Information Utilities
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This article is written by Harshita Naidu, pursuing a Certificate Course in Insolvency and Bankruptcy Code from Here she discusses “Raison D’être of Information Utilities Under The Insolvency And Bankruptcy Code, 2016”.



A distinguishing attribute of Information Utility [‘IU’] is that it provides authenticated information about debts and defaults. It is a path breaking concept as it accumulates all credit related information by creating an electronic repository for the same. The purpose of IUs is to record liabilities of all entities and the information would be disclosed in order to facilitate resolution of Insolvency and Bankruptcy cases.

Note: As per the report of the working group on Information Utilities, ‘The primary function of IU is to provide high-quality authenticated information about debts and defaults. Any information stored in IU should be acceptable to Courts as a prima facie evidence of the existence of a debt. Hence, it is important to ensure that the process by which information is stored in IUs is robust, standardized and rigorous.’

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The intention of the Legislature by framing such provisions is that the records of debts and default maintained with IUs are readily accessible which shall aid NCLT to dispose off a Corporate Insolvency Resolution Process Application swiftly.

Objective Behind Setting Up of Information Utilities

  • If an entity commits a ‘default’ and as per Section 3 of the Code, it is not in a position to repay the outstanding debts to its creditors, then Creditors whether acting in a single capacity or in a consortium have a locus standi to initiate legal action against the Debtors. Default may occur due to variations in the financial status of the Debtor or maybe because of business failure. The idea behind incorporating such a provision in the code is to maintain an accurate record of all financial and operational liabilities of all entities.
  • In short, if the Insolvency Resolution Process is initiated, this would reduce the time taken to ascertain the debt and default and expedite the Insolvency and Bankruptcy process.

Elucidation of the Term – ‘Information Utility’

Section 3(21) states that IU means a person registered with Board under Section 210.

The relevant provisions of IU as incorporated in the Code is elucidated as follows:

Section 209– A person shall be eligible to carry a business as IU only if a certificate of registration is obtained from the Board.

Section 210– A certificate of Registration shall be issued if all the technical formalities are completed as prescribed by the Board.

The same shall be suspended or cancelled if obtained through making a false statement or misrepresentation or by any other unlawful means or has failed to comply with regulation of Board or provisions of code.

Section 213 – IU shall provide services which include core services to any person if such person complies with the terms and conditions of the regulations.

As per Section 3(9), Core Services means – Accepting electronic submission of financial information;

    •  Safe and accurate recording of Financial Information;
    •  Authenticating and verifying financial information submitted by person;
  • Providing access to information stored with IU to person as may be specified.

Meaning Of Financial Information And Persons Eligible To Submit Relevant Information To IU

  • In pursuance of Section 3 of the Code, submission of financial information falls within the ambit of ‘core services’ provided by IU. Financial information would include:
  • Financial statements; 
  • Debts and record of default;
  • Records of assets over which any security interest is created.  

Creditors [Either Financial /Operational or any other creditor], Corporate Debtors including its Authorized Representatives or Guarantors are eligible to submit information to IU. 

Obligations of IUs

  • As per Section 214 of the Code, the financial information stored in every IU shall be in a universally accepted format and shall meet minimum service quality standards as specified by regulations. In addition to this, before storing any such information, it shall be the duty of IU to get the information authenticated by all concerned parties. If any party is willing to submit information through electronic means, then it shall be the duty of IU to accept such submissions via electronic means. If any person registered with IU is willing to access any relevant information, then IU shall provide access for the same.

Role of IUs

    • It maintains a repository of debts and defaults;
    • The information shared with the Adjudicating Authority is a prima facie evidence which can be rebutted;
  • Its primary function is to procure, maintain and provide information to all concerned stakeholders of a Company which includes the Corporate Debtor.


National e-Governance Services Limited is India’s first IU. The information relating to the process and functioning of NeSL is extracted from the NeSL’s website and explained as follows;

  • PROCEDURE FOR SUBMISSION OF FINANCIAL INFORMATION TO IU – Any person may submit financial information to IU on payment of requisite fees; KYC like PAN, Aadhar, CIN etc has to be produced before the authority for due verification. Thereafter user registration will be initiated. For Banks/FI, ‘super user’ would be created with a facility to create sub users.
  • FORMAT OF SUBMISSION OF FINANCIAL INFORMATION TO IU – It can be submitted in Form C – Data Input File Format prescribed and published by NeSL.
  • ACKNOWLEDGEMENT OF SUBMISSION OF INFORMATION TO IU – IU shall assign a unique identifier to such information, including record of debt, the terms and condition of authentication/ verification and notify the user in the manner in which information can be accessed by other parties. The registered user is authorized to view the data in which information was last updated and can check the status of authentication/verification while providing access to information.


