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TMI Blog2023 (8) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... marks on the professional conduct of the RP. Whether the decision of the Adjudicating Authority to allow payment of fees to the RP for the period 01.09.2019 till 24.04.2022 is sustainable in the face of the contention raised by the major Financial Creditor on the CoC - Religare Finvest that it had not given any such consent? - HELD THAT:- It is well established that the fees of the RP are required to be ratified by the CoC. Coming to the facts of the present case, perusal of the minutes of the first CoC meeting reveals that it had ratified the appointment of the Interim Resolution Professional including payment of fees and in the second CoC meeting held on 14.06.2019 his appointment as RP was confirmed - in the present case, it is undisputed fact that the CoC even after deciding to replace the RP did not make any endeavours for effectuating the substitution of the RP. Hence the RP continued to remain in position. It is also an admitted fact that the third CoC had resolved to pay the RP on the existing terms and conditions till the date of his demitting office. Contention of Religare Finvest is that it had given consent for payment of fees of RP only up to 30.08.2019 but t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating Authority as the rationalization has been done with proper application of mind. Whether the deprecatory remarks on the professional conduct of the RP were appropriate or they deserve to be expunged? - HELD THAT:- The CoC had recommended liquidation but RP had orally opposed liquidation of the Corporate Debtor before the Adjudicating Authority even after having filed the liquidation application. The RP had also not acted on the suggestion of the CoC to file a petition before the Adjudicating Authority against the suspended management for non-cooperation in submitting statutory registers and other documents etc. The CoC was of the view that much harm was caused to the Corporate Debtor by handing over the control of its assets to the erstwhile management. These actions of the RP do not reflect well on his professional conduct and cannot be countenanced - RP was more focused on claiming his fees/remuneration and other expenses than discharging his responsibilities of completing CIRP in a time bound manner - the Adjudicating Authority has been justified in taking a serious note of the conduct of the Resolution Professional. There are no reasons to interfere with the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 23,57,635/- and the non-contribution of fees by any CoC member. The CoC decided to go for liquidation of the Corporate Debtor and have a liquidator of own choice after changing the RP. The CoC in the 5th meeting held on 17.10.2019 had decided not to extend the time-limit for CIRP and not to approve Form G or invite EOI. Meantime, the RP had filed MA No. 3399/2019 on 16.10.2019 for payment of his fees and expenses amounting to Rs.24,25,143/- till 31.08.2019. This was allowed by the Adjudicating Authority on 10.11.2022. In this MA, the RP had also raised the issue of Religare Finvest not cooperating in CIRP and pushing the Corporate Debtor into liquidation. The RP had also filed an application MA No. 3668/2019 on 11.11.2019 before the Adjudicating Authority seeking liquidation of the Corporate Debtor which was allowed on 16.11.2022. Directions were also sought for release of fees of RP from 31.08.2019 to 01.11.2019 being Rs.12,63,393/-. IA No.2755/2021 was filed by the RP to allow the suspended management of the Corporate Debtor to submit their resolution plan; to direct the CoC to pay outstanding CIRP cost and debar CoC member from participation in CoC if it fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndemic. Quite apart from the fact that no substantial work had been done by the RP, keeping in view the fact that the Corporate Debtor was not capable of revival, the order of the Adjudicating Authority to continue paying such hefty fees was not justified. It has also been submitted that the Adjudicating Authority had lost sight of the fact that the RP had already been paid Rs.24,25,143/- following the orders dated 10.11.2022. Since then, the RP had not performed any work and therefore it is not justified to pay any further amount for the period 01.09.2019 onwards. CA(AT) Ins No.104/2023 5. The Learned Counsel for the Appellant/RP has submitted that the CoC in its first meeting had ratified the fees of the RP of Rs. 3.75 lakhs p.m. plus GST. The RP was therefore rightfully entitled to claim the same amount to be paid as his fees. While admitting that the CoC in its third meeting had decided to replace the RP, it was also asserted that the CoC did not move any application for his substitution and had resolved to pay the RP till the date of his demitting office. It was therefore contended by the RP that the CoC having further decided to continue on with him until the