Person filing CIRP application is liable to bear expense/ fees of Interim Resolution Professional

Guru Containers Vs Jitendra Palande (NCLAT Delhi)

NCLAT Delhi held that regulation 33 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the operational credit (i.e. the person filing CIRP application) is liable to bear the expense/ fees of Interim Resolution Professional.

Facts- The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 (IBC) by the Appellant arises out of the Order dated 07.12.2022 (Impugned Order) passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench). By the Impugned Order, the Adjudicating Authority directed Shri Guru Containers, the present Appellant to reimburse the Interim Resolution Professional (IRP) the total costs of Rs.5,62,000/- which was incurred by the IRP in the discharge of his duties. Aggrieved by this impugned order, the present appeal has been preferred.

Conclusion- CIRP Regulation 33 clearly provides that the applicant shall bear the expenses to be incurred by or on the IRP. In the present case, when the Operational Creditor had initiated the CIRP proceedings which had led to the appointment of the IRP, it is incumbent upon the Operational Creditor to pay for the CIRP expenses. For the Operational Creditor to claim that it is not obligatory to reimburse the fees/expenses of IRP squarely contravenes the Regulations and therefore cannot be countenanced. The CIRP Regulation 33 of course also provides that the reimbursement would be to the extent it is ratified by the CoC. Ratification of fees by CoC does not arise in the present case because no CoC could be formed for reasons already noted earlier. Given these peculiar circumstances, we are of the considered view that in terms of the statutory construct of IBC, it is the Operational Creditor who is liable to bear the expense/fees of IRP in the present case.

FULL TEXT OF THE NCLAT JUDGMENT/ORDER

Please become a Premium member. If you are already a Premium member, login here to access the full content.