2023 (1) TMI 905 - AT - Insolvency and Bankruptcy

Appellate Tribunal Upholds Decision on Professional Fees Dispute under Insolvency Code

L. Padmanabha Chari Versus Prateek Apparels Private Limited

The National Company Law Appellate Tribunal affirmed the decision of the Adjudicating Authority in a case involving a dispute over professional fees for ... Withholding of professional fees of petitioner - whether the Fee for Professional Services, constituted as an Operational Debt? - reimbursement of Travelling Expenses, would not an amount of payment to Professional Fee - Invoice was not appreciated in proper Direction - HELD THAT:- Considering the fact that the Insolvency & Bankruptcy Code, 2016, is a summary proceeding and the Code is an inbuilt and self-contained one and the Proceedings are not to be decided, like that of a Suit, before a Competent Civil Court, taking note of the fact that the Respondent, at any cost, is not accepting the case of the Appellant, in regard to the Fees required by him and the plea of the Respondent is not moonshine, this Tribunal, at this juncture, simpliciter deems it fit that directing the Appellant to resort to approach the Competent Forum for redressal of its grievances, in regard to the amount, claimed by the Appellant, for the services rendered, if he so desires / advised. This Tribunal is not inclined to interfere in the impugned order - Appeal dismissed. Issues:1. Dispute over professional fees for services rendered.2. Interpretation of the impugned order under the Insolvency & Bankruptcy Code, 2016.3. Validity of the payment made by the respondent.4. Applicability of inherent powers of the Adjudicating Authority.Issue 1: Dispute over professional fees for services rendered:The Appellant, an Operational Creditor, filed a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking payment for professional services rendered. The Adjudicating Authority observed the nature of services provided and the rejection of the claim by the Respondent. Despite finding the petition not maintainable under the Code, the Authority directed the Respondent to consider paying a reasonable amount to the Appellant, citing principles of good corporate governance and the substantial services rendered by the Appellant.Issue 2: Interpretation of the impugned order under the Insolvency & Bankruptcy Code, 2016:The Appellant challenged the impugned order, alleging that the Adjudicating Authority failed to apply its mind and overlooked the provisions of Section 8 and 9 of the Insolvency & Bankruptcy Code, 2016. The Appellant argued that the order did not appreciate the professional services as operational debt and wrongly dismissed the petition.Issue 3: Validity of the payment made by the respondent:The Respondent contended that payments were made to the Appellant for services rendered on various dates, totaling Rs. 9,67,208, with an additional payment of Rs. 1,00,000 as directed by the Adjudicating Authority. The Respondent disputed the Appellant's claim for further payment, asserting that a total sum of Rs. 10,67,208 had already been paid for services rendered.Issue 4: Applicability of inherent powers of the Adjudicating Authority:The Adjudicating Authority exercised inherent powers under Rule 11 of NCLT Rules, 2016, to dispose of the petition in the interest of justice, despite finding it not maintainable under the Code. The Tribunal upheld the Authority's decision, emphasizing that the Insolvency & Bankruptcy Code is a summary proceeding and directed the Appellant to seek redressal through the competent forum for further grievances related to the claimed amount.In conclusion, the National Company Law Appellate Tribunal dismissed the appeal, affirming the decision of the Adjudicating Authority. The Tribunal clarified that the dismissal did not prevent the Appellant from seeking redressal through appropriate legal channels if desired.