The Regulatory Cost of Regulation

How the Bombay High Court’s Hazel Mercantile decision recasts IBBI’s role in the CIRP process

The Court’s decision and its regulatory significance

Hazel Mercantile began as a challenge to a particular charge. It ended as a substantial statement of the Insolvency and Bankruptcy Board of India’s place in the corporate-insolvency system. The Bombay High Court dismissed four connected writ petitions challenging Regulation 31A of the CIRP Regulations, holding that the petitioners had not established that the provision was ultra vires the IBC or arbitrary in violation of Article 14. In doing so, it accepted both the statutory footing for the levy and a broad account of the regulatory work that the levy is said to support. ¹

The immediate rule is specific. Regulation 31A(1) imposes a regulatory fee of 0.25% of the realisable value to creditors under a resolution plan approved under section 31, where that value exceeds liquidation value. The proviso makes the rule applicable to plans approved under section 31 on or after 1 October 2022.² Regulation 31(ba), in turn, treats the fee as an insolvency resolution process cost (CIRP cost). Regulation 31A(2) also contains a separate fee: 1% of the cost booked as CIRP cost in respect of an IRP’s or RP’s hiring of professional or other assistance for a CIRP. It was not the 0.25% limb challenged in these matters. The 0.25% limb also has an express exception for a section 31-approved plan in respect of insolvency resolution of a real-estate project where the plan comes from an association or group of allottees in that project. ³

The Court’s legal holding was not that IBBI may raise revenue whenever a CIRP produces value. Its conclusion was narrower, though still important: the Code’s fee-making and regulation-making provisions, read with the residual CIRP-cost provision and Regulations 31 and 31A, authorised this charge in this setting. The Court also held that the charge was a regulatory fee rather than a tax; that the petitioners had not shown the rate to be excessive, expropriatory or disproportionate; and that the stated date trigger was prospective when applied to plans still awaiting section 31 approval. ⁴, ⁵

What gives the judgment a significance beyond its 0.25% figure is its conception of the regulator. The petitioners’ case treated IBBI principally as the regulator of insolvency professionals, insolvency professional agencies and information utilities, and argued that it supplied no service for which a resolution applicant or creditor body could properly be charged. The Court rejected that premise. In its account, IBBI’s executive, quasi-judicial and quasi-legislative functions operate throughout the CIRP architecture—from the rules that structure participation and information to requirements bearing on a plan’s route to approval. ⁶

That distinction matters in practice. If the relevant benefit is the maintenance of a functioning, supervised insolvency process rather than a bespoke service sold to one payer, a fee can be linked to the successful culmination of that process without being reduced to a licence charge. But the judgment does not erase the boundary between a regulatory fee and a general exaction. The Court retained quid pro quo as a characteristic of a fee; it held only that, for this kind of regulatory charge, the nexus may be broad and process-wide rather than individually matched or mathematically exact. ⁷

The more useful way to read Hazel is therefore not as a simple win for a fee. It is a decision about the legal architecture of process regulation: who may fund it, through which statutory route, and at what stage that funding obligation must be built into a resolution plan. That framing also identifies the continuing discipline on future levies. A charge will need a real connection to the Code’s purposes, a coherent regulatory-cost architecture, and a defensible relationship between collections and regulatory functions. Hazel validates the present arrangement; it does not announce a general immunity for any future IBBI charge.

The statutory pathway: from power to levy to priority payment

The Court reached Regulation 31A through a connected statutory pathway rather than a single, free-standing source of power. The starting point was section 196(1)(c), which the Court read as authorising IBBI to levy fees or other charges for carrying out the purposes of the Code, including registration and renewal fees. The word “including” did important work in that construction. In the Court’s view, reducing the provision to fees payable by IBBI’s directly regulated service-provider categories would deprive the wider purpose-linked language of meaningful operation. ⁸

The next link was section 5(13)(e), which includes within CIRP costs “any other costs as may be specified by the Board.” The petitioners argued that this residual language had to be confined by the more specific heads in section 5(13)(a)–(d). The Court disagreed. Those earlier heads—interim finance, resolution-professional remuneration, the cost of operating the debtor as a going concern, and specified government-incurred facilitation expenses—did not, it held, share a single identifiable genus. Clause (e) could therefore operate as a residual head, without being narrowed through ejusdem generis or noscitur a sociis. ⁹

