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TMI Blog2019 (6) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and income is below a level, as may be notified by the Central Government or (ii) the Corporate Debtor with such class of creditors or (iii) such other category of corporate persons as may be notified by the Central Government - the Fast Track Corporate Insolvency Resolution Process is different from Corporate Insolvency Resolution Process against such Corporate Debtor(s) as may be notified by the Central Government in terms of clauses (a), (b) (c) of sub-section (2) of Section 55. The Adjudicating Authority exceeded its jurisdiction by extending the period of 90 days after completion of 270 days of the Corporate Insolvency Resolution Process wrongly exercising its power under sub-section (2) of Section 55 which is not applicable - answered in negative. Whether Committee of Creditors had jurisdiction to replace the Resolution Professional after completion of 270 days? - HELD THAT:- After completion of 270 days, the Committee of Creditors ceased to exist and thereby they have no jurisdiction to replace a Resolution Professional u/s 22 of the I B Code . Even if the decision to replace the Resolution Professional is taken prior to 270 days, in absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Insolvency Resolution Process also determining the Corporate Insolvency Resolution Process fee and the cost incurred and payable to Appellant (Sanjay Kumar Ruia) to the tune of ₹ 23,69,064/- plus G.S.T. 2. Learned Counsel appearing on behalf of Sanjay Kumar Ruia, erstwhile Resolution Professional of S.N. Plumbing Private Limited , submits that the Resolution Professional has incurred expenditure against different heads and submitted professional bill totaling ₹ 1,45,92,064/- which was also approved by the Committee of Creditors . Thereafter, the Adjudicating Authority while passing order under Section 55, without any basis, reduced the amount to the tune of ₹ 23,69,064/- plus G.S.T., which is not permissible in law. 3. It is further submitted that after completion of 270 days of the Resolution Process , the Committee of Creditors had no power to replace the Resolution Professional and the Adjudicating Authority had no power to extend the period beyond 270 days. 4. Mr. Ilam Paribi, appearing on behalf 1st Respondent- Financial Creditor and Ms. Amisha Agarwal, learned Counsel appearing on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government; or (c) such other category of corporate persons as may be notified by the Central Government. 8. Sub-section (2) of Section 55 makes it clear that an application for Fast Track Corporate Resolution Process can be made only against the following Corporate Debtors , namely: - (a) a corporate debtor with assets and income below a level as may be notified by the Central Government; or (b) a corporate debtor with such class of creditors or such amount of debt as may be notified by the Central Government; or (c) such other category of corporate persons as may be notified by the Central Government. 9. Section 55 provides that application for Fast Track Corporate Insolvency Resolution Process should be completed within a period of 90 days. 10. In the present case, the application was not filed under Section 55 but under Section 9 of the I B Code . In terms of Section 12 Corporate Insolvency Resolution Process was required to be completed within 180 days from the date of admission. Sub-section (3) of Section 12 empowers the Adjudicating Authority to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor - S.N. Plumbing Private Limited does not come within the category of Corporate Debtor in terms of clauses (a) or (b) or (c) of sub-section (2) of Section 55, its assets and income being not below a level, notified by the Central Government nor having class of creditors or amount of debt as notified by the Central Government. Therefore, Section 55 cannot be invoked against the Corporate Debtor - S.N. Plumbing Private Limited . 15. We, therefore, hold that the Adjudicating Authority exceeded its jurisdiction by extending the period of 90 days after completion of 270 days of the Corporate Insolvency Resolution Process wrongly exercising its power under sub-section (2) of Section 55 which is not applicable. Accordingly, the Issue No.1 is answered in negative. Issue No.2 16. After completion of 270 days of Corporate Insolvency Resolution Process , the Adjudicating Authority can pass order under Section 31 of the I B Code , if a Resolution Plan has been approved by the Committee of Creditors . In absence of any Resolution Plan , the Adjudicating Authority is bound to pass order under Section 33 by initiating liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law for the time in force; (f) conforms to such other requirements as may be specified by the Board. 3. The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). 4. The committee of creditors may approve a resolution plan by a vote of not less than seventy five per cent of voting share of the financial creditors. 5. The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered. Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. 19. Chapter IX of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 deals with Insolvency Resolution Process . Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Insolvency Resolution Process Costs . Explanation below Regulation 34 indicates that expenses which includes the fee to be paid to the resolution professional and the other expenses, including the cost of professional advisors, to be incurred by the resolution professional. 21. Regulation 38 deals with mandatory contents of the Resolution Plan and class of regulation. All Resolution Plans are required to identify specific sources of funds that will be used to pay Insolvency Resolution Process Costs to be paid in priority and reads as under: 38. Mandatory contents of the resolution plan ( 1) A resolution plan shall identify specific sources of funds that will be used to pay the (a) insolvency resolution process costs and provide that the insolvency resolution process costs will be paid in priority to any other creditor; (b) liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the Adjudicating Authority; and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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