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

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

Khozim Yusuf Nagarwala Versus Satyendra Prasad Khorania Erstwhile RP of Raj Buildhome Pvt. Ltd.

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 ... Contempt petition - Determination of Resolution Professional (RP's) fees and expenses - jurisdiction of the Adjudicating Authority to determine the fees and expenses - Regulation 33(2) of CIRP Regulations 2016 - HELD THAT:- The submission of the Appellant that the Adjudicating Authority has no jurisdiction to proceed for computation of fee and expenses, not agreed upon. When the Appellate Tribunal vide its order dated 11.12.2019 has specifically directed in paragraph 19 that Financial Creditor is liable to pay the CIRP cost and fees which was to be reported to the Adjudicating Authority and which was to be determined, the Adjudicating Authority has ample jurisdiction to proceed to examine the entitlement of the fee and expenses. The direction of the Appellate Tribunal has been substantially complied by the Adjudicating Authority by determining the fee and expenses. The order passed by this Appellate Tribunal on 11.12.2019 is final and binding between the parties and the Financial Creditor cannot escape from liability to pay fee and expenses. Adjudicating Authority has determined the fee of Rs. 1,00,000/- per month totalling Rs. 7,30,000/- which we are of the view that need to be paid by the Financial Creditor. CIRP expenses has also been approved for Rs. 2,41,512/- which finds approval - However, the direction issued in paragraph 15.3 is uncalled for and is set aside. The Appellant is liable to pay the amount of Rs. 7,30,000/- plus Rs. 2,41,512/- minus any amount if already paid which payment shall be made to the RP within four weeks from today by a Bank Draft or by R.T.G.S payment - Appeal disposed off. 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.