  • Financial information furnished by one of the parties connected to a debt needs to be verified and authenticated by all other parties connected to the debt by affixing digital signature or Aadhar based e-signature. Persons can access the authenticated information during Insolvency Resolution Process; 
  • IU shall provide annual statement to registered user free of cost;
  • Rectification/Modification of financial information can be made by stating reasons in the manner prescribed in Code/ Regulations;
  • During process of authentication, party has an option to review or affix his remarks item-wise for the data, while authenticating the information furnished by IU. Such dispute will be referred to Financial Creditors/ Banks for resolution;
  • If Borrower does not authenticate the debt information or default within 7 days, the same shall be referred back to Banks/ Financial Creditors for resolution.
  • To access or retrieve any information, person has to pay fees as specified in the regulations.
  • The information shall be preserved with NeSL, for a period of 8 years from the date of closure of debt or from date of last update in a debt a/c. 


  • Any person not satisfied with the services offered by NeSL, can lodge his or her grievance in the web based grievance redressal mechanism enabled in the website. The same shall be resolved within 7 working days and communicated to the person via email.
  • In case the maker of the representation is not satisfied with the reply, he can escalate the matter to the grievance redressal committee of NeSL, which would be examined by the said committee, and resolution would be ensured in 10 working days.
  • Any Person Aggrieved By Functioning Of IU Can File A Complaint With IBBI.

Access to the Information Stored with the Information Utility

  • Parties  to the debt and the host bank;
  • The insolvency professional, to the extent provided in the code;
  •  The adjudicating authority  and the board;
  • Any person authorized to access the information under any other Law.

Critical Analysis Of The Apposite Provisions Of Insolvency And Bankruptcy [Information Utilities] Regulations, 2017 Read With Insolvency And Bankruptcy Board Of India(Information Utilities) (Amendment) Regulations, 2019


  • Public Company with a sole object to provide core services and other services under these regulations and has a minimum net worth of INR 50 crores is eligible to be registered as IU. Persons who shall be eligible to function in the capacity of IU shall be – the person itself, its promoters, directors, its KMP and persons holding 5 per cent directly or indirectly its paid up share capital or its total voting power. 


  • Having Integrity, reputation and character;
  • Absence of conviction by a Court for an offence or sentenced to imprisonment for a period less than 6 months;
  • Absence of restraint order issued by financial sector regulator or adjudicating authority;
  • Financial solvency.


  • Application for Registration – FORM A of the schedule and non-refundable application fee of INR 5 Lakhs;the same procedure for renewal shall be followed as aforesaid but the application for renewal shall be filed within 6 months before expiry of registration.


  • If Board may grant or renew certificate of registration in FORM – B within 60 days of receipt of application;If Board is of the opinion that registration shall not be granted; it shall inform the same within 45 days of receipt of application; The applicant shall rectify the errors or justify his statements mentioned in the application within 15 days of receipt of communication and Board may accept or reject the application within 30 days of receipt of explanation.


  • As per IU Amendment Regulation, 2019 – ‘Conditions for Registration’ shall include – ‘(e) pay an annual fee of fifty lakh rupees to the Board, within fifteen days from the date of commencement of the financial year. Provided that no annual fee shall be payable in a financial year in which an IU is granted registration or renewal as the case may be. Provided further that without prejudice to any other action, which the Board may take as it deems fit, any delay in payment of fee by an IU shall attract simple interest at the rate of twelve percent per annum until paid.
  • Illustration a) – Where an IU is registered on 1st December 2016, it shall pay a fee of fifty lakh rupees within 15 days of receipt of intimation of registration. No further payment is required to be made for the financial year 2016-17. The annual fee of fifty lakh rupees for the financial year 2017-18 becomes due on 1st April, 2017 and the same shall be paid on or before 15th April, 2017 and so on. b) Where the annual fee is paid on 20th April, 2017, interest at the rate of 12 percent per annum shall be paid for the delay of five days.’
  • Prior approval of Board: The regulation also states that in case of acquisition of shares or voting rights by a person together with paid up equity shares or voting rights if any held by such person entitles him to hold more than five percent directly or indirectly of the paid up equity share capital or total voting power; change in control; merger, amalgamation or restructuring; sale, disposal, or acquisition of whole or substantially the whole of its undertaking; voluntary liquidation; dissolution or any other similar action involving discontinuance of its business then prior approval of Board is required.
  • It shall intimate the Board if a person holding 5 percent paid up share capital or voting powers ceases to hold directly or indirectly and the same shall be informed to the Board within 15 days from the date of cessation.

