2020 (10) TMI 684 - Tri - Insolvency and Bankruptcy

Reimbursement of CIRP cost - HELD THAT - It is found that ARCIL was part of the CoC. When CoC was constituted by the RP, the ARCIL was included in the CoC on his consent and always remained present in the meeting of the CoC - On further perusal of the records, it is observed that, CoC which consists of Kotak Resources and the ARCIL, ARCIL too ratified the CIRP cost of ₹ 12,12,831.00 in its meeting held on 07.08.2018. Accordingly, ARCIL cannot retract from their consent which is/was admission on their part. The said fact is reflected from resolution dated 07.08.2018 at page No. 94 of the petition, wherein, CoC resolved that the expense pertaining to resolution costs amounting in aggregate to ₹ 12,12,831.00 be and hereby ratified and approved . This Adjudicating Authority is of the considered view that CoC consisting of both the Kotak Resources and ARCIL are responsible for the reimbursement of the CIRP cost to the RP in the equal proportion - this Bench hereby, orders both the members of the CoC to reimburse the CIRP cost of ₹ 12,12,831.00 in equal proportion to the RP within 15 days from the receipt of this order. Application disposed off.

Summary

Issues:
1. Reimbursement of Corporate Insolvency Resolution Process (CIRP) Cost under section 60 of the Insolvency and Bankruptcy Code, 2016.
2. Responsibility for bearing CIRP costs between Corporate Debtor, Committee of Creditors (CoC), and Financial Creditor.

Analysis:
1. The judgment revolves around an Instant Application (IA) filed by the Resolution Professional (RP) of a company under the Insolvency and Bankruptcy Code seeking directions for reimbursement of CIRP costs amounting to ?12,12,831.00 incurred during the CIRP proceedings approved by the CoC in a meeting held on 7th August, 2018.

2. The facts of the case reveal that the Financial Creditor initiated the CIRP against the Corporate Debtor, leading to the appointment of an Interim Resolution Professional (IRP) and subsequently, the RP by the CoC. However, an appeal was filed against the order initiating CIRP, resulting in a judgment by the NCLAT releasing the Corporate Debtor from the legal restrictions and allowing it to function independently.

3. The RP, recommended by the Financial Creditor and approved by the CoC, diligently managed the affairs of the Corporate Debtor to preserve its value and ensure continuity as a going concern.

4. The CoC member, ARCIL, contested the liability of bearing CIRP costs, claiming the initiation of CIRP was illegal and the costs should be solely borne by the Financial Creditor. However, it was noted that ARCIL was part of the CoC and had consented to ratifying the CIRP costs in a meeting held on 7th August, 2018, thus acknowledging responsibility.

5. The Adjudicating Authority concluded that both members of the CoC, including Kotak Resources and ARCIL, are equally responsible for reimbursing the CIRP costs to the RP. The judgment directed both members to reimburse the costs in equal proportion within 15 days from the receipt of the order, thereby disposing of the IA.

This detailed analysis of the judgment highlights the key issues of reimbursement of CIRP costs and the allocation of responsibility among the involved parties, providing a comprehensive understanding of the legal proceedings and decision-making process.