2021 (8) TMI 1346 - Tri - Insolvency and Bankruptcy

Non-payment of fees of the RP - It is submitted that the CoC had approved the fees of the Interim Resolution Professional at Rs.2,50,000/-per month and the Resolution Professional had also proposed his fees at Rs.2,50,000/- per month - HELD THAT - On perusal of the minutes of the 3rd CoC meeting held on 10.07.2020, it is seen that the CoC had raised concern that the fee proposed by the Resolution Professional and stated that it was on a higher side - The Resolution Professional has discharged his duties according to section 27 of the Code from 31.12.2019 till the date the Corporate Debtor was ordered to be liquidated i.e., 18.03.2021. The Resolution Professional has performed his functions as prescribed and has invited prospective Resolution Applicants and had submitted the Resolution Plan submitted by the promoters for consideration before the CoC. The Resolution Professional has more responsibilities and duties than the Interim Resolution Professional. We are of the view that it is irrational on the part of the CoC to approve the fee of the Interim Resolution Professional at Rs.2,50,000/- per month but refuse payment to the Resolution Professional at par with the Interim Resolution Professional - The CoC has failed to provide any alternative fee structure also. It is not expected that the Resolution Professional shall have to forgo his fee solely on the account of the fact that the CoC has not approved the fee. The CoC has also not cared to enter appearance in the matter before this Adjudicating Authority in spite of notice. A payment of Rs. 15,00,000/- directed as a consolidated fee to the Resolution Professional for the entire CIRP period. This shall be paid within a period of two weeks from today. Application disposed off.

Summary

Issues involved: Non-payment of fees to Resolution Professional by Committee of Creditors (CoC) during the Corporate Insolvency Resolution Process (CIRP).

Analysis:
1. Admission of Corporate Debtor: The Adjudicating Authority admitted the Corporate Debtor in CIRP and appointed the Applicant as the Interim Resolution Professional (IRP), followed by the appointment as Resolution Professional. The Resolution Professional discharged duties as per the Insolvency and Bankruptcy Code (Code) until the Corporate Debtor's liquidation order.

2. Approval of Fees: The CoC deferred approving the Resolution Professional's fees, despite approving the Interim Resolution Professional's fees at the same rate. The Resolution Professional proposed a consolidated fee, which was rejected by the CoC in an e-voting where 97.42% voted against approval.

3. Allegations of Mala Fide Action: The Applicant alleged mala fide action by the CoC for rejecting the fee approval without providing reasons. The minutes of a previous CoC meeting indicated concerns about the proposed fee being on the higher side.

4. Resolution Professional's Responsibilities: The Resolution Professional fulfilled obligations under section 27 of the Code, inviting Resolution Applicants and presenting Resolution Plans to the CoC. An alternate offer of a consolidated fee was proposed twice during CoC meetings.

5. Judicial Intervention: The Tribunal found the CoC's actions irrational, noting that the Resolution Professional's responsibilities exceeded those of the Interim Resolution Professional. The CoC's failure to provide reasons for rejection or propose an alternative fee structure was deemed unjustifiable.

6. Decision and Directions: In light of the circumstances, the Tribunal directed the CoC to pay a consolidated fee of Rs. 15,00,000 to the Resolution Professional for the entire CIRP period within two weeks. The Tribunal disposed of the application and instructed the Registry to circulate the order to all relevant parties and authorities for compliance.

This detailed analysis outlines the key aspects of the judgment concerning the non-payment of fees to the Resolution Professional by the Committee of Creditors during the Corporate Insolvency Resolution Process.