Section 240(2)(d) supplied the regulation-making bridge: it concerns the specification of other costs for the purposes of the CIRP-cost definition. Regulation 31 then performs the classificatory work. Its amended clause (ba) expressly includes the fee payable under Regulation 31A among CIRP costs; Regulation 31A supplies the rate, base, trigger and exemption. Read together, the Court held, these provisions placed the regulatory fee within the Board’s delegated authority and within the defined cost structure of a resolution process. ¹⁰

That classification carries a material payment consequence. The Court noted that section 30(2)(a) requires a plan to provide for CIRP costs, in the manner specified by the Board, in priority to other debts. Separately, section 53(1)(a) ranks CIRP costs and liquidation costs first in the distribution of liquidation proceeds. The Court consequently rejected the submission that Regulation 31A had artificially conferred priority on an otherwise unauthorised demand. Once the fee was validly specified as a CIRP cost, its priority followed from the Code’s existing treatment of those costs. ¹¹

The point is easy to lose amid the public-law debate. A fee included in CIRP costs is not merely an invoice to be dealt with after the economic bargain is done. It belongs in the plan-compliance analysis before section 31 approval. For the petitioners’ plans, which were pending before the adjudicating authority when Regulation 31A came into force, the Court held that the adjudicating authority would be within its powers to call for addition of an applicable regulatory fee as a CIRP cost, taking account of the relevant plan provisions concerning amended IBC/Regulations, CIRP costs and escalation. ¹²

This statutory chain has an operational implication as much as a doctrinal one. Participants should not treat the applicability calculation as a late regulatory housekeeping issue. The appropriate sequence is to assess the trigger, calculate and document the amount, identify the source of payment, and show how the plan continues to meet its CIRP-cost obligation. That approach follows the Court’s account of how the provisions interact; it is not a judicially prescribed checklist.

The judgment also supplies a caution for future rulemaking. Its reasoning was anchored in the particular combination of a purpose-linked charging provision, a residual CIRP-cost head, a specific regulation-making provision and an express regulatory classification. A future charge that lacks those anchors, or is disconnected from the process cost it is said to fund, would not simply inherit Regulation 31A’s reasoning by label alone. ¹³

From entity regulator to process regulator

The most consequential part of Hazel may be its description of IBBI’s function. The Court did not deny that IBBI regulates insolvency professionals, insolvency professional agencies and information utilities. It held, rather, that this is not the end of the analysis. Regulation of those institutions is itself regulation of CIRP, and the Board’s rule-making, oversight, data, research and evaluative functions are woven into the process from commencement through the approval or rejection of a resolution plan. ¹⁴

The Court located that broader role in concrete process domains. It referred to the Board’s involvement through regulations governing matters such as the composition, voting and meetings of the committee of creditors; information memoranda; the requirements governing resolution plans; and the specification of CIRP costs. The result was an “ecosystem” account of regulatory service: IBBI need not stand on one side of a completed transaction and point to a discrete service rendered to the successful applicant. Its role lies in maintaining the rules, institutions and oversight conditions in which the transaction can occur. ¹⁵

That was central to the Court’s rejection of the no-service argument. A resolution applicant and the committee of creditors may not each receive an individualised service at the moment the charge falls due. But they participate in a process whose architecture, professional gatekeepers, information arrangements and compliance standards are shaped by the regulator. On the Court’s reasoning, those process-wide functions provide the required generalised nexus for the fee. ¹⁶

The Court’s account should nevertheless be stated with precision. “Ecosystem” is an explanation offered in support of the validity of this fee under this statutory scheme; it is not a free-standing source of regulatory power. Nor does a broad regulatory role make IBBI the decision-maker on the commercial merits of a plan. The judgment did not dilute the distinction between regulation of the process and the committee of creditors’ commercial choices within the statutory framework. ¹⁷

For process design, the shift is meaningful. Resolution professionals, creditors and applicants increasingly operate in a system in which compliance costs are not external to the economics of a plan. Regulatory requirements can shape the information available to participants, the form in which a plan is considered, and the costs that receive statutory priority. A plan built on the assumption that regulation is merely an after-the-fact professional-licensing function is likely to understate both execution risk and distributional effects.

That does not justify opaque expansion. The stronger the reliance on process-wide benefit, the more important it becomes to identify the actual regulatory functions being funded and to explain how a chosen charging event is a rational proxy for the benefit of the system. Clear drafting on the liable person, calculation base, trigger, exceptions and payment treatment is not an optional communication exercise; it is part of what keeps a system-wide regulatory rationale connected to the legal authority that supports it.

