IBC Section 214: Obligation of information utility

Section 214 of Insolvency and Bankruptcy Code, 2016: Obligation of information utility

Official Bare Act Text

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

For the purposes of providing core services to any person, every information utility shall-

a) create and store financial information in a universally accessible format;

(b) accept electronic submissions of financial information from persons who are under obligations to submit financial information under sub-section (1) of section 215, in such form and manner as may be specified by regulations;

(c) accept, in specified form and manner, electronic submissions of financial information from persons who intend to submit such information;

(d) meet such minimum service quality standards as may be specified by regulations;

(e) get the information received from various persons authenticated by all concerned parties before storing such information;

(f) provide access to the financial information stored by it to any person who intends to access such information in such manner as may be specified by regulations;

(g) publish such statistical information as may be specified by regulations;

(h) have inter-operatability with other information utilities.

Legal Commentary & Landmark Judgments: Section 214

Section 214 prescribes the mandatory statutory obligations of an Information Utility regarding data security, authentication, and user access.

Duty of Verification: The IU must authenticate and verify financial information submitted to it with all concerned parties before registering the data.
Data Security and Confidentiality: Must maintain foolproof data integrity, electronic encryption, and business continuity systems to prevent data breach, loss, or unauthorized tampering.
Inter-Operability: Obligated to provide inter-operability with other registered information utilities and ensure seamless access to regulatory authorities and tribunals.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court held that the strict statutory obligations under Section 214 ensure that information utilities maintain impeccable reliability and evidentiary weight.
Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Highlighted that debtor verification protocols mandated under Section 214 satisfy fundamental natural justice requirements before default recording.

Courtroom Practice & Strategic Litigation Guidance:

If an Information Utility records a default without serving the mandatory statutory verification notice on the debtor, debtor's counsel can challenge the default certificate as procedurally defective under Section 214.