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  • Regulation 8[1] states that no person shall at any time either directly/indirectly or together with persons acting in concert acquire or hold more than ten percent of paid up equity share capital or total voting power of IU.
  • However, a govt. Company, stock exchange, depository, bank, insurance co and public financial institution either by themselves or together in concert can acquire or hold up to 25 percent paid up equity share capital or total voting power.
  • Regulation 8[2] acts as an Exception to the aforesaid provision which states that: [“Notwithstanding anything to the contrary contained in sub-regulation (1) – (a)a person may directly or indirectly, either by itself or together with persons acting in concert, hold up to fifty-one percent of the paid up equity share capital or total voting power of an IU upto three years from the date of its registration; or(b) an Indian company, (i) which is listed on a recognized Stock Exchange in India, or (ii) where no individual, directly or indirectly, either by himself or together with persons acting in concert, holds more than ten percent of the paid-up equity share capital, may hold up to hundred percent of the paid-up equity share capital or total voting power of an information utility up to three years from the date of its registration. Provided that the information utility is registered before 30th September 2018.”] 
  • The provisions of this Regulation shall not apply to the holding of shares or voting power by the Central Government or a State Government.
  • As per Regulation 9–The Governing body shall consist of – 
  • Managing director;
  • Independent directors;Shareholder directors.
  • Provided that more than half of the directors shall be citizens of India and shall be residents in India. Meetings cannot be held without the presence of atleast 1 independent director. As per IU Amendment Regulations 2019, an individual may serve as an independent director for a maximum of two terms or three years each, or part thereof, or upto the age of[seventy-five years], whichever is earlier.
  • Moreover, a Compliance Officer shall be appointed as per Regulation 11who shall ensure compliance with provisions of the Code and shall report to the Board in case of noncompliance of any provision of the Code.
  • REGULATION 18–A person shall register itself with IU for submitting information or accessing information stored with any of the IU. IU shall verify the identity of the person and shall grant registration. The person shall be a unique identifier. Moreover, a person once registered with IU shall not register with any IU again. As per Regulation 19, different parties to same transaction may use different IU to submit or access information in respect of the same transaction.  
  • Illustration – A debt transaction has creditor ‘A’ and debtor ‘B’. A may submit information about debt to IU ‘X’ and B may submit information to IU ‘Y’.  – A user may access information stored with IU through any IU. 
  • As per REGULATION 20- IU shall accept information submitted by user in FORM C and shall assign a unique identifier to the information, including records of debt. 

‘Concept of Deemed Authentication’

  • As per the Amendment Regulation, the role of IU is strengthened by IBBI as it permits IU to access Corporate Debtor’s data through MCA21 database and CERSAI portal. Until recently, borrowers were overlooking IUs request to authenticate the information regarding ‘debts or defaults’. 
  • Consequently, the concept of ‘Deemed Authentication’ has been introduced by the amendment regulation which aids IU to undertake the process of authentication and verification of Information of default as soon as it is received.
  • The IU shall inform the debtor atleast 3 times for confirmation of information of default. A minimum gap of 3 days shall be allowed each time for the debtor to respond. The information of default or the reminder as the case may be shall be delivered to the debtor either by hand, post or electronic means at the postal or e-mail address either registered with IU by him, failing which, recorded with any statutory repository as approved by the Board, failing which, submitted in FORM C of the schedule.
  • If Debtor confirms information of default  – Colour of Status is Green; If Debtor disputes the information of default –Colour of Status is Red; If Debtor does not respond even after 3 reminders –Colour of Status is Yellow which leads to Deemed   Authentication. Therefore, if debtor ignores the messages even after 3 reminders, then IU has the right to rely on information available at MCA 21 portal or CERSAI and IU could mark it as deemed to be authenticated.

Evidentiary Value Of Information Utility – Is it a Conclusive Evidence?