Why the levy remained a fee: broad regulatory nexus, not a bespoke service

The petitioners’ tax-versus-fee challenge confronted an older legal distinction under modern regulatory conditions. The Court accepted that quid pro quo remains an essential characteristic of a fee. It did not, however, require a strict one-to-one accounting between the amount paid by a particular resolution applicant and a distinct service delivered to that applicant. For a regulatory fee, the relevant connection may be broad-based and general; exact individual equivalence or mathematical precision is not required. ¹⁸

Applying that approach, the Court treated IBBI’s role across CIRP as the relevant service or regulatory benefit. Its reasoning moved beyond the proposition that IBBI regulates the professionals who administer a case. The Court described a wider contribution to the conditions for an efficient and supervised resolution process, and held that stakeholders in that process—including committees of creditors and resolution applicants—could not plausibly be treated as wholly unconnected to it. ¹⁹

The destination of the collections also mattered. The Court treated the fact that the amount remained with IBBI to meet its expenses, rather than entering general State revenue, as a basis for distinguishing the non-regulatory-fee authority relied on by the petitioners. It should not be presented as a complete or universal fee-versus-tax test. ²⁰

The Court then rejected the claim that the 0.25% rate was excessive, expropriatory or confiscatory. On the material before it, the Court found no basis to treat the levy as disproportionate. That is a holding about the challenged rate, the statutory scheme and the evidentiary record; it is not a declaration that any rate attached to a regulatory purpose will be immune from scrutiny. ²¹

The decision provides a workable test for process-wide charges, but also a practical warning. A regulator need not itemise a bespoke service for every payer. It should, however, be able to articulate the regulated activity, the system benefit, the reason for the chosen collection point and the relationship between the charge and the functions it funds. As the connection becomes more remote, or the amount becomes more ambitious, the distinction between a regulatory fee and revenue raising becomes harder to sustain.

For that reason, the phrase “broad regulatory nexus” should not become a substitute for analysis. The Court’s conclusion depended on IBBI’s legally recognised role across CIRP, the location of the fee within CIRP costs, and the evidence advanced on the Board’s finances and functions. An amended rate, a different levy base, a charge imposed outside the plan-cost architecture, or a record showing materially unrelated use of funds could require a different assessment.

Funding the regulator: self-sufficiency, surplus and accountability

The financial aspect of Hazel is both narrower and more revealing than the slogan “self-funded regulator” suggests. On the FY 2024–25 account material placed before it—produced in a compilation by the petitioners and not denied by IBBI—the Court recorded a pre-fee deficit made good by Government contributions and, after the fee, an ability to meet expenditure with a surplus. It held that surplus alone did not establish excessiveness or disproportionality. ²²

The Court accepted the submission that financial independence was important to IBBI’s regulatory integrity and viewed Regulation 31A as a step toward that objective in this statutory setting. That conclusion supported the Court’s rejection of the excessiveness challenge; it did not transform surplus into an end in itself. ²³

This distinction is important. A fee regime may properly aim at financial resilience, administrative capacity and independence from general budgetary support. Yet the legal and institutional case for it remains strongest when the use of collections remains demonstrably connected to the regulator’s statutory functions. The Court’s observation that collections remained with IBBI rather than entering general State revenue formed part of its reasoning for distinguishing the authority relied on by the petitioners. ²⁴

Hazel should be read as recognising self-sufficiency as a design objective, not as supplying a blank cheque for accumulation. Periodic calibration remains important. The rate, qualifying-plan population, creditor-value base, operating costs, reserves and resulting surplus can all change. A surplus that did not prove excessiveness on one record may still become relevant if the funding position or the regulatory programme materially changes.

A durable accountability model would therefore make the funding logic legible. That would include regular reporting on collections and their use, an intelligible reserves policy, periodic review of the rate and base, and clear explanation of how the fee’s economic incidence is being accommodated in the CIRP-cost structure. It would also make future rule changes easier to defend if IBBI can show why the charge remains connected to a defined regulatory need rather than simply to the value generated in an individual case.

There is a distributional question as well. Because CIRP costs receive priority, an increase in such costs may ultimately affect the pool available for other claims or the economics on which a plan was negotiated. The Court noted in the cases before it that creditors may take the resulting hit, while also observing that no creditor had appeared to challenge the regulation. It did not decide how that burden must be allocated in every plan. ²⁵ The practical consequence is not that one participant invariably bears the fee; it is that the cost and its effect on recoveries, feasibility and implementation should be confronted early enough to be assessed within the plan process.

