2021 (8) TMI 614 - AT - Insolvency and Bankruptcy

Tribunal upholds dismissal of appeal over professional fees claim under IBC rules

The Appeal was dismissed by the Tribunal as the Adjudicating Authority's decision to dismiss the Application by the former Interim Resolution Professional ... Settlement of Fee payable to RP - Payment of excess insurance premium amount without approval of CoC - deduction of professional fees and expenses form such excess amount - Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 33 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations) - HELD THAT:- It is apparent that without approval of the CoC the Appellant has taken decision to go with United India Insurance Company and renewed the insurance by paying higher insurance premium. Section 20 (2)(b) of the IBC authorizes the IRP to enter into such contracts which were entered into before the commencement of CIRP. In this case there was a new contract of insurance after the commencement of CIRP. The Appellant was aware with this situation that he cannot take such decision, therefore, he has circulated the quotations amongst the Members of CoC alongwith comparison of their premium amount. Thus, the aforesaid provision does not authorize the IRP to renew the insurance policy without approval of CoC at higher premium rate. The Appellant without any approval appointed CS Jignesh Shah for the purpose of seeking legal opinion in the matter of related party. It is also pertinent to note that Mr. Hiten Parikh and Jignesh Shah have not authorized the Appellant to file Application on behalf of them. Thus, the Appellant cannot pursue their claims before the Adjudicating Authority. The Resolution Plan has been approved by the Adjudicating Authority and therefore, the CoC has already been dissolved and the RP has been discharged. In such circumstances, Ld. Adjudicating Authority has righty dismissed the Application - Appeal dismissed. Issues:1. Dismissal of Application by Adjudicating Authority.2. Claim for outstanding professional fees and expenses.3. Authority of Interim Resolution Professional (IRP) under Section 20(2)(b) of the IBC.4. Appointment of professionals without authorization.5. Timeliness of filing the Application for fees.6. Dismissal of the Appeal.Issue 1: Dismissal of Application by Adjudicating AuthorityThe Appellant, erstwhile Interim Resolution Professional (IRP) of a Corporate Debtor, filed an Appeal against the Adjudicating Authority's order dismissing his Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority held that the Applicant's claim for professional fees was not maintainable as the professionals had not authorized him for the same. Additionally, the Authority mentioned that the Application was filed belatedly after the Resolution Plan had been approved and the CoC dissolved. Consequently, the Adjudicating Authority dismissed the Application.Issue 2: Claim for Outstanding Professional Fees and ExpensesThe Appellant sought direction for the payment of outstanding professional fees and expenses, including fees for a Company Secretary and a Chartered Accountant. The Respondents resisted the claim, arguing that the Appellant had paid excess insurance premium without approval, and the professionals had not authorized the claim. The Adjudicating Authority upheld the Respondents' contentions and dismissed the Application.Issue 3: Authority of Interim Resolution Professional under Section 20(2)(b) of the IBCThe Appellant argued that he had statutory authority under Section 20(2)(b) of the IBC to take decisions regarding insurance renewal and engage professionals. However, the Tribunal found that the provision authorized the IRP to enter into contracts made before the CIRP commencement, not for new contracts like insurance renewal post-commencement. The Appellant's decision to renew insurance without CoC approval was deemed unauthorized.Issue 4: Appointment of Professionals without AuthorizationThe Appellant engaged professionals without their authorization to represent him before the Adjudicating Authority. The Tribunal noted that the professionals had not authorized the Appellant to file Applications on their behalf, leading to the conclusion that the Appellant could not pursue their claims.Issue 5: Timeliness of Filing the Application for FeesThe Tribunal observed that the Appellant filed the Application for fees after a significant delay of three months from the deduction of excess premium. The delay was considered unreasonable, especially after the Resolution Plan approval and the discharge of the RP, leading to the dismissal of the Application.Issue 6: Dismissal of the AppealAfter hearing arguments from both sides, the Tribunal reviewed the record and found no grounds to interfere with the Adjudicating Authority's decision. The Appeal was dismissed without any order as to costs.This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's reasoning leading to the dismissal of the Appeal.