it may, for reasons to be recorded in writing, dispense with such notice.
(2)
The Investigating Authority may require the service provider or an associated
person to submit records as may be required, before the commencement of investigation.
(3)
The Investigating Authority may visit the offices of the service provider for
conducting the on-site investigation.
(4)
It shall be the duty of the service provider and an associated person to produce
before the Investigating Authority such records in his custody or control and furnish to
the Investigating Authority such statements and information relating to its activities
within such time as the Investigating Authority may require.
(5)
The service provider shall allow the Investigating Authority to have access to the
premises occupied by such service provider or by any other person on its behalf and
extend facility for examination of any records in the possession of the service provider or
any such other person and provide copies of records or other material which in the
opinion of the Investigating Authority are relevant for the investigation.
(6)
The Investigating Authority shall, in the course of investigation, may examine and
record statements of any associated person of the service provider in relation to the affairs
of his business and for that purpose may require any of those persons to appear before it
personally.
(7)
Notes of any examination referred to in sub-regulation (6) shall be recorded and
shall be read over to, or by, and signed by, the person examined.
(8)
It shall be the duty of the service provider and an associated person to give to the
Investigating Authority all assistance which the Investigating Authority may reasonably
require in connection with the investigation.
(9)
The Investigating Authority may keep in its custody any record produced to it up to
six months and thereafter shall return the same to the person by whom or on whose behalf
the records were produced:
Provided that it may call for these records again if it considers necessary and shall
give certified copies of these to the person by whom or on whose behalf these were
produced, if required by him.
(10) Where in the course of investigation, the Investigating Authority has reasonable
grounds to believe that the records of, or relating to, a service provider or an associated
person in any manner, may be destroyed, mutilated, altered, falsified or secreted, the
Investigating Authority may make an application to the competent court having
jurisdiction for an order for the seizure of such records.
(11) After considering the application under sub-regulation (10) and hearing the
Investigating Authority, if necessary, the competent court may, by order, authorise the
Investigating Authority –
(a)
to enter, with such assistance, as may be required, the place or places where
such records are kept;
(b)
to search that place or those places in the manner specified in the order; and
(c)
to seize records, it considers necessary, for the purposes of the investigation.
(12) The Investigating Authority may requisition the services of any police officer or any
officer of the Central Government, or of both to assist him in search and seizure under the
order under sub-regulation (11) and it shall be the duty of every such officer to comply
with such requisition.
(13) Every search or seizure shall be carried out in accordance with the provisions of the
Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures made under
that Code.
9. Interim Investigation Report.
(1)
The Investigating Authority may submit an interim investigation report to the
Board, if it considers appropriate, keeping in view the nature and progress of
investigation.
(2)
The Investigating Authority shall submit an interim investigation report, if required
by the Board.
(3)
If the Board is satisfied from the interim investigation report that prima facie, there
is a gross violation of the provisions of the Code, or the rules or regulations made
thereunder, by the service provider and an immediate action under sub-section (2) of
section 220 is warranted, the Board shall refer the matter to the Disciplinary Committee
for an appropriate action.
(4)
On consideration of the interim investigation report, the Disciplinary Committee
may pass an interim order with appropriate directions to the service provider.
(5)
The interim order referred to sub-regulation (4) shall lapse on expiry of 90 days.
10. Investigation Report.
(1)
The Investigating Authority shall submit 6[the investigation report] to the Board.
(2)
The Board shall examine the 7[*] investigation report as to whether investigation is
complete and satisfactory or requires further investigation and advise the Investigating
Authority accordingly within 15 days of receipt of the 8[*] investigation report.
(3)
After taking into account advice of the Board, the Investigating Authority shall
prepare the investigation report and submit it to the Board.
9[CHAPTER III-A
INVESTIGATION DURING DISPOSAL OF COMPLAINT OR GRIEVANCE
10A. Investigation during disposal of complaint or grievance.
6 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior to
substitution, the words stood as:” a copy of the draft investigation report”.
7 Omitted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior to
omission, the word stood as: “draft”.
8 Omitted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior to
omission, the word stood as: “draft”.