That is the accountability opportunity left by the judgment. The Court has upheld the legal route for this regulatory fee. The continuing task for the regulator and CIRP participants is to ensure that the route is used transparently: with a calculable obligation, an evident regulatory purpose, disciplined financial stewardship and a plan record that makes the priority-cost consequence visible before section 31 approval.

The plan-approval hinge: timing, finality and NCLT process

The hardest question in Hazel Mercantile was not whether Regulation 31A could be framed in the abstract. It was what happens when the regulatory landscape changes after the Committee of Creditors (CoC) has approved a plan but before the plan receives an order under section 31. The petitioners’ account was intuitive: once the CoC and the successful resolution applicant have agreed a plan, later loading it with a regulatory fee changes the bargain. The Court rejected that account on the facts before it, but not by treating a CoC-approved plan as casually revisable. Its reasoning instead turns on the distinction between commercial approval and statutory approval.²⁶

Regulation 31A(1) fixes its principal trigger by reference to the date on which a resolution plan is approved under section 31: where the realisable value to creditors under the plan exceeds liquidation value, the 0.25% fee applies to plans approved on or after 1 October 2022. Regulation 31(ba) places that fee within CIRP costs. That classification matters because section 30(2)(a) requires a plan to provide for CIRP costs in the manner specified by the Board and in priority to other debts. Separately, section 53(1)(a) ranks CIRP costs and liquidation costs first in the distribution of liquidation proceeds.²⁷, ²⁸

The Court accepted the importance of finality between the CoC and the resolution applicant. But it did not accept the stronger proposition that NCLT approval is a mechanical afterthought. In the Court’s analysis, the adjudicating authority still has to satisfy itself that the statutory conditions for approval, including section 30(2) compliance, are met. The Court described limited circumstances in which the adjudicating authority may send a plan back to the CoC or give notice to rectify a defect; that procedural latitude does not make the tribunal a second commercial decision-maker.²⁹

That distinction carried the retrospectivity analysis. A plan that had been approved by the CoC but remained before the NCLT when Regulation 31A took effect had not yet crossed the regulation’s stated section 31 approval trigger. The Court therefore regarded application of the fee to the plans before it as prospective. It also held that no vested right had been displaced by treating an applicable fee as a CIRP cost at the approval stage.³⁰

The result is practical as well as doctrinal. On the Court’s reasoning, and in the facts before it, CIRP-cost compliance remained a live issue during the interval between a CoC vote and a section 31 order. For the petitioners’ plans, the Court held that the adjudicating authority could call for addition of an applicable fee as part of CIRP costs. The appropriate question is not whether the tribunal may renegotiate the plan’s commercial allocation; it is whether the plan placed before it meets the Code’s mandatory cost architecture.³¹, ³²

Two qualifications should remain prominent. First, as an inference from the Court’s discussion, rather than a general reopening power, a CoC-approved plan is not to be reopened whenever a cost changes. The Court described limited circumstances for intervention while maintaining the primacy of CoC commercial wisdom.³³ Secondly, the outcome was reinforced by case-specific plan language. In the Hazel and Suraksha matters, the Court noted acknowledgments that CIRP costs under the Code and Regulations, including escalations or amendments, would be borne; Suraksha had also given an express undertaking. Those facts are important to the application of the holding, not a universal rule that every resolution applicant necessarily assumes every subsequently introduced cost.³⁴

For participants, the timing lesson is straightforward: do not treat CoC approval as the last occasion to test the CIRP-cost schedule. An RP should reassess applicable costs before the section 31 hearing, document the calculation and its legal basis, and place the resulting position clearly before the CoC, applicant and NCLT. That is a prudent implementation approach drawn from the decision’s logic, rather than a new court-prescribed protocol.³⁵

Operational implications for CIRP participants

The decision’s immediate operational consequence is narrow but meaningful. As a prudent implementation measure, not a court-issued protocol, participants should assess whether Regulation 31A applies before the section 31 hearing and, if it does, address the applicable amount in the plan’s CIRP-cost treatment. The economic consequence may ultimately be reflected in recoveries, plan funding or another allocation permitted by the plan; Hazel Mercantile does not prescribe a single economic bearer in every case.³⁶, ³⁷

IBBI: make the obligation legible

The Court sustained Regulation 31A through a statutory chain that linked the Board’s fee power, the residual CIRP-cost provision, regulation-making authority and the express addition of the fee to Regulation 31. It also accepted a system-wide regulatory nexus rather than a bespoke service to each payer.³⁸, ³⁹, ⁴⁰, ⁴¹ That does not remove the value of operational clarity.

