2024 (7) TMI 197 - AT - Insolvency and Bankruptcy

Appellate Tribunal Confirms Financial Creditor's Obligation to Pay Resolution Professional's Fees and CIRP Expenses.

The Appellate Tribunal upheld the Adjudicating Authority's determination of the Resolution Professional's (RP) fees at Rs. 1,00,000 per month and approved ... Jurisdiction to determine interim resolution professional fees and CIRP expenses - liability of financial creditor to pay CIRP costs and RP fees - enforcement of appellate directions by adjudicating authority - limitations of contempt jurisdiction in computing fees - computation of fees on basis of material on recordJurisdiction to determine interim resolution professional fees and CIRP expenses - enforcement of appellate directions by adjudicating authority - Adjudicating Authority had jurisdiction to examine and determine the fee and CIRP expenses in compliance with the Appellate Tribunal's directions. - HELD THAT: - The Appellate Tribunal's order of 11.12.2019 (paragraph 19) held the Financial Creditor liable to pay CIRP cost and fees and directed the Interim Resolution Professional/Resolution Professional to file a report before the Adjudicating Authority for determination. Given that direction, the Adjudicating Authority possessed ample jurisdiction to proceed to compute and determine entitlement to fee and expenses. The contention that such computation could not be undertaken in the course of contempt proceedings was rejected because the Adjudicatory function flowed from the appellate direction and the Adjudicating Authority could examine and determine amounts due. [Paras 7, 8]Adjudicating Authority rightly exercised jurisdiction to determine RP fees and CIRP expenses in compliance with the appellate direction.Computation of fees on basis of material on record - limitations of contempt jurisdiction in computing fees - Computation and allowance of fees and expenses must be based on material before the Adjudicating Authority; an unrelated direction in paragraph 15.3 was set aside. - HELD THAT: - While the Adjudicating Authority could determine fees and expenses, it could do so only on the basis of material placed before it. The Appellate Tribunal's mandate had been substantially complied with by the Adjudicating Authority determining fee and expenses, but the specific direction contained in paragraph 15.3 was found to be unwarranted and was set aside because the Adjudicating Authority should confine its decision to available material and not issue extraneous directions beyond that scope. [Paras 9]Direction in paragraph 15.3 is set aside; fee and expenses must be founded on the material before the Adjudicating Authority.Liability of financial creditor to pay CIRP costs and RP fees - The Financial Creditor is liable to pay the determined amounts: RP fee totalling Rs. 7,30,000 and CIRP expenses of Rs. 2,41,512, less any amounts already paid, payable to the RP within four weeks. - HELD THAT: - Having approved the determination by the Adjudicating Authority, the Appellate Tribunal affirmed that the Financial Creditor must discharge the RP fee fixed at Rs. 1,00,000 per month (total Rs. 7,30,000) and the CIRP expenses of Rs. 2,41,512. The Appellate Tribunal recognised prior partial payments if any and directed settlement of the balance by bank draft or RTGS within four weeks from the date of the order. [Paras 9, 10]Financial Creditor shall pay Rs. 7,30,000 plus Rs. 2,41,512 minus amounts already paid to the RP within four weeks by Bank Draft or R.T.G.S.Final Conclusion: Appeal disposed; Adjudicating Authority had jurisdiction to determine RP fees and CIRP expenses under the appellate directions, the direction in paragraph 15.3 is set aside, and the Financial Creditor is directed to pay the approved fee and expenses (subject to amounts already paid) to the RP within four weeks. Issues:- Appeal against order passed by the Learned Adjudicating Authority- Determination of fee and expenses in the contempt jurisdiction- Compliance with the directions issued by the Appellate Tribunal- Dismissal of Contempt Petition by the Adjudicating Authority- Liability of the Financial Creditor to pay CIRP cost and feesAnalysis:1. The appeal was filed against an order passed by the Learned Adjudicating Authority in a Corporate Insolvency Resolution Process (CIRP) case. The Appellate Tribunal had earlier allowed the appeal and issued directions, including releasing the Corporate Debtor from the CIRP process and instructing the Financial Creditor to pay the CIRP cost and fees. Subsequently, the Adjudicating Authority dismissed the Company Petition based on the Appellate Tribunal's order.2. The Adjudicating Authority was of the view that no contempt was established on the part of the Financial Creditor. However, a Contempt Petition was filed by the Resolution Professional (RP) against the Financial Creditor for non-payment of expenses amounting to Rs. 17,68,67,767. The Adjudicating Authority dismissed the Contempt Petition, and no appeal was filed against this decision.3. The Appellant challenged the Adjudicating Authority's order, arguing that the Authority should not have computed the RP's fee and expenses in the contempt jurisdiction. The Appellant contended that the Adjudicating Authority's order was unsustainable as the RP had not submitted a report on fees and expenses as directed by the Appellate Tribunal.4. The Adjudicating Authority was deemed to have jurisdiction to determine the fees and expenses based on the Appellate Tribunal's directions. The Authority had the power to examine the entitlement of fees and expenses, as mandated by the Tribunal's order. The Adjudicating Authority's decision to calculate the fee and expenses was considered valid.5. The Appellate Tribunal upheld the Adjudicating Authority's determination of the RP's fee at Rs. 1,00,000 per month and approved CIRP expenses of Rs. 2,41,512. However, a specific direction in the Authority's order regarding expenses of Rs. 3,01,427 was set aside. The Financial Creditor was ordered to pay Rs. 7,30,000 plus Rs. 2,41,512 to the RP within four weeks, minus any amount already paid.6. The appeal was disposed of with the above directions, affirming the Financial Creditor's liability to pay the determined fees and expenses in compliance with the Appellate Tribunal's order.