9 Inserted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022).
Notwithstanding anything contained in Chapter III, the processing of a complaint or
grievance or material available on record under the Insolvency and Bankruptcy Board of
India (Grievance and Complaint Handling Procedure) Regulations, 2017, shall mean
investigation under this regulation and in such case the processing papers shall mean the
investigation report under regulation 10:
Provided that nothing in this regulation shall restrict the Board to appoint an inspecting
authority under Chapter-II or an investigating authority under Chapter-III.
CHAPTER III-B
INTERIM ORDER ON MATERIAL AVAILABLE ON RECORD
10B. Interim order on material available on record.
(1) If based on material available on record, the Board is satisfied that prima facie, there is a
violation of the provisions of the Code or the rules or regulations made thereunder by the
service provider, and an immediate action under sub-section (2) of section 220 is warranted,
the Board shall refer the matter to the Disciplinary Committee for an appropriate action.
(2) On consideration of the matter referred under sub-regulation (1), the Disciplinary
Committee may pass an interim order with appropriate directions.
(3) The interim order referred to sub-regulation (2) shall lapse on expiry of ninety days from
the date of the order.]
CHAPTER IV
CONSIDERATION OF REPORT
11. Consideration of Report.
(1)
The Board shall consider the inspection report received under regulation 6 or
investigation report received under regulation 10, as the case may be, expeditiously.
(2)
If the Board, after consideration of the report under sub-regulation (1) 10[or on the
basis of material otherwise available on record], is of the prima facie opinion that
sufficient cause exists to take actions under section 220 or sub-section (2) of section 236,
it shall issue a show-cause notice in accordance with regulation 12 to the service provider
or an associated person and in any other case, close the inspection or investigation, as the
case may be.
12. Show-cause notice.
(1)
The show-cause notice shall be in writing and shall state-
(a)
the provisions of the Code under which it has been issued;
(b)
the details of the alleged facts;
(c)
the details of the evidence in support of the alleged facts;
10 Inserted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022)
(d)
11[the provisions of the Code, rules, regulations and guidelines thereunder
allegedly violated, or the manner in which the public interest is allegedly
affected;]
(e)
the actions or directions that the Board proposes to take or issue, if the
allegations are established; 12[*]
(f)
the time within which the noticee may make written submission.
13[(g) the manner in which service provider is required to respond to the show cause
notice; and
(h) consequences of failure to respond to the show-cause notice.]
(2)
For the purposes of clause (e) of sub-regulation (1), the Board shall take into
account, but not limited to, the following factors: -
(a)
the nature and seriousness of the alleged contraventions, including whether it
was deliberate, reckless or negligent on the part of the noticee;
(b)
the consequences and impact of the alleged contravention, including -
(i)
unfair advantage gained by the noticee as a result of the alleged
contravention;
(ii) loss caused, or likely to be caused, to 14[stakeholders] or any other
person as a result of the alleged contravention; and
(iii) the conduct of the noticee after the occurrence of the alleged
contravention, and prior to the alleged contraventions.
(3)
The show-cause notice shall provide 15[fifteen] days to the noticee to make a written
submission.
(4)
The show-cause notice shall state, if a noticee fails to respond under sub-regulation
(3) within the given time, it shall be disposed of based on the material available on record.
(5)
The show-cause notice shall enclose copies of relevant documents and extracts of
relevant portions from the report of investigation or inspection, or other records.
(6)
16[A show-cause notice shall be served on the service provider in electronic form at
the email address provided by the service provider to the Board and a copy shall also be
sent by registered post.]
11 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, it stood as “(d) the provisions of the Code, or the rules, regulations or guidelines made
thereunder, allegedly violated;”.
12 Omitted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior to
omission, the word stood as: “and”.
13 Inserted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022).
14 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, the words stood as: “clients”.
15 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, the words stood as: “at least 21”.
(7) The Board shall refer the show-cause notice to the Disciplinary Committee
alongwith all the relevant records including the written submissions, if any, made by the
noticee in the matter.
13. Disposal of Show-cause notice.
(1)
The Disciplinary Committee, after providing an opportunity of being heard to the
noticee, shall dispose of the show-cause notice by a reasoned order.
(2)
17[The Disciplinary Committee shall endeavour to dispose of the show-cause notice
within a period of thirty-five days of the date of the issuance of the show-cause
notice.]
