TaxTMI 
TaxTMI 
2023 (7) TMI 771
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional. An I.A. No. 985 of 2022 was filed by the Resolution Professional seeking extension of CIRP period by 90 days from 24.10.2022. The Adjudicating Authority on 21/11/2022 allowed extension of 90 days. On 01.12.2022, Resolution Plan was approved by the Committee of Creditors (CoC in short). Appellant has also claimed incentive fee which came to be considered by the Committee of Creditors on 01.12.2022 the claim of the Appellant to incentive fee for value maximization as per Clause 4 of Schedule II under Regulation 34B of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. I.A. No. 222/2023 was filed by the Appellant dated 2nd February, 2023 where the Appellant prayed for following reliefs: "a) Pass appropriate order for payment of performance linked payment incentive fees to the Applicant as per Regulation 34B of the CIRP Regulations, 2016, inter alia, for successfully completing CIRP and approval of resolution plan by CoC in 247 days (i.e., 26.04.2022 (admission order) to 29.12.2022 (voting on resolution plan completed), and for achieving value maximization; and/or b) Such other and further reliefs(s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r operates, level of operating economic activity of corporate debtor and complexity related to process. (3) After the expiry of period mentioned in clause 2 of Schedule-II, the fee of the interim resolution professional or resolution professional shall be as decided by the applicant or committee, as the case may be. (4) For the resolution plan approved by the committee on or after 1st October 2022, the committee may decide, in its discretion, to pay performance-linked incentive fee, not exceeding five crore rupees, in accordance with clause 3 and clause 4 of Schedule-II or may extend any other performance-linked incentive structure as it deems necessary. (5) The fee under this regulation may be paid from the funds, available with the corporate debtor, contributed by the applicant or members of the committee and/or raised by way of interim finance and shall be included in the insolvency resolution process cost." 7. Regulation 34B refers to schedule II which is to the following effect: "Schedule-II (Under Regulation 34B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Authority on commencement of payment to creditors by the resolution applicant. Explanation: For the purposes of clause 3 and clause 4, "realisable value" means the amount payable to creditors in the resolution plan approved under section 31. Illustration - A corporate debtor having liquidation value of twenty crore rupees was resolved and the realisable value to creditors was one hundred crore rupees. The resolution plan was submitted to the Adjudicating Authority on 170th day from the insolvency commencement date. The committee has decided to pay the performance-linked incentive fees under clause 3 and 4. In this case, fee payable to the resolution professional shall be as under: (i) Performance-linked incentive fee for timely resolution: 0.75% of Rs. 100 crore = Rs.75 lakh, and (ii) Performance-linked incentive fee for value maximisation: 1.00% of Rs. 80 crore (Rs.100 crore - Rs.20 crore) = Rs.80 lakh." 8. The Appellant in the Application has claimed incentive fee of Rs. 21,33,000/- as performance linked incentive fee for timely resolution and Rs. 11,64,256/- as performance linked incentive fee for value maximization. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decide whether or not to act. The legal concept of discretion implies power to make a choice between alternative courses of action (Discretionary Justice Davis 1969). Statute has conferred discretionary power on the Commissioner and State Government but not discretion coupled with duty because they are dealing with a subject matter on which State has exclusive privilege. Permissive language used by the Statute in Section 14 and the rule making authority in Rule 4 gives the State Government and the Commissioner, no mandatory duty or obligation to grant the licence except perhaps to consider the application, if the liquor policy permits so." 14. The decision of the CoC dated 01.12.2022 as noted above is a business decision of the CoC while approving the Resolution Plan including the payments which have to be made to the various creditors, stakeholders as well as to the Insolvency Professional Cost, which have to be deliberated and voted upon by the Committee of Creditors. The payment of Performance Linked Incentive Fee in event it is paid to the Resolution Professional shall be part of the Insolvency Resolution Cost which affects the entitlement of stakeholders when the Insolvenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....16 Regulations, the Court set out the jurisdiction of the Adjudicating Authority as well as the Appellate Tribunal as follows: "55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in 62 prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board.....