IBC Section 205: Insolvency professional agencies to make bye

Section 205 of Insolvency and Bankruptcy Code, 2016: Insolvency professional agencies to make bye

Official Bare Act Text

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

Subject to the provisions of this Code and any rules or regulations made thereunder and after obtaining the approval of the Board, every insolvency professional agency shall make bye-laws consistent with the model bye-laws specified by the Board under sub-section (2) of section 196.

Legal Commentary & Landmark Judgments: Section 205

Section 205 empowers Insolvency Professional Agencies to make Model Bye-Laws governing membership, conduct, and disciplinary proceedings of its members.

Statutory Bye-Law Making Power: Every IPA must make bye-laws consistent with the model bye-laws specified by the IBBI.
Subject Matters Covered: Covers minimum membership standards, continuous professional development, peer review, grievance handling, and disciplinary inquiries.
Approval of the Board: No bye-law or amendment thereto takes effect without the prior written approval of the Insolvency and Bankruptcy Board of India.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court noted that approved model bye-laws under Section 205 create a uniform nationwide standard of professional practice.
Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: Emphasized that bye-laws made under Section 205 have statutory binding force over enrolled insolvency practitioners.

Courtroom Practice & Strategic Litigation Guidance:

Insolvency professionals defending disciplinary charges before an IPA must inspect the exact text of the approved bye-laws to identify jurisdictional flaws or limitation bars in the proceedings.