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2022 (10) TMI 64 - AT - Insolvency and BankruptcyDirection to present Appellant to take part in the Corporate Insolvency Resolution Process (CIRP) and pay CIRP costs as per voting share - Applicability of CBIC Master Circular No. 1081/02/2022-CX dated 19.01.2022 on Recovery and Write-off of Arrears of Revenue in IBC matters - Section 60(5) read with Section 19 of the Insolvency and Bankruptcy Code - HELD THAT - The definitions clause of NCLT Rules, 2016 at Rule 2 (12), states that unless the context otherwise requires, fee is the amount payable in pursuance of the provisions of the Act and these rules for any petition or application or interlocutory application or a document or for certified copy of document or order of the Tribunal or such other paper as may be specified in Schedule of Fees to these rules and includes any modifications as may be made thereto or any fee as prescribed for filing of documents to the Tribunal by these rules. From a bare reading of the above NCLT Rules, it is quite clear that fees mentioned in Rule 112 read with the definition clause 2(12) does not mention either CIRP costs or the fees to be paid to the IRP or RP. The aforesaid NCLT Rules are confined to fees payable on account of petition or appeal or application filed or references made for documents/orders before the NCLT. This is clearly distinguishable from the expenses which constitute insolvency resolution process costs; costs of the IRP or the Resolution Professional cost which are defined in Section 5(13) read with CIRP Regulation 31, 33 and 34 respectively. Applicability of CBIC Master Circular No. 1081/02/2022-CX dated 19.01.2022 on Recovery and Write-off of Arrears of Revenue in IBC matters - HELD THAT - It is beyond any pale of doubt that IBC is a complete code in itself and that being the case, in the present matter, in respect of payment of fees of Resolution Professional and CIRP cost, the norms as laid down in the IBC and relevant CIRP Regulations will prevail over the Master Circular and will be squarely applicable on the Appellant - the Appellants cannot find any succour in the Master Circular issued by CBIC in support of their contention. Whether the Adjudicating Authority had erred in directing the Resolution Professional to proceed with the CIRP and further directing the Appellant having 88% voting share to take active part in CIRP? - HELD THAT - From the material on record, it is borne out that the Adjudicating Authority having admitted the CIRP proceedings on 23.11.2021 and appointed the IRP, the latter had started discharging his duties and responsibilities diligently in terms of IBC Code and Rules/ Regulations framed thereunder. There are no convincing reasons to interfere with the Impugned Order - Appeal dismissed.
Issues:
1. Whether the Appellant is exempt from paying IRP fees and CIRP costs. 2. Whether the Adjudicating Authority erred in directing the Resolution Professional to proceed with CIRP and recover CIRP costs. Analysis: Issue 1: Appellant's Exemption from IRP Fees and CIRP Costs The Appellant argued that Rule 112 of NCLT Rules, 2016 exempts government departments from paying fees, thus contending that CIRP costs cannot be collected from them. However, the Tribunal clarified that Rule 112 pertains to fees for petitions, appeals, and applications before NCLT, not CIRP costs or IRP fees. The Tribunal highlighted that the IBC and NCLT Rules do not expressly exempt government departments from paying CIRP costs or IRP fees. The Tribunal also emphasized that the IBC is a comprehensive code, prevailing over other laws, as established by legal precedents. Therefore, the Appellant's argument based on the CBIC Master Circular was deemed untenable, and the Tribunal held that the Appellant must pay the IRP fees and CIRP costs. Issue 2: Adjudicating Authority's Directive on CIRP Proceeding and Costs The Adjudicating Authority had directed the Resolution Professional to proceed with CIRP and recover CIRP costs, which the Appellant contested. The Tribunal noted that the Resolution Professional had diligently performed duties under the IBC since the initiation of CIRP. The CoC was formed with operational creditors due to the absence of financial creditors, following the IBC procedures. The Appellant had expressed reluctance to participate in the CIRP process and even sought withdrawal, which was put to vote but did not meet the required threshold. The Resolution Professional sought directions twice from the Adjudicating Authority for a smooth CIRP process. The Tribunal concluded that the Adjudicating Authority's decision to proceed with CIRP and direct CoC to pay CIRP costs was justified and did not contain any flaws. Therefore, the Tribunal dismissed the appeal, finding no merit in the Appellant's arguments. In conclusion, the Tribunal upheld the Adjudicating Authority's decision, emphasizing the applicability of IBC provisions over other laws and rejecting the Appellant's claims for exemption from IRP fees and CIRP costs. The Tribunal found no grounds to interfere with the Impugned Order, resulting in the dismissal of the appeal without costs.
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