IRP entitled to proportional fees of Rs.4 lakh per 30-day period, not one-time payment

The NCLAT Chennai held that an IRP is entitled to fees of Rs.4,00,000/- for each 30-day period served, not just a one-time payment. The tribunal calculated that the IRP worked 53 additional days beyond the initial 30-day period until replacement by a new RP on 27.11.2020. Applying proportional calculation, the IRP was awarded Rs.6,49,290/- for the extended period at the rate of Rs.4,00,000/- per 30 days, payable within 30 days. Appeal allowed in part.

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Issues:
- Challenges to Impugned Orders in two Company Appeals
- Entitlement of Interim Resolution Professional (IRP) to fees
- Clarification sought on payment of fees to IRP

Analysis:

In the present judgment, two Company Appeals were filed challenging Impugned Orders issued by the National Company Law Tribunal, Bengaluru Bench. The appeals revolve around the entitlement of the Interim Resolution Professional (IRP) to fees for the period of his appointment. The Appellant, appointed as IRP in a Corporate Insolvency Resolution Process (CIRP), sought payment for his services rendered during his tenure. The Respondent No. 2, Canara Bank, was directed to pay the IRP his proportional share of the agreed fee until he was replaced by a new RP. The IRP contended that he should be compensated from the date of his appointment till the new RP was appointed. The Appellant filed a clarification application seeking a determination on the amount owed to him for his services.

The Appellant, in both appeals, was appointed as IRP in a CIRP initiated by Respondent No. 3. The terms of payment for the IRP were agreed upon in a letter dated 15.11.2018. The IRP diligently performed his duties, including collation of claims, convening CoC meetings, and facilitating the CIRP process. However, the Respondent No. 2, with a significant voting share in the CoC, decided to replace the IRP with a new RP. The IRP continued his duties until the new RP was appointed, as directed by the NCLT. The dispute arose regarding the payment of fees to the IRP for the period he served.

The Appellate Tribunal analyzed the facts and orders passed by the NCLT. It was observed that the IRP was entitled to the agreed fee for the period he served as IRP until the new RP took over. The Tribunal determined that the Respondent No. 2 should pay the IRP his fees for the entire duration he served as IRP, including the period from the expiry of the first 30 days of his appointment till the appointment of the new RP. The Appellant was directed to be paid the amount owed to him within 30 days from the date of the judgment.

In conclusion, the Company Appeals were partly allowed, and the pending Interlocutory Applications were disposed of. The judgment clarified the entitlement of the IRP to fees and directed the Respondent No. 2 to pay the Appellant the agreed amount for his services rendered during the CIRP process.

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