IBC Section 199: No person to function as insolvency professional agency without valid certificate of registration

Section 199 of Insolvency and Bankruptcy Code, 2016: No person to function as insolvency professional agency without valid certificate of registration

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

Save as otherwise provided in this Code, no person shall carry on its business as insolvency professional agencies under this Code and enrol insolvency professionals as its members except under and in accordance with a certificate of registration issued in this behalf by the Board.

Legal Commentary & Landmark Judgments: Section 199

Section 199 mandates that no entity shall function as an Insolvency Professional Agency (IPA) without obtaining a valid certificate of registration from the Board.

Mandatory Statutory Registration: Strict prohibition against any person or body functioning as an insolvency professional agency without a valid certificate of registration issued by the IBBI.
Frontline Regulatory Tier: IPAs act as the frontline self-regulatory bodies responsible for enrolling, educating, and disciplining insolvency professionals.
Consequences of Unregistered Operations: Operating as an IPA without registration is illegal and attracts immediate injunctive restraint and penal sanctions under the Code.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court highlighted that the two-tier regulatory structure (IBBI and registered IPAs under Section 199) ensures comprehensive monitoring of professionals.
Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: Affirmed that mandatory IPA registration guarantees that only standardized, accredited bodies oversee insolvency practitioners.

Courtroom Practice & Strategic Litigation Guidance:

Insolvency professionals must ensure their professional membership with their registered IPA remains in active standing; suspension of membership by an IPA automatically invalidates the professional's Authorization for Assignment (AFA).