joinin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal. In the present application, the RP is claiming an amount @ 3.75 lacs per month both for himself and his team besides expenses in a sum of Rs. 1,68,60,372/- without doing any work. The RP cannot claim fee by taking advantage of the inaction of the COC in filing an application for his replacement nor on certain observations made in MA 3399/2019 as the above MA was filed for fee and expenses during the active period of CIRP. This Bench made certain observations in M.A. 3399/2019 since the COC is objecting for payment of fee and expenses of the team of RP even during the active CIRP period which was the lis in M.A 3399/2019. The Applicant cannot claim the same amount for subsequent period even without considering Covid circumstances etc. by taking advantage of certain observations in M.A. 3399/2019. 5. It is also pertinent to observe here that the Resolution Professional has already claimed his fee and expenses till 31.08.2019 in the earlier M.A. 3399/2019 and in the present I.A. 1312/2022, he claimed fee and expenses from 24.04.2019 to 24.04.2022 under Exhibit A of the present application. The Resolution Professional has already claimed the expenses of Rs. 1,50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reveals that it had ratified the appointment of the Interim Resolution Professional including payment of fees and in the second CoC meeting held on 14.06.2019 his appointment as RP was confirmed. It is also noticed that CoC in its third meeting had decided to replace the RP and also decided by name the person to be appointed. There is no quarrel over the fact that replacement of the RP falls within the prerogative of the CoC. Be that as may, in the present case, it is undisputed fact that the CoC even after deciding to replace the RP did not make any endeavours for effectuating the substitution of the RP. Hence the RP continued to remain in position. It is also an admitted fact that the third CoC had resolved to pay the RP on the existing terms and conditions till the date of his demitting office. 11. Given this backdrop, we may now examine the contention of Religare Finvest that it had given consent for payment of fees of RP only up to 30.08.2019 but the Adjudicating authority had wrongly recorded their consent for the period up to 24.04.2022. We do not find much force in their contention. Once the CoC in the third meeting had decided to continue with the RP on the same ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase in the judgement of this Tribunal in Sajeve Bhushan Deora vs. Axis Bank Ltd. Ors. 2019 SCC OnLine NCLAT 1437 being different do not come to the aid of the RP. 15. It has been observed by the Adjudicating Authority that it was unreasonable for the RP to claim fees for himself and his team for the period when all work was at a standstill due to Covid pandemic. Another reason cited is that while the RP had already claimed legal expenses of Rs. 1,50,000/- in MA No.3399/2019, he has claimed yet another amount of Rs.7,95,407/- in IA No.1312/2022 though both these applications were for seeking the same relief of payment of fees. It has also been observed that at a time when the CoC had already decided to replace the RP, he was taking advantage of the fact that replacement application was not filed on time before the Adjudicating Authority. Moreover, some of the actions of the RP were not in sync with the decisions of the CoC. Hence the RP had failed to assist in the CIRP process in a fair and objective manner in the best interest of all stakeholders. 16. The above findings of the Adjudicating Authority of deficiency in the performance of the RP are not far from truth. RP admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparation had suffered since valuers could not be appointed on time as CoC was not confirming payment of valuer s fees. The RP had been suffering on account of non-release of fees by the CoC. It was vehemently contended that the derogatory remarks made against the RP are unwarranted and that there is sufficient material on record to prove to the contrary and hence these observations ought to be expunged. 19. While we take cognizance of the steps having been taken by the RP as summated above, we are also mindful of the expectations from the RP in the conduct of CIRP proceedings in the IBC framework. It is well settled that the RP plays a pivotal role in the CIRP process and acts as the bridge of balance and harmony between the CoC and other stakeholders including the Corporate Debtor. As an officer of the court, the RP as the facilitator of the resolution process is expected to conduct the CIRP process with fairness, diligence, forthrightness and highest sense of responsibility. Judged against this backdrop, we need to find out how the RP measured up to the occasion. 20. What stares at our face is that even after a lapse of nearly three years, the CIRP process had failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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