2020 (7) TMI 758 - AT - Insolvency and Bankruptcy

Seeking direction to Adjudicating Authority (National Company Law Tribunal) Mumbai Bench to decide the fee of Resolution Professional and cost of the Corporate Insolvency Resolution Process as incurred by the Resolution Professional and to be borne and paid by the Bank of India Ltd. (Financial Creditor) - HELD THAT - On a query, learned counsel for the Appellant replied that the Resolution Professional has worked for about three months. Since the expenses have been allowed in full and the consolidated amount of ₹ 5 Lakh GST has been allowed as fee of the Resolution Professional for entire period, we find the same is not unreasonable. Fixation of fee is not a business decision depending upon the commercial wisdom of the Committee of Creditors. Appeal dismissed.

Summary

Issues:
1. Determination of fee for Resolution Professional and cost of Corporate Insolvency Resolution Process.
2. Adequacy of fee determined by the Adjudicating Authority.
3. Comparison with previous judgments regarding fee determination.
4. Role of Committee of Creditors in fee fixation.

Analysis:
1. The Appellate Tribunal directed the Adjudicating Authority to decide the fee of the Resolution Professional and the cost of the Corporate Insolvency Resolution Process to be borne by the Financial Creditor, Bank of India Ltd. The Adjudicating Authority allowed all expenses incurred by the Resolution Professional and directed the payment of a consolidated amount of ?5 Lakhs + GST towards the fee of the Resolution Professional.

2. The Appellant's counsel argued that the fee determined was inadequate, citing previous judgments where the fee was left to the commercial wisdom of the Committee of Creditors. However, the Resolution Professional had worked for three months, all expenses were allowed, and a consolidated fee of ?5 Lakhs + GST was approved for the entire period. The Tribunal found this fee reasonable and not subject to the commercial wisdom of the Committee of Creditors.

3. The Tribunal emphasized that the fixation of the fee is not a business decision dependent on the commercial wisdom of the Committee of Creditors. In this case, the fee determination was considered appropriate based on the Resolution Professional's work duration and the expenses incurred. The appeal was dismissed as lacking merit, with no additional costs imposed.

4. The judgment highlights the distinction between fee determination for Resolution Professionals and the role of the Committee of Creditors in such decisions. While previous judgments may have left the fee to the Committee's discretion, in this instance, the Tribunal found the determined fee to be reasonable and not requiring further intervention. This decision underscores the importance of evaluating each case's specific circumstances when determining the Resolution Professional's fee in insolvency proceedings.