Tribunal orders CoC to pay Rs. 15,00,000 fee to Resolution Professional within two weeks

The Tribunal directed the Committee of Creditors (CoC) to pay a consolidated fee of Rs. 15,00,000 to the Resolution Professional for the entire Corporate Insolvency Resolution Process (CIRP) period within two weeks. The CoC's failure to provide reasons for rejecting the fee proposal and their actions were deemed irrational and unjustifiable by the Tribunal. The Resolution Professional's responsibilities were found to exceed those of the Interim Resolution Professional, leading to the decision in favor of the Resolution Professional.

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Issues involved: Non-payment of fees to Resolution Professional by Committee of Creditors (CoC) during the Corporate Insolvency Resolution Process (CIRP).

Analysis:
1. Admission of Corporate Debtor: The Adjudicating Authority admitted the Corporate Debtor in CIRP and appointed the Applicant as the Interim Resolution Professional (IRP), followed by the appointment as Resolution Professional. The Resolution Professional discharged duties as per the Insolvency and Bankruptcy Code (Code) until the Corporate Debtor's liquidation order.

2. Approval of Fees: The CoC deferred approving the Resolution Professional's fees, despite approving the Interim Resolution Professional's fees at the same rate. The Resolution Professional proposed a consolidated fee, which was rejected by the CoC in an e-voting where 97.42% voted against approval.

3. Allegations of Mala Fide Action: The Applicant alleged mala fide action by the CoC for rejecting the fee approval without providing reasons. The minutes of a previous CoC meeting indicated concerns about the proposed fee being on the higher side.

4. Resolution Professional's Responsibilities: The Resolution Professional fulfilled obligations under section 27 of the Code, inviting Resolution Applicants and presenting Resolution Plans to the CoC. An alternate offer of a consolidated fee was proposed twice during CoC meetings.

5. Judicial Intervention: The Tribunal found the CoC's actions irrational, noting that the Resolution Professional's responsibilities exceeded those of the Interim Resolution Professional. The CoC's failure to provide reasons for rejection or propose an alternative fee structure was deemed unjustifiable.

6. Decision and Directions: In light of the circumstances, the Tribunal directed the CoC to pay a consolidated fee of Rs. 15,00,000 to the Resolution Professional for the entire CIRP period within two weeks. The Tribunal disposed of the application and instructed the Registry to circulate the order to all relevant parties and authorities for compliance.

This detailed analysis outlines the key aspects of the judgment concerning the non-payment of fees to the Resolution Professional by the Committee of Creditors during the Corporate Insolvency Resolution Process.

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