NCLAT affirms IBBI's role in regulating fee payments for IRPs and RPs, Adjudicating Authority to consider recommendations

The National Company Law Appellate Tribunal (NCLAT) upheld the jurisdiction of the Insolvency and Bankruptcy Board of India (IBBI) to regulate fee payments to Interim Resolution Professionals (IRP) and Resolution Professionals (RP). The NCLAT affirmed the Adjudicating Authority's decision to seek recommendations from IBBI on fee payment matters. It was clarified that while the Adjudicating Authority has the final decision-making authority on fee entitlement, seeking recommendations from IBBI does not undermine its jurisdiction. The appeal was disposed of with the direction for the Adjudicating Authority to promptly resolve the fee payment issue based on IBBI's recommendations.

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Issues:
1. Jurisdiction of IBBI to regulate payment of remuneration to IRP/RP.
2. Authority of Adjudicating Authority to refer the matter to IBBI for recommendations on fee payment.
3. Power of Adjudicating Authority to make final decisions on fee entitlement of IRP/RP.

Analysis:
1. The appeal was filed against an order passed by the Adjudicating Authority related to the payment of fees to an Interim Resolution Professional (IRP). The Appellant claimed a higher fee than what was approved by the Committee of Creditors (CoC). The Adjudicating Authority referred the matter to the Insolvency and Bankruptcy Board of India (IBBI) for recommendations on the fee payment issue.

2. The Appellant challenged the jurisdiction of IBBI to decide on the payment of fees to the IRP. The Counsel for the Appellant argued that the Adjudicating Authority should have decided the matter regarding the fee entitlement instead of seeking recommendations from IBBI. However, the Counsel for Respondent No.2 and CoC contended that the CoC has the jurisdiction to decide on the sufficiency of the fee, and the Appellant should not have approached the Adjudicating Authority regarding the fee issue.

3. The National Company Law Appellate Tribunal (NCLAT) considered the submissions and examined the relevant legal provisions. It was established that the Adjudicating Authority has the power to make final decisions on the entitlement of fees to the IRP or Resolution Professional (RP) as part of the Corporate Insolvency Resolution Process (CIRP) costs. The Tribunal referred to a Supreme Court judgment to support this position.

4. The NCLAT clarified that while the Adjudicating Authority has the ultimate decision-making authority on fee entitlement, seeking recommendations from IBBI does not undermine its jurisdiction. IBBI is empowered to regulate the payment of remuneration to RP and IRP through regulations or executive instructions until specific regulations are framed. The Tribunal emphasized that IBBI's recommendations could assist in resolving the fee payment issue in line with the Code of Conduct specified for Insolvency Professionals.

5. In conclusion, the NCLAT upheld IBBI's jurisdiction to regulate fee payments to IRP/RP and affirmed the Adjudicating Authority's decision to seek recommendations from IBBI in the present case. The Tribunal advised the Adjudicating Authority to promptly dispose of the matter after receiving IBBI's recommendations to bring the ongoing issues to a resolution. The appeal was disposed of based on these observations.

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