Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2022 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 684 - AT - Insolvency and BankruptcyResolution Professional seeking payment of his fees - whether the Appellant Bank, which is the sole Financial Creditor of the reconstituted CoC be made liable to pay the fees of the CIRP Cost and RP, which the earlier CoC had ratified? - HELD THAT - The Operational Creditor who had initiated the CIRP was initially the sole CoC Member which had ratified the fees and expenses at Rs.1 Lakh per month. The total liability to be paid by the Operational Creditor towards CIRP Cost was Rs.2,07,000/- till 12.10.2019. Subsequently, the Appellant Bank filed its claim and the CoC was reconstituted and the Bank became the sole CoC Member. It is not in dispute that the Appellant participated in all the CoC Meetings and even passed a Resolution seeking Liquidation of the Corporate Debtor in the fourth CoC Meeting dated 10.02.2020. It is also not disputed that the fees and the cost incurred, claimed by the RP is only till the date, the Resolution for the Liquidation was passed. The proviso in this Regulation clearly stipulates that if any decision is taken by the committee, prior to the reconstitution, which in this case is the ratification of the fees and the expenses, its validity will not be affected. Admittedly the CIRP Costs were approved by the COC prior to the inclusion of the Appellant Bank and hence as per the proviso to Regulation 12(3) of CIRP Regulations, 2016, it is the liability of the Appellant Bank to pay the expenses. The quantum of costs and fees was ratified by the earlier CoC and the Appellant has not objected to any such issues having participated in the Meetings and specifically being the sole CoC. The Adjudicating Authority has only very fairly bifurcated the expenses to be paid by the Operational Creditor and Rs.10,20,858/- to be paid by the Appellant Bank for the subsequent period till the Liquidation Resolution was passed. There are no substantial reasons to interfere with the well-considered Order of the Adjudicating Authority - appeal dismissed.
Issues:
1. Liability of the Appellant Bank to pay the fees of the CIRP Cost and RP. Analysis: 1. The main issue in this appeal was whether the Appellant Bank, as the sole 'Financial Creditor' of the reconstituted Committee of Creditors (CoC), should be held responsible for paying the fees of the Corporate Insolvency Resolution Process (CIRP) Cost and the Resolution Professional (RP) that were previously approved by the earlier CoC. The Appellant argued that it should not be liable as it did not ratify the expenses and the RP had not fulfilled his responsibilities adequately. 2. The Appellant Bank contended that the fees and expenses of the RP were approved by the 'Operational Creditor' who was part of the earlier CoC, and after the CoC was reconstituted with the Bank as the sole Financial Creditor, it did not ratify these expenses. However, the first Respondent argued that the costs were approved before the Bank joined the CoC, and as per the regulations, the Bank cannot avoid liability for these expenses. Assessment: 1. The Tribunal examined the circumstances and found that the Appellant Bank, being the sole Financial Creditor in the reconstituted CoC, had actively participated in all meetings, including passing a resolution for the liquidation of the Corporate Debtor. The Tribunal held that the Appellant Bank could not disclaim liability for the CIRP costs and RP fees, especially since it had been part of the decision-making process and resolution passed by the CoC. 2. Referring to Regulation 12(3) of the CIRP Regulations, the Tribunal emphasized that the validity of decisions taken by the committee before the inclusion of a new member (in this case, the Appellant Bank) remains unaffected. As the costs were approved prior to the Bank joining the CoC, the Tribunal upheld that the Bank was liable to pay the expenses as per the regulations. 3. The Tribunal concluded that there were no substantial grounds to interfere with the Adjudicating Authority's order, which had fairly allocated the expenses between the Operational Creditor and the Appellant Bank. Consequently, the appeal was dismissed, and no costs were awarded in the matter.
|