India Resurgence ARC Pvt. Ltd. Vs Rohit J. Vora (NCLAT Delhi)
NCLAT Delhi held that adjudicating authority rightly reduced fees payable to Resolution Professional on failure in complying with his responsibilities of completing CIRP in a time bound manner.
Facts- The present appeal is filed u/s 61 of Insolvency and Bankruptcy Code, 2016 (IBC) arises out of the order passed by the Adjudicating Authority (National Company Law Tribunal) wherein the Adjudicating Authority has directed the Committee of Creditors (CoC) for payment of fees to the Resolution Professional (RP) of Rs.1 lakh per month + GST from 01.09.2019 to 24.04.2022 along with other actual expenses incurred by him on production of bills.
Notably, Section 7 application had been admitted against the Corporate Debtor on 25.04.2019 for initiation of CIRP. After collating claims of the creditors, the CoC was constituted on which Religare Finvest became a member. The Religare Finvest had 69.02% of the voting share and was the majority Financial Creditor. In terms of voting share, the next largest Financial Creditor was Dena Bank with a 29.34% vote share as recorded in the minutes of the first CoC meeting. Later, India Resurgence Arc Pvt Ltd became a member on 24.12.2021 after replacing Religare Finvest as the predecessor in interest following a deed of assignment in their favour. For convenience, this party will be referred to as Religare Finvest in this matter.
The Interim Resolution Professional appointed to conduct the CIRP was later appointed as the RP with a monthly remuneration of Rs.3.75 lakhs plus GST as approved in the 1st CoC meeting.
The 3rd CoC meeting decided to remove the RP subject to his continuance until replacement by a new person. However, the RP continued to function since no application was filed for a change of RP.
Conclusion- Held that some of the actions of the RP were not in sync with the decisions of the CoC. Hence the RP had failed to assist in the CIRP process in a fair and objective manner in the best interest of all stakeholders. The RP was also unable to elicit any successful resolution plan for the Corporate Debtor within 180 days from the initiation of CIRP.
Held that the active CIRP period having expired with no substantial work to be taken up further and the Covid pandemic also having generally disrupted work, the scaling down of the fees to Rs 1 lakh was not discriminatory or unfair. The Adjudicating Authority was therefore well within its rights in exercising its wisdom in adjudicating on the reasonability quotient of fees payable to the RP.
We find that RP was more focused on claiming his fees/remuneration and other expenses than discharging his responsibilities of completing CIRP in a time-bound manner. Hence, we are of the considered view that on the whole the Adjudicating Authority has been justified in taking a serious note of the conduct of the Resolution Professional.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
1. These two appeals filed under Section 61 of Insolvency and Bankruptcy Code, 2016 (“IBC” in short) arises out of the common order dated 06.12.2022 (hereinafter referred to as “Impugned Order”) passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench Court-III) in IA No.1312/2022 of CP(IB) No. 4065/MB/2018 wherein the Adjudicating Authority has directed the Committee of Creditors (“CoC” in short) for payment of fees to the Resolution Professional (“RP” in short) of Rs. 1 lakh per month + GST from 01.09.2019 to 24.04.2022 along with other actual expenses incurred by him on production of bills.
2. The relevant facts which are necessary for deciding the two appeals are as follows:
