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2024 (4) TMI 868 - AT - Insolvency and BankruptcyDirection for payment of fees to the Interim Resolution Professional and reimbursement of Rs 9 lakhs as CIRP expenses - wrong fixation of IRP fees - lack of earnestness and proficiency on the part of the IRP - HELD THAT - There is no dispute over the fact that only three CoC meetings were held. The 1st, 2nd and 3rd meetings of the CoC were held on 24.06.2019, 13.11.2019 and 31.01.2020 respectively and all the three meetings were attended by the Authorised Representatives of the Appellant. However, when the decision-making process is analysed, it is noticed that that there were clear signs of lethargy and tendency on the part of the Appellant to defer decisions. Coming to the subject matter of ratification of CIRP expenses incurred by the IRP and appointment of legal counsel; to approve fees to be paid to the IRP @ Rs. 2 lakhs per month and appointment of Resolution Professional and to fix his fees, it is found that this had figured in the agenda for discussion in the first CoC meeting itself but remained inconclusive since the Appellant had informed that they would convey the approval only after securing internal approval from their competent authority. The same paralysis in decision-making continued in the second CoC meeting wherein though the extension of the 90 days of the CIRP of the Corporate Debtor was agreed to by the CoC, on the issue of IRP fees and CIRP expenses it was informed that they would convey the approval within 15 days after securing internal approval from their competent authority. The Appellant which had been delaying the CIRP process by deferring to take decisions in the CoC meetings on the ground that approval of higher authorities was required. There is substance in the contention of the IRP that the Appellant displayed non-responsive behaviour and lackadaisical approach in the CoC meetings inspite of being the sole CoC member. During the entire CIRP process, the CoC neither approved the fees of the IRP nor did it raise any objection to the quantum of fees claimed by the IRP - when the IRP has on his own reduced his fees by 50% shows that his endeavours has been to keep his fees reasonable, there was no error on the part of the Adjudicating Authority to agree to the reduced quantum of fees. The IRP had also submitted the detailed chart of CIRP expenses before the Adjudicating Authority. Even the CIRP expenses has been reduced from Rs.11.91 lakhs to Rs.9 lakhs. Hence, there are no cogent ground to entertain any doubt on the application of mind on the part of the Adjudicating Authority in finding the IRP fees and CIRP expenses to be reasonable. There are no reason to interfere in the impugned order passed by the Adjudicating Authority. The Appellant is directed to pay the erstwhile IRP/Respondent No.1 the fees of Rs 33 lakhs within one month from the date of the order - In so far as, payment of Rs 9 lakhs CIRP expenses is concerned, in terms of orders of this Tribunal dated 01.11.2023, any dues thereof which still remain payable maybe made directly to the bank accounts of those who have incurred the expenses as per details to be provided by the IRP. Appeal dismissed.
Issues Involved:
1. Fixation of Interim Resolution Professional (IRP) fees. 2. Reimbursement of Corporate Insolvency Resolution Process (CIRP) expenses. 3. Adherence to the timeline of Insolvency and Bankruptcy Code (IBC). Summary: 1. Fixation of IRP Fees: The Appellant challenged the impugned order directing the payment of Rs 33 lakhs as fees to the IRP, arguing that the fee was fixed on the higher side and not in sync with the work performed. It was contended that the Adjudicating Authority failed to apply the test of reasonability and proportionality as per Clause 25 of the Code of Conduct for Insolvency Professionals and wrongly relied on Regulation 34(B) of IBBI (Insolvency Professionals for Corporate Persons) Regulations, 2016, which was not applicable since the IRP was appointed before 01.10.2022. 2. Reimbursement of CIRP Expenses: The Appellant also contested the reimbursement of Rs 9 lakhs as CIRP expenses, claiming they were excessive, particularly the expenses under the heading of Advocate fees. The IRP, however, defended the expenses, asserting that all activities listed were necessary for the conduct of CIRP and that the expenses were reduced from Rs 11.91 lakhs to Rs 9 lakhs. 3. Adherence to IBC Timeline: The Appellant argued that the IRP failed to complete the CIRP within the stipulated 180 days, necessitating an extension of 90 days, and eventually leading to liquidation. The IRP countered that the delay was due to the indecision and non-cooperation of the Appellant, who was the sole member of the Committee of Creditors (CoC). The IRP claimed to have made the best possible efforts to complete the CIRP within the stipulated time and provided a detailed list of 106 activities performed. Findings: The Tribunal found that the IRP had conducted necessary activities and that the delay was attributable to the Appellant's indecision and non-cooperation. The minutes of the CoC meetings indicated that the Appellant deferred decisions, requiring internal approvals, which delayed the CIRP process. The Adjudicating Authority's decision to fix the IRP fees at Rs 1 lakh per month and reduce the CIRP expenses to Rs 9 lakhs was deemed reasonable and in consonance with Regulation 34B of IBBI (Insolvency Professionals for Corporate Persons) Regulations, 2016. Conclusion: The appeal was dismissed, directing the Appellant to pay Rs 33 lakhs as IRP fees within one month and to settle the CIRP expenses of Rs 9 lakhs as per the Tribunal's order dated 01.11.2023.
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