(3)
The order under sub-regulation (1) may provide for-
(a)
closure of show-cause notice without any direction;
(b)
warning;
18[(ba) suspension or cancellation of authorisation for assignment of an insolvency
professional;]
(c)
any of the actions under sub-sections (2), (3) and (4) of section 220;
(d)
a reference to the Board to take any action under sub-section (5) of section 220
or sub-section (2) of section 236; or
(e)
any other action or direction as may be considered appropriate.
(4)
The order under sub-regulation (1) shall not become effective until thirty days have
elapsed from the date of issue of the order, unless the Disciplinary Committee states
otherwise in the order along with the reasons for the same.
(5)
19[The order passed under sub-regulation (1) shall be served upon the service
provider in an electronic form and be published on the website of the Board:
Provided that where the service provider is an insolvency professional, a copy of the
order shall be sent to the insolvency professional agency of which he is a professional
member.]
16 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, it stood as:
“(6) A show-cause notice issued shall be served on the noticee-
(a) by sending it to the noticee at its registered office, by registered post with acknowledgement due; and
(b) by an appropriate electronic form to the email address provided by the service provider to the Board.”
17 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, it stood as “(2) The Disciplinary Committee shall dispose of the show-cause notice within a
period of 180 days of the issue of the show-cause notice.”
18 Inserted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022).
19 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, it stood as:
“(5) The order under sub-regulation (1) shall be issued to the noticee immediately, and be published on the
website of the Board.”
20[(6) The Disciplinary Committee shall in the order passed under sub-regulation (1) require
the service provider-
(a) to discharge pending obligations, if any;
(b) to continue its functions till such time as may be directed, only to enable
stakeholders to shift to another service provider; and
(c) to comply with any other directions.
(7) In case where the service provider is an insolvency professional, the Board shall intimate
the order to all the members of committee of creditors of the insolvency resolution processes
in which he is acting as an interim resolution professional or resolution professional, as the
case may be, and to the Adjudicating Authority.]
CHAPTER V
RESTITUTION
14. Restitution.
(1)
Where a direction has been issued, to any person to disgorge the amount under sub-
section (4) of section 220, the Board shall endeavour to realize the amount of
disgorgement expeditiously.
(2)
The Board shall, as soon as after the realization of the amount of disgorgement,
invite claims by a public announcement from persons, who have suffered loss on account
of the contravention underlying the direction under sub-section (4) of section 220,
seeking restitution from the disgorged amount.
(3)
The persons referred to in sub-regulation (2) shall submit claims in Form A within
30 days of the public announcement.
(4)
The Board shall scrutinise the claims and prepare a list of valid claims within 30
days of the last date for receipt of claims.
(5)
The Board shall disburse such amount proportionately among the claimants within
30 days of preparation of the list of valid claims.
FORM A
(Under Regulation 14(3) of the Insolvency and Bankruptcy Board of India (Inspection and
Investigation) Regulations, 2017)
20 Substituted by Notification No. IBBI/2022-23/GN/REG087, dated 14th June, 2022 (w.e.f. 14.06.2022). Prior
to substitution, it stood as:
“(6) If the order under sub-regulation (1) suspends or cancels the registration of a service provider, the
Disciplinary Committee may, if it considers fit, require the service provider to-
(a)
discharge pending obligations, if any;
(b)
continue its functions till such time as may be directed, only to enable clients to shift to
another service provider; and
(c)
comply with any other directions.”
Claim under Order No… dated ………. under section 220(4) of the Code
Sl.
No.
Description
Particulars
1.
Name and Address of the Claimant
2.
Identity of the Claimant
(a) Aadhaar No
(b) PAN
(c) Bank account no, name of the bank, branch to
which money is to be remitted and IFSC code
3.
Please explain how you have lost money on account of
contravention as mentioned under section 220(4)
4.
Please show computation of loss suffered by you
Verification
I hereby verify and affirm that the contents as stated above are true and correct to the best of
my knowledge and belief and no material fact has been concealed.
(Signature of the Claimant)
Note: If the amount of claim exceeds Rs. 10,000, this verification shall be done before a
Notary for the purpose of submission of claim.
