Supreme Court sets aside NCLAT's order on professional charges in insolvency case

The Supreme Court allowed the appeal, setting aside the NCLAT's order and remitting the matter back to the NCLT to determine the Appellant's claim for professional charges. The Court emphasized that fees ratified by the CoC should be considered part of insolvency resolution process costs. It clarified that the NCLT has jurisdiction to decide on claims related to CIRP costs, distinct from the IBBI's role in addressing misconduct. The NCLT's previous order was set aside, and the matter was restored for fresh determination, with pending applications disposed of.

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Issues Involved:
1. Appointment and fees of the registered valuer.
2. Jurisdiction of NCLT and NCLAT regarding CIRP costs.
3. Determination of insolvency resolution process costs.
4. Application of Section 60(5)(c) of the IBC.
5. Role of IBBI in grievance redressal against RP.

Detailed Analysis:

1. Appointment and Fees of the Registered Valuer:
The appeal arises from the insolvency proceedings of Kavveri Telecom Infrastructure Limited. The NCLT initiated the CIRP against the Corporate Debtor on 21 March 2019, and the first Respondent was appointed as the RP on 26 August 2019. The Appellant was appointed as a registered valuer for the Corporate Debtor's plant and machinery on 16 September 2019, with a fee of Rs. 7.50 lakhs plus GST ratified by the CoC on 9 December 2019. The Appellant claims to have conducted valuations at eighty-four sites and incurred expenses of Rs. 52,000. However, following the NCLAT's order on 18 December 2019 setting aside the CIRP, the first Respondent cancelled the Appellant's appointment and paid only Rs. 50,000, leading to the Appellant filing an application under Section 60(5) of the IBC for nonpayment of fees.

2. Jurisdiction of NCLT and NCLAT Regarding CIRP Costs:
The NCLAT remanded the matter to the NCLT to decide on CIRP costs. The NCLT reduced the RP's fee by 20% but did not address the Appellant's fees, claiming it was functus officio. The NCLAT upheld this decision, leading to the Appellant's appeal to the Supreme Court.

3. Determination of Insolvency Resolution Process Costs:
The Supreme Court examined the definitions and regulations concerning insolvency resolution process costs under Section 5(13) of the IBC and Regulation 31 of the IRP Regulations. These include fees for resolution professionals and other costs approved by the CoC. The Court emphasized that the costs incurred by professionals like the Appellant, ratified by the CoC, should be considered part of the insolvency resolution process costs.

4. Application of Section 60(5)(c) of the IBC:
The Supreme Court highlighted that Section 60(5)(c) of the IBC grants the NCLT jurisdiction to entertain or dispose of any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings. The Court noted that the NCLT should have exercised its jurisdiction to determine the Appellant's claim, as it related to the period when the Appellant was discharging his duties as a registered valuer during the CIRP.

5. Role of IBBI in Grievance Redressal Against RP:
The NCLT had suggested that the IBBI was the competent authority to address allegations against the RP. However, the Supreme Court clarified that while the IBBI can investigate and penalize errant conduct of the RP, it does not divest the NCLT of its jurisdiction to determine claims related to CIRP costs. The grievance redressal mechanism is meant to address misconduct, not to settle claims for professional fees.

Conclusion:
The Supreme Court allowed the appeal, set aside the NCLAT's order, and remitted the matter back to the NCLT to determine the Appellant's claim for professional charges. The NCLT's order of 18 December 2019 was also set aside, and the application CA No. 192 of 2020 was restored for fresh determination. Pending applications were disposed of.

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