Amendment in the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 and the Insolvency and Bankruptcy, 2017

In a recent attempt to improve the handling of grievance and complaint raised before the Insolvency and Bankruptcy Board of India (“IBBI”), a Notification No. IBBI/2022-23/GN/REG086, dated 14th June, 2022 has been published in the IBBI, thereby amending the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 and the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017. The key highlights of the amendment are enumerated hereinbelow:
(a) Substitution of Regulation No. 5: In regulation 3, for sub-regulation (5), the following sub-regulation has been substituted, thereby, providing a dedicated portal for submission of grievances:
“(5) A grievance or a complaint shall be filed with the Board on its dedicated portal www.ibbi.gov.in”

(b) Disposal of grievances: Under Regulation 6, the following amendments have been observed:
• Under sub-regulation (1), the words “Disposal of grievance” has been substituted with “Disposal of grievance by the Board” by the Board”.
• Under sub-regulation (2), the word “fifteen” has been substituted with “seven”, while the following proviso has been inserted:
“Provided that an additional time not exceeding seven days may be granted by the Board for submitting the information and records sought under sub-regulation (2) on the request of the service provider.”
• Under sub-regulation (3) the word “forty-five” has been substituted by “thirty”.
Impact:
(i) The Board shall close the grievance within Thirty days of its receipt if it does not require any redress.
(ii) The Board shall direct the service provider to redress the grievance within Thirty days of its receipt if it requires any redress.

(c) Disposal of Grievances By the Insolvency Professional Agency (Insertion of Regulation 6A):
The Board after regulation 6, has inserted the following regulation:

“6A. Disposal of grievance by Insolvency Professional Agency
(1) Notwithstanding anything contained in regulation 6, the Board may forward a grievance against an insolvency professional for disposal by the insolvency professional agency of which he is a professional member.
(2) On receipt of the grievance under sub-regulation (1), the insolvency professional agency shall dispose of the grievance in accordance with its bye-laws and intimate the Board within thirty days of receipt of grievance.”

(d) Amendment under Regulation 7:
• Under sub-regulation (2), the time for submission of information sought from the service provider has been reduced from 15 to 7 days with additional time of only 7 days on the request of the service provider.
• Under sub-regulation (3), time given to the board to form an opinion of whether there exist a prima facie case or not is reduced from 45 days to 30 days.
• Under sub-regulation (5), filing the review of the decision given by the board by the complainant should be done within 30 days from the date of the decision.
• Under sub-regulation (7), the following sub-regulation has been substituted:
“(7) Where the Board is of the opinion that there exists a prima facie case, it may issue a show cause notice under regulation 11 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 or order an investigation under Chapter III of Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017.”

IMPACT OF THE AMENDMENT:
(i) The mechanism of complaint/ grievance redressal and subsequent enforcement action has been amended to have expeditious redressal and also to avoid placing undue burden on the service providers.

(ii) To curtail such delays and to ensure expeditious and result oriented enforcement mechanism, the Amendment Regulations have provided the following:

a. Revisions in various timelines related to enforcement process provided in the (Grievance and Complaint Handling Procedure) Regulations, 2017 and (Inspection and Investigation) Regulations, 2017 for addressing the issue of delay in present mechanism.

b. Effective participation of IPAs in regulating the IPs through examination of grievances received against IPs.