2021 (1) TMI 1177 - Tri - Insolvency and Bankruptcy

Fixation/ratification of the fees of IRP/RP - Commercial wisdom of COC - HELD THAT - Fixation of fee is not a business decision depending upon the commercial wisdom of the Committee of Creditors - going by the aforesaid rationale it is amply clear that fixation of the fees of IRP/RP does not come within the domain of the Commercial wisdom of COC and, hence is justiciable. The aspect of ascertaining fees of IRP/RP is strictly guided by the mandate and parameters provided by the IBBI vide its circular dated 12.06.2018 bearing number IBBI/IP/013/2018. The fixation of fee is not a commercial wisdom of the CoC. Hence, respondent no. 2 is directed to ratify the IRP fee claimed by the applicant/IRP to the tune of ₹ 2,10,000/- and reimburse the same - Application allowed.

Summary

Issues:
- Dispute over Insolvency Resolution Professional (IRP) fee
- CoC's role in determining the remuneration of IRP/RP
- Compliance with IBBI guidelines on fee fixation

Issue 1: Dispute over Insolvency Resolution Professional (IRP) fee
The applicant, an IRP, sought relief for the approval and reimbursement of the IRP fee amounting to ?2,10,000. The CoC had appointed a new RP, leading to a disagreement over the fee charged by the IRP. Despite repeated requests, the CoC failed to ratify the fees for the CIRP proceedings, resulting in outstanding dues. The respondent contended that the CoC had fixed the IRP fee at ?60,000, which the applicant disagreed with, proposing a higher fee. The respondent argued that the CoC had the discretion to decide the remuneration for the IRP or RP.

Issue 2: CoC's role in determining the remuneration of IRP/RP
The CoC meetings held on different dates reflected the disagreement between the applicant and the CoC members regarding the IRP fee. The applicant insisted on a higher fee, while the CoC members considered the proposed fee exorbitant. The respondent highlighted that the CoC had unanimously resolved to pay the IRP a lower fee of ?72,000 for a specific period, which the applicant found unjustified due to being absent during the resolution.

Issue 3: Compliance with IBBI guidelines on fee fixation
The applicant referred to IBBI guidelines, emphasizing that the fixation of IRP/RP fees should not be solely based on the commercial wisdom of the CoC. Citing a judgment by the Hon'ble NCLAT, the applicant argued that fee fixation is justiciable and should adhere to the parameters set by the IBBI circular. The Tribunal concurred with this stance, directing the respondent to ratify and reimburse the claimed IRP fee of ?2,10,000.

In conclusion, the Tribunal allowed the application, emphasizing that the fixation of IRP fees is not solely a business decision of the CoC but should align with the guidelines provided by the IBBI. The judgment highlighted the importance of adhering to regulatory parameters in determining the remuneration of IRP/RP and resolved the dispute over the IRP fee in favor of the applicant.