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2022 (1) TMI 266 - SC - Insolvency and BankruptcyDetermination of insolvency resolution costs - payments of costs and expenses incurred by the Resolution Professional (RP) - HELD THAT - In the present case, after the NCLAT set aside the order of the NCLT initiating the CIRP, the proceedings were remitted back for determining the insolvency resolution costs. It is material to note that the appellant had addressed a letter to the respondent on 13 December 2019 prior to the filing of the application to which the respondent responded on 24 January 2020 stating that, upon verification, the costs and fees were found in conformity with both the technical and financial bid, based on which the assignment was awarded - The adjudicating authority merely directed the respondent to pay the expenses incurred and an amount of ₹ 5,00,000 plus GST towards the fee of the RP. Neither the basis of the claim nor its reasonableness has been considered by the adjudicating authority. The appellate authority has merely proceeded in an ad hoc manner on the ground that the amount of ₹ 5,00,000 as fee, in addition to the expenses, appears to be reasonable. Both the orders suffer from an abdication in the exercise of jurisdiction. In the absence of any reasons either in the order of the NCLT or the appellate authority, it is impossible for the Court to deduce the basis on which the payment of an amount of ₹ 5,00,000 together with expenses has been found to be reasonable. Consequently, an order of remand becomes necessary. The impugned judgment and order of the NCLAT dated 30 July 2020 is set aside - the NCLT, upon remand, is requested to expedite the disposal of the MA and to complete the process within a period of one month from the date of receipt of a certified copy of this order on its record - appeal disposed off.
Issues:
- Dispute over payment of costs and expenses incurred by the Resolution Professional (RP). Analysis: 1. The appeal stemmed from a dispute regarding the costs and expenses incurred by the Resolution Professional (RP) in an insolvency resolution process. The RP had submitted a bid for appointment as an Interim Resolution Professional, which was accepted by the National Company Law Tribunal (NCLT) in September 2019. 2. Subsequently, the NCLAT set aside the NCLT's order, remitting the proceedings back to the NCLT to determine the fee and costs of the Corporate Insolvency Resolution Process (CIRP) to be borne by the respondent, a financial creditor. 3. The RP quantified the amount payable as fee and costs, with a balance remaining after partial reimbursement by the respondent. The RP then moved the NCLT for the release of the remaining fee and costs, which was granted by the NCLT in part. 4. However, the RP appealed to the NCLAT, challenging the reduction in the fee awarded by the NCLT. The NCLAT upheld the NCLT's decision, emphasizing that the fee awarded was not unreasonable and that it was not a business decision dependent on the Committee of Creditors' commercial wisdom. 5. The RP further challenged the NCLAT's decision in the Supreme Court, arguing that the fee and expenses submitted were in line with the bid and approved by the respondent. The RP contended that the NCLT and NCLAT failed to properly assess the claim and arbitrarily fixed the fee. 6. In its judgment, the Supreme Court referred to the case law establishing the adjudicating authority's jurisdiction to determine fees payable to professionals involved in the insolvency resolution process. The Court noted the lack of scrutiny by the NCLT and NCLAT in assessing the RP's claim and directed a fresh decision by the NCLT. 7. The Supreme Court set aside the NCLAT's decision, as well as the NCLT's order, and remanded the matter back to the NCLT for a reevaluation of the RP's fee and costs. The Court instructed the NCLT to expedite the process and complete the assessment within one month from the date of the Supreme Court's order. 8. Ultimately, the appeal was allowed, and the impugned judgments were overturned, emphasizing the need for a proper assessment of the RP's claim and a reasoned determination of the fee and costs incurred during the insolvency resolution process.
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