As a matter of sound administration, IBBI can make the regime easier to apply by publishing clear, text-faithful guidance on the trigger, calculation basis, documentation, payment route, correction of mistakes and the Regulation’s express real-estate-project exception for a plan from an association or group of allottees in that project. The guidance should explain the Regulation; it should not purport to add substantive obligations that its text does not contain.⁴², ⁴³ Collection and expenditure reporting would likewise help participants assess how a fee defended as supporting the regulatory system is functioning in practice. These are recommendations for implementation, not holdings or directions of the Court.⁴⁴

IRPs and RPs: surface the cost before it becomes a late-stage dispute

For the RP, a disciplined approach is to consider Regulation 31A during the approval process. The first step is applicability: identify the relevant section 31 approval date, test the Regulation’s threshold and exemption, and distinguish the 0.25% resolution-plan limb from the separate 1% charge concerning the hiring of professionals or other services.⁴⁵ The next is calculation: preserve the working papers and assumptions used to identify realisable value to creditors and the amount proposed as CIRP cost.

The amount can then be disclosed in materials put before the CoC, the resolution applicant and NCLT, with an explanation of its anticipated effect on the plan’s cost schedule and compliance with section 30(2)(a). This does not ask an RP to resolve commercial questions unilaterally. It ensures that the statutory cost question is visible while there is still a procedural route to address it. That is particularly important for plans already pending for approval, the setting in which the Court rejected the petitioners’ retrospectivity argument.⁴⁶, ⁴⁷

CoCs and creditors: distinguish legal priority from commercial incidence

A fee’s classification as CIRP cost answers a legal-priority question; it does not automatically answer who will absorb its economic effect. The Court recognised that increased CIRP costs may require creditors to take a hit, while also observing that no creditor was before it in the matters before the Court.⁴⁸ That observation should not be inflated into a determination of a creditor-led challenge, inter-creditor allocation, or the correct distributional answer in a particular resolution plan.

CoCs should therefore consider recording the fee’s effect on feasibility, distributions and implementation before voting, or before responding to an issue identified while the plan is pending with NCLT. The minutes need not recast commercial wisdom as judicially reviewable arithmetic. They should, however, demonstrate that the decision-makers understood the cost priority and the available plan-consistent method for accommodating it. This is especially useful where a late identification of the fee could otherwise be mistaken for an attempt to reopen commercial negotiations.⁴⁹

Resolution applicants: price uncertainty with precision

Resolution applicants should model qualifying regulatory costs early and make the plan’s treatment of cost changes express. Hazel Mercantile is a reminder that commitments to pay CIRP costs under the Code and Regulations, including changes from time to time, may matter greatly when a fee is introduced or becomes applicable before section 31 approval.⁵⁰ It is not authority for erasing the terms of a different plan or for imposing a charge outside the statutory scheme.

Clear drafting can reduce avoidable dispute: does the plan assume applicable CIRP costs as at section 31 approval; is there a contingency or cap; and, if a legally payable cost changes the financial model, what plan-compliant adjustment follows? The answers must remain compatible with the Code and the plan’s structure. They cannot convert a statutory compliance issue into a route for unilateral repricing after approval.⁵¹

NCLT: police statutory compliance without becoming a commercial forum

The Court’s account of NCLT’s role is a restrained one. The tribunal is not confined to a ministerial checklist, yet its ability to seek correction operates in limited circumstances and does not displace CoC commercial primacy.⁵² In a qualifying case, that leaves room to ask whether the plan properly provides for a Regulation 31A fee as CIRP cost; it does not authorise the tribunal to choose the commercially preferable allocation among stakeholders.

A focused record may keep that boundary clear: the RP’s applicability note, calculation, relevant plan clauses, the CoC’s treatment of the consequence, and a concise submission on section 30(2)(a) compliance. The point is controlled implementation of an upheld regulation, not expansion of NCLT supervision.⁵³, ⁵⁴

Boundaries, risks and future disputes

Hazel Mercantile is consequential precisely because it is not boundless. It validates this Regulation 31A challenge on the statutory text, rate, regulatory rationale and evidentiary record before the Bombay High Court. It should not be converted into a proposition that every future IBBI charge, however designed, is insulated from vires, fee-versus-tax, proportionality or arbitrariness review.⁵⁵, ⁵⁶

The same care applies to the Court’s funding analysis. The Court found that the FY 2024–25 material did not show the 0.25% levy to be excessive, disproportionate or confiscatory; it also held that a surplus, without more, did not establish excessiveness. It did not hold that any surplus is irrelevant, or that financial independence permits revenue raising detached from regulatory function.⁵⁷, ⁵⁸ A future challenge could present a different rate, a materially altered collection pattern, evidence about use of funds, or a different factual record on burden and proportionality.

