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2021 (12) TMI 1275 - Tri - Insolvency and BankruptcyPayment of Transaction Audit Fees - Section 60(5) of IBC read with Rule 11 of NCLT Rules - HELD THAT - It is clear that the Suspended Management /Directors have neither cooperated fully nor they have provided the complete book of accounts, despite sufficient opportunities given, as required under Sec 19 of IBC for completion of the CIRP. The Transaction Auditor, the Applicant here has not submitted Complete Transaction Audit Report for want of cooperation from the Directors and availability books of accounts of the CD. The Transaction Audit Report submitted by the Applicant is not complete. Hence the Suspended Management is hereby directed to file reply affidavit to the reported irregularities undertaken by the CD as mentioned in the Report and the reasons for their non - cooperation/non supply of all books of accounts, within 10 days from today - Transaction Audit Report is not complete. Considering the work done by the Applicant and the Unit being a Coaching Institute, it is reasonable for the CoC to pay ₹ 3,00,000.00 plus applicable GST i.e. ₹ 60000.00 per year - application disposed off.
Issues Involved:
1. Submission of Transaction Audit Report. 2. Payment of Transaction Audit Fees. 3. Cooperation from Suspended Management. 4. Completeness of Transaction Audit Report. Issue-wise Detailed Analysis: 1. Submission of Transaction Audit Report: The Applicant, appointed as the Transaction Auditor, submitted the Transaction Audit Report to the Respondent No.1, the current Resolution Professional (RP). The RP requested changes to the report and bargained the fees, which the Applicant refused. The Applicant's report indicated fraudulent business practices under Section 66 of IBC and preferential transactions under Section 43 of IBC, with significant financial implications. Despite several requests, the Respondent No.1 did not submit the report to the Hon’ble Bench, citing pending fee finalization. 2. Payment of Transaction Audit Fees: The Applicant's fees were discussed in the 2nd COC meeting and set at ?80,000 per year for the period from 01.04.2015 to 26.02.2020, totaling ?4,00,000 plus applicable GST. However, the RP and Respondent No.2 did not ratify this fee, offering only ?1,00,000, which the Applicant rejected. The Tribunal directed the CoC to pay ?3,00,000 plus applicable GST, considering the work done and the nature of the business. 3. Cooperation from Suspended Management: The Suspended Management did not fully cooperate, failing to provide necessary documents and information despite several requests and opportunities. The RP confirmed this lack of cooperation in his status report. The Tribunal directed the Suspended Management to file a reply affidavit explaining the irregularities and their non-cooperation within 10 days. 4. Completeness of Transaction Audit Report: Due to incomplete information and lack of cooperation from the Suspended Management, the Transaction Audit Report submitted by the Applicant was not complete. The Tribunal acknowledged this and directed the RP to file submissions on the points mentioned in the report within 10 days. The Tribunal also allowed the RP to utilize the Applicant's services for completing the report in the future, with separate fees negotiable at that time. Order: The Tribunal disposed of the IA with the above observations and directions, emphasizing the need for cooperation from the Suspended Management and reasonable payment for the Transaction Auditor's services.
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