TaxTMI 
TaxTMI 
2026 (3) TMI 761
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....The Cosmos Co-Op Bank Limited, who is the Financial Creditor of the Corporate Debtor is the Respondent herein. 2. It is the case of the Appellant that the Impugned Order dated 25.07.2024 is contrary to the provisions of Code and Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons, 2016 ("CIRP Regulations") as well as in contradiction to the Adjudicating Authority own order dated 11.08.2023 passed by the Ld. Adjudicating Authority whereby the fee of the Resolution Professional was fixed at Rs. 50,000/- per month. The Appellant submitted that the Adjudicating Authority wrongly observed that description of tasks undertaken by the Appellant during the said period does not justify the payment of professional fee at the rate of Rs. 50,000 per month. The Appellant submitted that the said finding is contrary to factual position. The Appellant submitted that the Resolution Professional, during the entire period of the CIRP till the date of handing over is duty bound to maintain the Corporate Debtor and complete the statutory compliances. The Appellant submitted that he pursued all litigation before various legal fora. The Appellant elaborated tha....
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.... 1792 of 2017, whereby corporate insolvency resolution process was commenced against the Corporate Debtor vide Order dated 16.04.2018. 6. The Appellant submitted that the CoC had fixed the fees of the Appellant acting as the Resolution Professional at Rs. 2,50,000/- per month in its second meeting held on 03.07.2018. Thereafter, the CoC renegotiated the fees of the Appellant to Rs. 2,00,000/- per month vide email correspondences exchanged between the Appellant and the Respondent Bank including email dated 10.07.2020 issued by the Respondent Bank to the Appellant. 7. The Appellant submitted that when the resolution for filing of application under Section 12A of the Code was passed by the CoC, the Respondent had submitted the Undertaking dated 04.04.2019 along with its Form FA dated 03.04.2019, wherein as per Regulation 30A of the CIRP Regulations, the Respondent undertook to bear and pay to the Appellant the actual expenditure and cost incurred on CIRP of the Corporate Debtor. The Appellant castigated the conduct of the Respondent and stated that while on the one hand, the Appellant performed all her statutory duties as per the Code, on the other hand the Respondent unilateral....
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.... in observing that description of tasks undertaken by the Appellant during the said period does not justify the payment of professional fee at the rate of Rs. 50,000/-. The Appellant further submitted that the said finding is contrary to the records of the case. 11. Concluding his arguments, the Appellant requested this Appellate Tribunal to set aside the Impugned Order and allow the present appeal. 12. Per contra, the Respondent refuted all the averments of the Appellant treating these as baseless and misleading. 13. The Respondent stated that during the CIRP of the Corporate Debtor namely Crystal Clear Veg Oil Refinary Pvt. Ltd., only solitary Resolution Plan amounting to Rs. 65,00,000/- was received from one of the Resolution Applicant against the claim of Financial Creditors of Rs. 17,67,00,000/-, however, since the said, Resolution Plan was not satisfactory, the same was rejected by the CoC in their commercial wisdom during 12th CoC Meeting held on 06.03.2019. The Respondent stated that the CoC also decided that the CIRP proceedings against the Corporate Debtor would be withdrawn, as a result of this, an application under the provisions of Section 12 A of the Code was....
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....'s fee to the extent of Rs. 76,05,557/-, a case wherein, CIRP was supposed to be withdrawn in 2019 and no substantial work has been undertaken since 2019. 17. The Respondent admitted that the Appellant was not running the Corporate Debtor as a going concern and was not carrying out any specific duties as prescribed under the provisions of the Code or CIRP regulations. The Respondent conceded that even the Code is purposefully silent on the issue of payment of fees to the Resolution Professional during the pendency of a 12A application. 18. The Respondent submits that the Appellant has no right to claim any fees for the period starting from re-consideration of the MA 1339/2019 before the Adjudicating Authority, on the direction of this Hon'ble Tribunal, till the passing of the Order dated 23 January, 2024 allowing the withdrawal application. Despite the same, the Appellant has filed the present Appeal to merely extract more money from the Respondent under the garb of CIRP costs and has frivolously filed the present Appeal with mala fide intention even though she is absolutely not entitled to any further payment. The Respondent has already paid the Applicant a hefty sum....
