THE ADJUDICATING AUTHORITY HAS POWER TO DETERMINE THE FEE OF RESOLUTION PROFESSIONAL

[Mr. M. GOVINDARAJAN]

In KHOZIM YUSUF NAGARWALA VERSUS SATYENDRA PRASAD KHORANIA ERSTWHILE RP OF RAJ BUILDHOME PVT. LTD. - 2024 (7) TMI 197 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB , the financial creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) for initiation of corporate insolvency resolution process.  The Adjudicating Authority admitted the said application.  The corporate insolvency resolution process was commenced on 03.05.2019.

The Financial creditor filed an application before the National Company Law Appellate Tribunal (‘NCLAT’ for short), New Delhi Bench against the order dated 03.05.2019 by the Adjudicating Authority.  The NCLAT allowed the appeal.  The NCLAT quashed the order of Adjudicating Authority.  The corporate debtor was released from the rigors of the corporate insolvency resolution process.  The NCLAT directed the Resolution Professional to hand over the management, assets and records of the corporate debtor which will functions through its Board of Directors. 

The NCLAT further directed the financial creditor to pay the cost of Resolution Professional.  The Resolution Professional shall submit report before the Adjudicating Authority with regard to fee and CIRP cost.  The Adjudicating Authority is directed to pass orders to recover the same from the financial creditor to make payment of the same to Resolution Professional.

The Adjudicating Authority took up the case as per the directions of NCLAT and it dismissed the same on 12.12.2019.  The Adjudicating Authority directed the financial creditor to take note of the order of the NCLAT and ensure compliance.  On the basis of the order of Adjudicating Authority, the Resolution Professional sent an email to the financial creditor to make the payment of Rs.17.69 crores.  The financial creditor did not make the said payment. 

The Resolution Professional filed a contempt petition against the financial creditor.  The Financial creditor filed an application before the Adjudicating Authority with the prayer to dismiss the contempt petition filed by the Resolution Professional.  The Adjudicating Authority held that there was no contempt in this case and thus dismissed the contempt application.  No appeal has been field against this order.  Therefore, the said order attained finality.

The appellant filed the present appeal before NCLAT against the order of Adjudicating Authority.  The appellant further submitted that-

• The Adjudicating Authority has no jurisdiction to compute fee and expenses of the Resolution Professional.
• As per the order of this Appellate Tribunal dated 11.12.2019, the Report ought to have been filed by the RP before the Adjudicating Authority and it was the Adjudicating Authority who was to determine the fee and expenses
• No Report having been filed by the RP order of the Adjudicating Authority is unsustainable.
• The directions issued by the Adjudicating Authority with regard to expenses of Rs. 3,01,427/- is unsustainable.
• There was no material before the Adjudicating Authority with regard to the aforesaid amount and liberty was given to the RP to submit Bill subsequently.
• Most of the Bill which are in the expenses of Rs. 3,01,427/- were the same bills which are submitted for expenses for Rs. 2,41,512/-.

The Resolution Professional submitted the following before the NCLAT-

• The Adjudicating Authority was well within its jurisdiction to issue direction for computing the fee and expenses in compliance of the order of this Appellate Tribunal.
• The Financial Creditor has not paid the amount to the RP and only meagre amount has been paid to the RP and most of the amounts is still balance.
• The bills which are in the expenses of Rs. 3,01,427/- are not the same bills which cover the expenses of Rs. 2,41,512/-.

The NCLAT considered the submissions of both the parties.  The NCLAT did not agree with the contentions of the appellant that the Adjudicating Authority has no jurisdiction to proceed for computation of fee and expenses.  NCLAT has specifically directed in their order dated 19.12.2019 that the Financial Creditor is liable to pay the CIRP cost and fees which was to be reported to the Adjudicating Authority and which was to be determined, the Adjudicating Authority has ample jurisdiction to proceed to examine the entitlement of the fee and expenses.   The direction of the Appellate Tribunal has been substantially complied by the Adjudicating Authority by determining the fee and expenses. The order passed by NCLAT on 11.12.2019 is final and binding between the parties and the Financial Creditor cannot escape from liability to pay fee and expenses. 

The Adjudicating Authority has determined the fee of Rs. 1,00,000/- per month totaling Rs. 7,30,000/- which we are of the view that need to be paid by the Financial Creditor. CIRP expenses has also been approved for Rs. 2,41,512/- which finds approval by us also.

The NCLAT was of the view that the Appellant is liable to pay the amount of Rs. 7,30,000/- plus Rs. 2,41,512/- minus any amount if already paid which payment shall be made to the RP within 4 weeks from the date of order passed by NCLAT.