2022 (5) TMI 315 - AT - Insolvency and Bankruptcy

Replacement of Resolution Professional (RP) - appointment of Mr. Vijay Kumar Gupta as Resolution Professional by replacing Mr. Khushvinder Singhal, Resolution Professional - Committee of Creditors vide its meeting approved the replacement of the Appellant with Mr. Vijay Kumar Gupta - HELD THAT - A perusal of the Order especially paragraph 8 of the Order indicates that in different item the Professional Fee and CIRP cost from 31st March, 2021 to 31st January, 2022 has been claimed in a tabular form. The paragraph indicates that CIRP cost also includes cost which has been incurred subsequent to the decision of the CoC on 17th May, 2021. There are no error in the Direction of the Adjudicating Authority for considering CIRP costs since major portion of the CIRP as claimed is subsequent to the resolution dated 17th May, 2021. It is the CoC which is to examine the factual aspects of the claim and take an appropriate decision, the Adjudicating Authority has not committed any error in directing the CoC to consider the CIRP cost and pass appropriate order. In the present case, the decision of the CoC on which reliance is placed are of 30th April, 2021 and 17th May, 2021 where fee has been approved. It is submitted that the validity of such decision cannot be questioned subsequently. In the CIRP process, the CoC is fully competent to revise the fee even if it was earlier approved by any earlier CoC decision - there are no error in the order of the Adjudicating Authority directing the reconstituted CoC to consider the CIRP cost. Appeal dismissed.

Summary

Issues involved:
- Appeal against the Order for the appointment of a new Resolution Professional.
- Approval of Resolution Professional replacement by the Committee of Creditors.
- Direction by the Adjudicating Authority to consider CIRP fees.
- Interpretation of Regulation 12(3) proviso regarding the validity of CoC decisions.

Analysis:

1. Appointment of Resolution Professional:
The Appeal was filed against the Order passed by the Adjudicating Authority for the appointment of a new Resolution Professional in place of the existing one. The Committee of Creditors had approved the replacement in a meeting, and the Adjudicating Authority directed the handover of records and assets to the newly appointed Resolution Professional. The new Resolution Professional was required to file consent and progress reports as per the Code and Regulations.

2. Consideration of CIRP Fees:
The Adjudicating Authority directed the reconstituted Committee of Creditors to consider the CIRP fees, including costs incurred after the CoC resolution. The Appellant argued that the fees were already approved in a previous meeting and should not be reconsidered. However, the Authority found no error in directing the CoC to review the CIRP costs, stating that the CoC was responsible for examining the claims and making appropriate decisions.

3. Interpretation of Regulation 12(3) Proviso:
The Appellant cited Regulation 12(3) proviso, arguing that the validity of CoC decisions could not be affected by subsequent decisions. However, the Authority clarified that the CoC had the authority to revise fees, especially considering changing circumstances and the duration of the CIRP process. The Authority held that the Regulation did not restrict the CoC from reconsidering fees and expenses, particularly when the claimed expenses were for a period subsequent to earlier CoC decisions.

In conclusion, the Appellate Tribunal found no merit in the Appeal and dismissed it, upholding the direction of the Adjudicating Authority for the reconstituted CoC to consider the CIRP costs. The judgment emphasized the CoC's responsibility to evaluate claims and make suitable decisions, even if fees were previously approved, based on the evolving circumstances of the insolvency proceedings.