IBC- Hefty Monetary Penalties explained: this guide covers what IBC- Hefty Monetary Penalties means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The Insolvency and Bankruptcy Board of India (IBBI) vide circular no. No. IBBI/IPA/43/2021 dated 28th day of July 2021, has issued circular on the topic “Monetary Penalties to be imposed by an Insolvency Professional Agency” in the exercise of powers under section 196 of the Insolvency and Bankruptcy Code, 2016. IBBI's move seeks to ensure insolvency professionals remain compliant with the letter and spirit of IBC and conduct themselves ethically.- Applicability: With immediate effect i.e. 28th day of July 2021.
| Sl. | Contravention | Monetary Penalty |
| 1. | Fails to submit disclosures, returns, etc. to IPAs or submits inadequate or incorrect disclosures, returns, etc., relating to any assignment, as required under the Code and Regulations made thereunder or Bye-laws of the IPA or called upon by the Board or the IPA. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 2. | Accepts an assignment having conflict ofinterests with the stakeholders. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 3. | Fails to maintain records properly relating to any of his assignments. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 4. | Rejects a claim(s) without giving any proper reason while undertaking an assignment or fails to exercise due diligence in claim verification. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 5. | Fails to comply with directions issued by Adjudicating Authority or the Appellant Tribunal. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 6. | Outsources his duties and obligations. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 7. | Fails to appoint registered valuers, wherever required, under the Code or Regulations made thereunder, for conducting valuation. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 8. | Fails to supply the information called for or to comply with the requirements of information sought by the IPA, Board, Adjudicating Authority or the Appellant Tribunal or does not cooperate with the inspection or investigating authority. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 9. | Fails to make public announcement in the manner provided for in the relevant Regulations. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 10. | Fails to provide notice regarding meetings of creditors. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 11. | Fails to reject resolution plan from ineligible resolution applicants. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 12. | Fails to take action in respect of Preferential, Undervalued, Fraudulent or Extortionate transactions. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 13. | Enters into contract or agreement with professionals in an incomplete and improper manner. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 14. | Contravenes any provision of the Bye-laws, or Regulations for which no specific penalty has been provided. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.” |