2020 (1) TMI 1230 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Whether is there any agreement/documentary evidence to prove the fees structure is agreed between Operational Creditor and Corporate Debtor? - HELD THAT - There is no agreement between the parties on payment of fee as claimed now. Further, the fee and expenses claimed by the applicant during his tenure as Standing Counsel also do not substantiate his present claim. There were no documents submitted by the applicant to prove that the One Time Settlement was made by his efforts and he is eligible for what he is claiming now - In the absence of any such agreement between the parties, it cannot be concluded that the applicant is eligible for percentage fee structure as claimed now in this application - answered in negative. Whether is there any pre-existing dispute between Operational Creditor and Corporate Debtor in regard to the present claim? - HELD THAT - The Corporate Debtor contested that even though they have not replied to the Demand Notice within the specific period, it will not take away their right to take plea of 'existence of dispute' before the Adjudicating Authority - We agree with the stand taken by the Corporate Debtor that mere not giving a reply cannot take away their right to take a plea of 'existence of dispute'. Therefore, there is a clear existence of prior dispute regarding fee claimed by the applicant - answered in negative. Whether fee structure under Rule 6 of Rules Regarding Fee Payable to Advocates, framed by the High Court applicable to Original Application filed before a Tribunal? - HELD THAT - The fee structure mentioned in Rule 6 (2) of the Rules Regarding Fee Payable to Advocates framed by High Court of Kerala for conducting money claims are applicable only to High Courts and Subordinate Courts and not to the Tribunals - answered in negative. The application filed by the Operational Creditor/applicant has fallen flat and cannot be proceeded further in this matter - Application rejected.

Issues Involved:
1. Agreement/documentary evidence to prove the fee structure between Operational Creditor and Corporate Debtor.
2. Pre-existing dispute between Operational Creditor and Corporate Debtor regarding the present claim.
3. Applicability of Rule 6 of the Rules Regarding Fee Payable to Advocates, framed by the High Court, to Original Applications filed before a Tribunal.

Detailed Analysis:

Issue 1: Agreement/Documentary Evidence to Prove Fee Structure
The Tribunal examined whether there was any agreement or documentary evidence to substantiate the fee structure claimed by the Operational Creditor. The Operational Creditor was appointed as Standing Counsel for the Corporate Debtor from 2002 to 2017 but no written agreement regarding the fee structure was presented. The Operational Creditor's claim was based on Rule 6 (2) (d) of the Rules Regarding Fee Payable to Advocates, which was communicated to the Corporate Debtor multiple times. However, there was no documented agreement or acknowledgment from the Corporate Debtor agreeing to this fee structure. The Tribunal also referred to the fee norms set by the Indian Bank Association for similar cases, which were significantly lower than the claimed amount. Consequently, the Tribunal concluded that there was no agreement or documentary evidence to support the claimed fee structure.

Issue 2: Pre-existing Dispute
The Tribunal assessed whether there was a pre-existing dispute between the parties regarding the fee claim. The Corporate Debtor argued that they had already paid ?3,60,000 towards the advocate fees and pointed out financial constraints. The Tribunal noted that the Corporate Debtor had communicated their disagreement with the fee structure multiple times, indicating a clear dispute. The Tribunal also referenced the NCLAT ruling in Drulum India Pvt. Ltd. v. Sharma Kalypso Pvt. Ltd., which stated that the absence of a reply to a demand notice does not preclude the Corporate Debtor from raising a dispute later. Therefore, the Tribunal concluded that a pre-existing dispute existed regarding the fee claim.

Issue 3: Applicability of Rule 6 of the Rules Regarding Fee Payable to Advocates
The Tribunal examined whether Rule 6 of the Rules Regarding Fee Payable to Advocates, framed by the High Court, was applicable to the Original Applications filed before a Tribunal. The Corporate Debtor argued that these rules apply only to High Courts and Subordinate Courts and not to Tribunals. The Tribunal referred to several judgments, including United India Insurance Co. Ltd. v. Padmini Amma and Union of India v. R. Gandhi and Ors., which distinguished between courts and tribunals. The Tribunal concluded that the fee structure mentioned in Rule 6 (2) of the Rules Regarding Fee Payable to Advocates is not applicable to Tribunals.

Conclusion:
The Tribunal found that:
1. There was no agreement or documentary evidence to support the claimed fee structure.
2. A pre-existing dispute existed regarding the fee claim.
3. The Rules Regarding Fee Payable to Advocates framed by the High Court are not applicable to Tribunals.

Based on these findings, the Tribunal rejected the application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, as it did not meet the necessary parameters established by the Supreme Court in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Private Limited. The application was dismissed with no order as to costs.

← Previous Next →