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....e application under sub-regulation (1) shall be made in Form FA of the Schedule accompanied by a bank guarantee- (a) towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33:, till the date of filing of the application under clause (a) of sub regulation(1); or (b) towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31:, till the date of filing of the application under clause (b) of sub-regulation (1). (3) Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt. (4) Where an application for withdrawal is under clause (b) of sub-regulation (1), the committee shall consider the application, within seven days of its receipt. (5) Where the application referred to in sub-regulation (4) is approved by the committee with ninety percent voting share, the resolution professional shall submit such application along with the approval of the committee, to the Adjudicating Auth....
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....e fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional.] Regulation 34. Resolution professional costs. The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process costs. [Explanation. - For the purposes of this regulation, "expenses" include the fee to be paid to the resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the resolution professional. Section 12A: Withdrawal of application admitted under section 7, 9 or 10. [12A. The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be prescribed.] "Regulation 34B. Fee to be paid to interim resolution....
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.... 3.00 (iv) More than Rs. 2,500 crore but less than or equal to Rs. 10,000 crore 4.00 (v) More than Rs. 10,000 crore 5.00 Period for minimum fixed fee. 2. The minimum fixed fee shall be applicable for the period, from appointment as interim resolution professional or resolution professional, till the time of (a) submission of application for approval of resolution plan under section 30; (b) submission of application to liquidate the corporate debtor under section 33; (c) submission of application for withdrawal under section 12A; or (d) order for closure of corporate insolvency resolution process; whichever is earlier. 24. We find that the Adjudicating Authority has held that expenses to the Appellant are payable only up to the date of filing of the Section 12A of the Code application relying on Regulation 30A(2)(a) of the CIRP Regulations. However, when we take into consideration Regulation 30A, especially Regulation 30A(7), we find that Regulation 30A(2)(a) of the CIRP Regulations uses the term "estimated expenses incurred on or by the IRP.... till the date of filing of the application"; and further Regulation ....
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.... by the Applicant in terms of Regulation 33 of CIRP Regulations. The Code and the CIRP Regulations do not mention any other power to the Adjudicating Authority to fix the fee of the Resolution Professional on its own and the onus is on the CoC. Thus, the Adjudicating Authority is not correct in fixing the fee of the Resolution Professional. 27. We find that the Adjudicating Authority has erred in holding that the CIRP Regulations do not contemplate the payment of any further professional fee after filing of application under Section 12A of the Code. We have already noted that Regulation 30A (7) provides that the Applicant shall deposit an amount towards the actual expenses incurred till the date of approval by the Adjudicating Authority as determined by the Resolution Professional. Thus, the Adjudicating Authority has not taken into consideration the said provision while passing the Impugned Order. 28. We also tend to agree with both the Appellant and Respondent on the point that the fees and costs charged by an Insolvency Resolution Professional must be transparent and a reasonable reflection of the work necessarily and properly undertaken. However, we wonder if drastic redu....
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....thority. Thus, the CoC is duty bound to make payment to the Resolution Professional as per regulations or as per negotiated terms. 32. We find that it is prerogative and privilege and function of CoC to fix suitable fee transparently for the Resolution Professional commensurate with work. We sympathize with CoC, who despite claims of Rs. 17.67 Crores against the Corporate Debtor were saddled with fee of Resolution Professional. We note that CoC had paid till February, 2023 Rs. 1,71,84,097/- out of which Rs. 76,05,557/- were paid to support staff. We are conscious of the fact that solitary Resolution Plan which was rejected by the CoC was only of Rs. 65 Lakhs. In other words, the CoC had already incurred twice the cost towards the Resolution Professional in comparison to much lower expected Resolution Plan value. 33. However, the issue remains as to whether the work and responsibility of Resolution Professional get over after filing Section 12 A application and can the Resolution Professional walk away from the CIRP after filing 12A application. In our opinion, the answer is clear and categorically NO. The Resolution Professional is duty bound to continue looking after the aff....