Authorisation for insolvency professionals upheld as a valid regulatory control, with constitutional and delegation challenges rejected.

Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 and Regulation 12A of the Model Bye-Laws were upheld as traceable to the enabling provisions of the Insolvency and Bankruptcy Code, 2016, because the scheme uses a two-tier structure of registration and authorisation within statutory standards. The challenge of excessive delegation therefore failed. The requirement that insolvency professionals obtain authorisation for assignment was treated as a uniform professional regulation aimed at competence, compliance and accountability, so it was not found to violate Articles 14, 19 or 21. The seven-day appeal period under Regulation 12A(7) was also sustained; the right of appeal is statutory and the short limit was not struck down, though the regulator was said to consider revision.

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Issues: (i) Whether Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 and Regulation 12A of the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 suffered from excessive delegation or lack of statutory authority. (ii) Whether the impugned regulatory requirement of obtaining authorisation for assignment infringed Articles 14, 19 and 21 of the Constitution of India. (iii) Whether the seven-day period for filing an appeal under Regulation 12A(7) was unconstitutional or otherwise rendered the appellate remedy illusory.

Issue (i): Whether Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 and Regulation 12A of the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 suffered from excessive delegation or lack of statutory authority.

Analysis: The enabling provisions in the Insolvency and Bankruptcy Code, 2016 expressly empowered the Board to frame model bye-laws and regulations governing insolvency professionals and insolvency professional agencies. The regulatory scheme contemplated a two-tier structure in which registration with the Board and authorisation through the concerned agency operate in different spheres. The criteria for issue of authorisation were laid down in the model bye-laws themselves, and the agency was required to act within that framework. The power exercised was therefore traceable to the parent statute and was structured by statutory standards.

Conclusion: The challenge based on excessive delegation failed, and the regulations were upheld.

Issue (ii): Whether the impugned regulatory requirement of obtaining authorisation for assignment infringed Articles 14, 19 and 21 of the Constitution of India.

Analysis: The Court treated insolvency professionals as a distinct class subject to professional regulation. The requirement of authorisation for assignment applied uniformly to all similarly situated insolvency professionals and was supported by an intelligible regulatory objective, namely ensuring competence, compliance and accountability in insolvency practice. The criteria for grant of authorisation were not found to be arbitrary or vague merely because compliance with relevant regulatory requirements issued from time to time was included. The scheme was viewed as a regulatory measure rather than a deprivation of the right to practise the profession.

Conclusion: Articles 14, 19 and 21 were not violated, and the constitutional challenge failed.

Issue (iii): Whether the seven-day period for filing an appeal under Regulation 12A(7) was unconstitutional or otherwise rendered the appellate remedy illusory.

Analysis: A right of appeal is a statutory right and may be conditioned by the statute or the subordinate legislation creating it. The Court held that the Limitation Act, 1963 did not apply in the manner suggested so as to rewrite the appellate timetable. At the same time, rejection of an application for authorisation was not final in the sense of permanently foreclosing practice, because the defects could be cured and a fresh application could be made. The Court nevertheless observed that the short limitation period may deserve reconsideration by the regulator, including the possibility of a longer period or power to condone delay.

Conclusion: The seven-day appeal period was not struck down, and the validity of Regulation 12A(7) was sustained.

Final Conclusion: The writ petition was rejected as the regulatory scheme governing authorisation for assignment was found to be within statutory power and constitutionally valid, though the Court made an advisory observation that the appellate limitation period may be reconsidered by the regulator.

Ratio Decidendi: Where the parent statute expressly authorises the regulator to frame model bye-laws and regulations, and the subordinate legislation prescribes uniform eligibility and appellate conditions for a regulated profession, such requirements are valid unless shown to be arbitrary, discriminatory or beyond the scope of the enabling Act.

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