2022 (2) TMI 800 - AT - Insolvency and Bankruptcy

Jurisdiction - power of IBBI to decide the question of payment of fees of the Appellant - HELD THAT - There is no quarrel to the preposition that it is the Adjudicating Authority which has power to take a final decision with regard to payment of fee to which IRP or RP may be entitled - In this context, judgment of the Hon ble Supreme Court is referred in ALOK KAUSHIK VERSUS BHUVANESHWARI RAMANATHAN AND ORS. 2021 (3) TMI 1242 - SUPREME COURT . It is thus settled law that the Adjudicating Authority is clothed with jurisdiction to take a final decision regarding entitlement of IRP or RP claiming his fee because i.e. part of the CIRP costs. The general power of framing regulations to carry out the provisions of this Code encompasses in itself the power to regulation regarding Insolvency Professionals. The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 has already been framed where as per Regulation 7(2)(h), the Insolvency Resolution Professional has to be abide by the Code of Conduct specified in the First Schedule to these Regulations - IBBI is fully clothed with jurisdiction to regulate payment of remuneration of RP and IRP both by framing regulation or by issuing executive instructions till regulation are not framed can regulate the subject. IBBI till necessary regulations are not framed regulating fee is empowered to issue executive instructions in this regard. The issue of payment of fee to the IRP/RP occur very frequently which needs to be regulated by Regulating Authority who is clothed with the power. The mere fact that IBBI has been asked to submit its recommendations by the Adjudicating Authority, in the present case, there are no reason to question the jurisdiction of IBBI to submit a recommendation. The recommendations may be helpful to determine the issue in accordance with guidelines and circulars issued by the IBBI in this respect, if any - the Appeal is disposed of.

Summary

Issues:
1. Jurisdiction of IBBI to regulate payment of remuneration to IRP/RP.
2. Authority of Adjudicating Authority to refer the matter to IBBI for recommendations on fee payment.
3. Power of Adjudicating Authority to make final decisions on fee entitlement of IRP/RP.

Analysis:
1. The appeal was filed against an order passed by the Adjudicating Authority related to the payment of fees to an Interim Resolution Professional (IRP). The Appellant claimed a higher fee than what was approved by the Committee of Creditors (CoC). The Adjudicating Authority referred the matter to the Insolvency and Bankruptcy Board of India (IBBI) for recommendations on the fee payment issue.

2. The Appellant challenged the jurisdiction of IBBI to decide on the payment of fees to the IRP. The Counsel for the Appellant argued that the Adjudicating Authority should have decided the matter regarding the fee entitlement instead of seeking recommendations from IBBI. However, the Counsel for Respondent No.2 and CoC contended that the CoC has the jurisdiction to decide on the sufficiency of the fee, and the Appellant should not have approached the Adjudicating Authority regarding the fee issue.

3. The National Company Law Appellate Tribunal (NCLAT) considered the submissions and examined the relevant legal provisions. It was established that the Adjudicating Authority has the power to make final decisions on the entitlement of fees to the IRP or Resolution Professional (RP) as part of the Corporate Insolvency Resolution Process (CIRP) costs. The Tribunal referred to a Supreme Court judgment to support this position.

4. The NCLAT clarified that while the Adjudicating Authority has the ultimate decision-making authority on fee entitlement, seeking recommendations from IBBI does not undermine its jurisdiction. IBBI is empowered to regulate the payment of remuneration to RP and IRP through regulations or executive instructions until specific regulations are framed. The Tribunal emphasized that IBBI's recommendations could assist in resolving the fee payment issue in line with the Code of Conduct specified for Insolvency Professionals.

5. In conclusion, the NCLAT upheld IBBI's jurisdiction to regulate fee payments to IRP/RP and affirmed the Adjudicating Authority's decision to seek recommendations from IBBI in the present case. The Tribunal advised the Adjudicating Authority to promptly dispose of the matter after receiving IBBI's recommendations to bring the ongoing issues to a resolution. The appeal was disposed of based on these observations.