First respondent ordered to pay CIRP costs, barred from CoC meetings, but claim remains valid. Upholding IBC, 2016.

The Tribunal ruled that the first respondent must pay their share of the CIRP costs related to the corporate debtor. As the first respondent adamantly refused to pay, they were barred from participating in CoC meetings, and the CoC was instructed to proceed without them. Despite this exclusion, the first respondent's claim remained valid. The decision aimed to uphold the IBC, 2016 and safeguard the insolvency resolution process's integrity.

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Issues Involved:
1. Whether the first respondent is required to pay the CIRP costs in relation to the corporate debtor.
2. Consequences if the first respondent does not pay the CIRP costs.

Detailed Analysis:

1. Whether the first respondent is required to pay the CIRP costs in relation to the corporate debtor:

The applicant, the resolution professional of M/s. Easun Reyrolle Ltd., filed an application under section 60(5) read with section 25(2)(c) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) seeking direction for the first respondent to remit their share of the CIRP costs. The applicant constituted the committee of creditors (CoC) with six financial creditors, and during the second CoC meeting, the CIRP costs of Rs. 16,02,392 were ratified and the members were instructed to pay their shares.

The first respondent, acting as the power of attorney holder for DBS Bank Ltd., Singapore, refused to pay citing the need for RBI approval due to the external commercial borrowing (ECB) facility provided by DBS Bank Ltd., Singapore. The applicant argued that the RBI approval was not required for CIRP contributions and highlighted that other CoC members, including one situated in the UK, had made their contributions.

The Tribunal noted that the claim form submitted by the first respondent was filed jointly by DBS Bank Ltd., Singapore and DBS Bank India Ltd., and the proceeds of the resolution plan would go to DBS Bank India Ltd. The Tribunal found the first respondent's argument for needing RBI approval for CIRP payments unconvincing and bizarre, especially since they were ready to receive proceeds from the resolution plan.

2. Consequences if the first respondent does not pay the CIRP costs:

The Tribunal emphasized that under regulations 33 and 34 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, CoC members are obligated to pay the fees and costs incurred by the resolution professional once ratified by the CoC. The Tribunal found no exceptions in the IBC, 2016 or its regulations that would exempt a CoC member from paying CIRP costs.

Given the first respondent's categorical refusal to pay the CIRP costs, the Tribunal considered it futile to direct them to make the payment. Consequently, the Tribunal decided that the first respondent, and by extension DBS Bank Ltd., Singapore, should be debarred from participating in CoC meetings. The Tribunal directed the applicant to remove the first respondent from the CoC and reconstitute the CoC afresh without the first respondent. However, the claim of the first respondent would remain intact, and they would only be barred from participating in CoC meetings related to the corporate debtor.

Conclusion:

The application was disposed of with the direction to exclude the first respondent from the CoC due to their refusal to pay the CIRP costs, ensuring compliance with the IBC, 2016 and maintaining the integrity of the insolvency resolution process.

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