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TMI Blog2024 (4) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Ltd Corporate Debtor into Corporate Insolvency Resolution Process ( CIRP in short), the Interim Resolution Professional ( IRP in short) was appointed to conduct the CIRP proceedings. Since, the CIRP proceedings could not be concluded, an application was filed before the Adjudicating Authority for liquidation of the Corporate Debtor which was allowed on 21.02.2022. Following the passing of the liquidation order, the IRP filed IA No. 1275 of 2022 seeking approval of IRP fees and CIRP expenses aggregating Rs.77,91,974/-. It was contended that the Adjudicating Authority in deciding the fees of Rs. 33 lakhs @ Rs.1 lakh per month for 33 months to be paid to the IRP committed a mistake as it was fixed on the higher side and not in sync with the work performed by the IRP. It was further stated that while deciding the fees of the IRP, the Adjudicating Authority failed to apply the test of reasonability and proportionality which should have been done in terms of Clause 25 of the Code of Conduct for Insolvency Professionals as laid down in the First Schedule of the IBBI (Insolvency Professionals) Regulations, 2016. It was also added that instead the Adjudicating Authority had wrongly placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible efforts to complete the CIRP process within the stipulated time. It was the indecision and non-cooperation on the part of the Appellant, who constituted the sole member of the CoC, which delayed the process of CIRP. Further it was not the fault of the IRP that inspite of publication of Form G, no Resolution plan had been received from any resolution applicant. The CoC was therefore left with no option but to move towards liquidation. It was added that the IRP has submitted a list of 106 activities performed by him since his appointment and emphatically asserted that all these activities were necessary, critical and unavoidable for conduct of CIRP. It was also pointed out that the IRP had attended several hearings before the Adjudicating Authority; before this Tribunal and before the Hon ble Supreme Court. Furthermore, the IRP had submitted the detailed chart of CIRP expenses before the Adjudicating Authority. It has also been submitted that the IRP had suo motu reduced their fees to Rs. 1 lakh per month and that this reduction was in consonance with Regulation 34B of IBBI (Insolvency Professionals for Corporate Persons) Regulations, 2016 which prescribes the minimum fees t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings. We notice that during each of the CoC meetings, the IRP had meticulously listed out the entire gamut of activities carried out by him for the smooth conduct of CIRP. In the 1st CoC meeting at Agenda item 4, the IRP had explained in details to the CoC of the steps taken by the IRP which included public announcements in the newspapers; communications entered into with the suspended management; visits undertaken to the office of the Corporate Debtor; collection, verification and filing of documents with Registrar of Companies; verification of claims received; constitution of CoC and filing of status reports with the Adjudicating Authority. This finds place at pages 72-74 of Appeal Paper Book ( APB in short). 10. Similarly, the IRP has detailed out the steps taken by the IRP at the time of the 2nd CoC meeting which included filing of application under Section 19 of IBC; appearances before Adjudicating Authority and this Tribunal; collection of financial documents of the Corporate Debtor and correspondence with the bankers; appointment of registered valuers; preparation of Information Memorandum, Request for Resolution Plan and Evaluation Matrix and publication of Form-G as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees, we find 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. When we come to the subject matter of initiation of liquidation, it is again noticed that even after the IRP in the 3rd CoC meeting had apprised the CoC that inspite of Form-G publication, no Resolution plan had been received from any resolution applicant, leaving no option but to move forward towards liquidation, even at this stage, the Appellant continued to remain slow and lethargic in taking a decision and the liquidation resolution was approved after a lapse of 6 months 11 days since the holding of the 3rd CoC meeting. We also find that the Authorised Representative of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 14. This now brings us to the question of how the Adjudicating Authority has determined the IRP fees and CIRP expenses. The relevant findings from the impugned order is as reproduced below : It has been admitted by the Appellant that the Liquidator- Respondent No. 3 has made a provision for Rs. 42 lakhs as provisional CIRP cost subject to the outcome of this appeal. In the reply filed by State Trading Corporation of India Limited in Para No.13, the State Trading Corporation of India Limited has submitted that the fee quoted by IRP/RP in this case is excessive and Hon ble Court may fix a reasonable amount as per the circumstances of the case. The erstwhile Resolution Professional has claimed a fee of Rs.66 lakhs at the rate of Rs.2 lakhs per month for 33 months. However, the erstwhile Resolution Professional as well as his counsel have submitted that they are agreeable for a fee @ Rs.1 lakh a month which fits in terms of Regulation 34B of IBBI (Insolvency Professional) for CP Regulations, 2016. Since the erstwhile IRP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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