    • In pursuance of Section 4 of Indian Evidence Act, 1872, ‘ When one fact is declared by this Act to be conclusive proof of another, the Court shall, on proof of the one fact, regard the other as proved, and shall not allow evidence to be given for the purpose of disproving it.’
  • However, information utility if admissible as Evidence cannot be conclusive in nature and can be rebutted.

Admissibility of IUs – Critical Analysis of Relevant Provisions of The Code Which Deals with IUs

  1. Pursuant to Section 7 of the Code, ‘AA’ may ascertain the existence of default from a record of an IU on an application filed by a Financial Creditor. AA’ is not under any obligation to admit the same as evidence. The information available with IUs may be rebutted by the other party;
  2. Pursuant to Section 9 of the Code, ‘AA’ may reject the application of an Operational Creditor if there is a record of dispute in the Information utility;
  3. Pursuant to Section 43(3) of the Code, if Corporate Debtor has transferred a property or an interest thereof for the benefit of creditor, surety, guarantor and the creditor, guarantor or surety has a beneficial position that would have been in the event of distribution of assets being made in accordance with Section 53, then such transfer shall not be a preferential transaction if such transfer was registered with an IU on or before thirty days after the Corporate Debtor receives possession of such property. However, as the records available with IUs is not conclusive and can be rebutted.
  4. Section 52 of the Code states that, in case of liquidation proceedings of the secured creditor, the liquidator shall verify such security interest and permit the secured creditor to realize such security interest, the existence of which may be proved either by the records available with IU or by any other means as specified by the Board.
  5. Section 57 of the Code, states that the application for fast track corporate insolvency resolution process may be filed by a creditor or corporate debtor as the case may be, along with – the proof of the existence of default as evidenced by records available with an information utility or such other means as may be specified by the Board.

Note – All the aforesaid provisions provide clarification and specifically states that the records available with IUs may or may not be admissible and hence Principle of Conclusivity does not apply to IUs.

Relevant Provisions of The Indian Evidence Act, 1872

  • In pursuance of Section 65 B of Indian Evidence Act, information contained in any electronic record shall be deemed to be a document and shall be admissible in the Court of Law.
  • Section 31 of the Indian Evidence Act, states that the admission of fact might not be a conclusive proof of fact but previous admission will act as an estoppel on such admission.
  • As per Section 115 of the Act,‘ When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representatives shall be allowed in any suit or proceeding between himself and such person or his representative to deny the truth of that thing.’

Landmark Judgment

  • As observed by Hon’ble Supreme Court in ‘Swiss Robbins Pvt. Ltd. &Anr. Vs.  Union of India & Others.’The evidence of default with IU is only a prima facie evidence of default, which is rebuttable by the Corporate Debtor.’The moment information of default is received such information has to be communicated to all parties and sureties to the debt. 

Significance of IUs

  • The Creditors or the Corporate Debtor has the right to procure information relating to ‘debt’ and ‘default’ from the IUs irrespective of whether creditor or debtor has initiated an Insolvency Resolution Process.
  • The concept of Deemed Authentication will be beneficial for all concerned stakeholders of the Company as borrowers will not be in a position to misuse any rights granted to them.
  • Data recorded with IU is made available to Adjudicating Authority [‘AA’] as and when required. It helps to make court process faster and smoother.

Concluding Remarks

  • As it is a digital database, there is a high possibility of data piracy. Necessary steps should be taken to avoid data piracy as it can adversely affect the stakeholders of the Company;
  • For ensuring that the relevant information is not corrupted, it is essential that the storage system available with IU should be of standard quality;
  • As thousands of records are submitted with IUs, it may happen that a small fraction of records are statistically incorrect.  
  • Pursuant to Section 215 of the Code, it is mandatory for Financial Creditors to submit financial information to IUs. However, the same is not mandatory for Operational Creditors;
  • As per the Report of Bankruptcy Law Reforms Committeethe ultimate objective is for India to have an efficient bankruptcy and insolvency framework. This involves navigating the legislative track and going from the draft Law to a Parliamentary Legislation. This involves many other elements of building state capacity. Establishing a sound insolvency framework for India should be seen as a project which encompasses five things – a. The Legislative track; b. Establishing the Regulator; c. Initiating the industry of Information Utilities and phasing in comprehensive adoption of these utilities; d. Initiating the Insolvency Profession, and e. Establishing world-class adjudication infrastructure.’



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