2022 (6) TMI 11 - AT - Insolvency and Bankruptcy

Tribunal clarifies CIRP costs entitlement; allows payment from Resolution Plan

The Tribunal held that the Appellant was entitled to Corporate Insolvency Resolution Process (CIRP) costs during the CIRP period but did not direct ... Quantification of CIRP cost - Seeking a declaration that monthly fees payable to the Applicant under the Service Agreement for the relevant period shall form part of the CIRP costs in terms of the IBC - HELD THAT:- The Resolution Plan contemplated that if the CIRP cost exceeds the current estimates, the excess amount as per actuals would be borne by the Successful Resolution Applicant subject to a maximum of Rs.475 Crores. Thus, payment of the CIRP costs which was not included in the estimates under the Resolution Plan was also contemplated upto Rs. 475 Crores. Unfortunately, at the time of hearing of the Appeal, the aforesaid clauses (g) and (h) of the Resolution Plan were not brought into the notice of this Tribunal. This Tribunal has clearly laid down that findings on questions of fact, how-so-ever erroneous cannot be allowed to be questioned. However, mistake which have due to oversight, inadvertence or human error can be corrected. Further it was held that it would be open to correct the conclusion if the same is not compatible with the finding recorded on the issues raised. In exercise of jurisdiction of this Tribunal under Rule 11 of the NCLAT Rules, present is a fit case where judgment dated 06.05.2022 needs correction and clarification - impugned order is set aside - application allowed. Issues Involved:1. Entitlement of the Appellant to CIRP costs during the CIRP period.2. Correction and clarification of the judgment dated 06.05.2022.3. Jurisdiction of the Tribunal to review its judgment under Rule 11 of the NCLAT Rules, 2016.Detailed Analysis:1. Entitlement of the Appellant to CIRP Costs During the CIRP Period:The Appellant challenged the order dated 18.03.2021 by the National Company Law Tribunal (NCLT) Mumbai Bench, which denied the Appellant's claim that monthly fees payable under the Service Agreement should be treated as part of the Corporate Insolvency Resolution Process (CIRP) costs. The Tribunal's judgment dated 06.05.2022 held that the Appellant was entitled to CIRP costs during the CIRP period. However, the Tribunal did not issue any direction for payment because it was informed that the approved Resolution Plan did not contemplate any payment towards CIRP costs. The Tribunal acknowledged that the Appellant was entitled to have the monthly fees treated as CIRP costs but did not direct payment due to the approved Resolution Plan's provisions.2. Correction and Clarification of the Judgment Dated 06.05.2022:The Appellant filed an application seeking correction and clarification of the judgment dated 06.05.2022, arguing that relevant clauses (g) and (h) of the Resolution Plan, which were not brought to the Tribunal's notice during the hearing, provided for the payment of CIRP costs exceeding the current estimates up to Rs.475 Crores. The Tribunal reviewed the Resolution Plan and found that it indeed contemplated the payment of CIRP costs exceeding the estimates, subject to a maximum of Rs.475 Crores. The Tribunal concluded that the judgment needed correction and clarification to align with the findings that the Appellant was entitled to CIRP costs.3. Jurisdiction of the Tribunal to Review Its Judgment Under Rule 11 of the NCLAT Rules, 2016:The Respondent argued that the application was essentially a review in disguise, which the Tribunal does not have jurisdiction to entertain. The Tribunal acknowledged that it does not have jurisdiction to review its judgments but clarified that the application was not seeking a review of the findings but a correction of an error due to oversight. The Tribunal cited precedents where it had exercised its inherent powers under Rule 11 to correct errors apparent on the face of the record. The Tribunal determined that the application was a fit case for correction and clarification under Rule 11, as the ultimate conclusions were not compatible with the findings due to the oversight of relevant clauses of the Resolution Plan.Conclusion:The Tribunal corrected and clarified the judgment dated 06.05.2022, directing that the Appellant is entitled to approach the Monitoring Committee for its CIRP costs as per the approved Resolution Plan. The application was disposed of with the rectified directions, and the Tribunal emphasized that it was not revisiting its findings but correcting an oversight.