Summary
The Court set aside the NCLT and NCLAT orders fixing a resolution professional’s fee at an unexplained ad hoc amount of Rs 5 lakh plus GST. Neither tribunal examined the contractual basis of the claim, the supporting statement or the financial creditor’s verification and acceptance. The NCLT retained jurisdiction to determine insolvency-related costs despite the setting aside of the CIRP, but had to exercise it through a reasoned assessment. The fee application was restored for fresh decision, with disposal requested within one month of receipt of the certified order.
Issues
- Whether the tribunals could determine a resolution professional’s fee through an unexplained ad hoc figure.
- Whether insolvency-related fee claims remained within the NCLT’s jurisdiction after the CIRP was set aside.
Provisions considered
- Section 60(5)(c), Insolvency and Bankruptcy Code, 2016Jurisdiction extended to determining costs arising from the CIRP despite its subsequent setting aside, and required proper assessment of the claim. (¶¶ 10, 13, 16)
- Regulation 34, IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016Resolution professional expenses, including fees, form part of insolvency resolution process costs and are fixed by the committee. (¶ 14-16)
Held
- Applying Alok Kaushik, the NCLT could determine a claim arising from services rendered as an incident of the CIRP even though the CIRP was later set aside. Its jurisdiction to determine such insolvency-related costs was not exhausted by that event. (¶ 13)
- Regulation 34 includes the resolution professional’s fees and professional expenses within insolvency resolution process costs. The 12 June 2018 IBBI circular requires reasonable fees and creditor-committee approval wherever required. (¶ 14-15)
- The financial creditor had verified the claimed costs and fees against the technical and financial bid. The NCLT failed to consider the submissions, the basis of the claim or its reasonableness; the NCLAT merely described the ad hoc sum as reasonable. Both thereby abdicated the proper exercise of jurisdiction. (¶¶ 6, 16)
- Without reasons explaining the fee determination, its basis could not be judicially assessed. Both orders were set aside and the application restored for fresh consideration; the Court did not itself award the claimed balance. (¶ 16-18)
Result
Appeal allowed; NCLT and NCLAT orders set aside; fee application restored to NCLT, with disposal requested within one month of receipt of the certified order.