The supplied judgment does not determine several fact-specific questions. The first is computation. Regulation 31A uses “realisable value to creditors” as its base, but the judgment did not determine a fact-specific calculation dispute, documentary standard or payment-enforcement mechanism. Cases may therefore test the evidence needed to establish the base, the treatment of competing valuation inputs, correction of an asserted error, and the procedural consequences of a disagreement.⁵⁹

The second is transition. The Court resolved the position of the petitioners’ plans, which had been approved by the CoC, were still pending before NCLT when the Regulation took effect, and contained relevant CIRP-cost commitments. It did not decide every plan that straddles an amendment date: for example, a plan with materially different wording, a demand first raised after final approval or implementation, or a different substantive regulatory amendment.⁶⁰, ⁶¹

The third is the economic and procedural setting. Hazel Mercantile noted the absence of a creditor challenger, but did not adjudicate a creditor-led challenge to the cost’s incidence or its effects among classes of stakeholders.⁶² Nor did it establish a universal pre-levy notice or hearing regime, verify that a consultation was in fact conducted for Regulation 31A, or decide actual compliance with parliamentary laying for this amendment. The statutory mechanisms and submissions mattered to the delegated-legislation analysis; they are not substitutes for a record in a future, focused procedural challenge.⁶³, ⁶⁴

Finally, the real-estate exemption remains a live boundary rather than an adjudicated equality rule. Regulation 31A contains an exception for a section 31-approved plan in respect of insolvency resolution of a real-estate project where the plan comes from an association or group of allottees in that project. The Article 14 challenge to that exemption was not pressed, and the Court did not determine its merits.⁶⁵, ⁶⁶ Questions about the exemption’s scope, the meaning of an association or group, and differential treatment on a future record therefore should not be presented as settled by Hazel Mercantile.

The best response to those open edges is not to read the judgment defensively or expansively. It is to keep the levy tied to its stated statutory anchors, calculate and disclose it transparently within the CIRP-cost structure, and preserve a record that distinguishes mandatory compliance from recommendations about fair administration. That discipline respects both what the Court decided and what it deliberately left for another case.

Conclusion

Hazel Mercantile is not simply a ruling about a 0.25% charge. It accepts a particular account of how insolvency regulation works. The Board’s function, on the Bombay High Court’s analysis, runs through the institutional and procedural architecture of CIRP: the professional framework, the rules that shape creditor decision-making, the information and plan-compliance structure, and the statutory path to approval. A fee tied to that process could therefore be validly placed within CIRP costs, provided it remained anchored to the Code’s purposes and the statutory scheme that governs those costs.

That holding has an immediate consequence. Regulatory-cost analysis belongs before a plan reaches final approval, not after the economic and legal record has been treated as closed. It requires a clear assessment of applicability, a defensible calculation, transparent disclosure, and a plan record showing how priority CIRP costs are accommodated. It does not erase CoC commercial wisdom, nor does it turn the NCLT into a forum for redesigning the bargain. The point is more limited: a plan must satisfy the Code’s mandatory cost architecture at the point of statutory approval.

The judgment also leaves an institutional responsibility. Broad regulatory benefit can justify a regulatory fee without a bespoke service to every payer. But that proposition carries its own discipline. IBBI’s future levy design and administration will remain more credible where the legal source of power, charging trigger, calculation base, use of collections, exemptions, transition rules and economic effects are made clear. Transparency cannot be an afterthought when a cost receives priority over other claims.

The enduring significance of the decision lies in this balance. Within the statutory scheme considered by the Bombay High Court, the judgment upholds Regulation 31A and accepts financial independence as part of IBBI’s regulatory rationale. It does not validate an unlimited or differently designed future levy. At the same time, it makes careful implementation indispensable. The regulatory cost of regulation must remain recognisably connected to the regulation it is said to support.

References

Disclaimer: This article is published for academic and educational purposes only. It does not constitute legal advice or a legal opinion. It was prepared with AI assistance and reviewed before publication. Readers should consult the relevant laws, regulations, and cited source materials before relying on any proposition discussed here.