TaxTMI 
TaxTMI 
2026 (7) TMI 108
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....IA 343/2021 filed by the Appellant i.e. Erstwhile IRP of the Corporate Debtor to order the Respondents Committee of Creditors of the Corporate Debtor for payment of Rs. 29,23,308/- to Committee of Creditor (CoC) of the Corporate Debtor towards the payment CIRP cost under Section 60(5)(b) of Insolvency and Bankruptcy Code, 2016 along with Section 425 of the Companies Act, 2013 and appropriate proceedings in connection with. 2. The Appellant had sought the following reliefs from the Adjudicating Authority: "a. Order the Respondents to deposit the total amount of Rs. 29,23,308/- (Rupees Twenty-Nine Lakh Twenty Three Thousand Three Hundred Eight) in the Bank Account as mentioned below: Name of Beneficiary: Mohd Nazim Khan Name of Bank: ICICI Bank Branch: Karol Bagh, New Delhi Saving A/c No: 629101104907 IFSC Code: ICIC0006291 b. Punish the COC Members with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees or with both as specified under Section 12 of the Contempt of Courts Act, 1971; and c. Any other order that the Hon'ble Tribunal may deem fit in the facts and cir....
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....ppointed as the IRP in Sonal Anand vs. M/s International Trenching Pvt Ltd vide order dated 08.08.2019 bearing CP (IB) 889/ND/2019, filed under Section 9 of Insolvency and Bankruptcy Code, 2016 ("IBC") before Hon'ble NCLT and continued to discharge his statutory duties until 20.11.2020, i.e., for more than 15 months, in compliance with the provisions of IBC. Duration of appointment as IRP of the Appellant is from 08.08.2019 to 20.11.2020. It is noteworthy that the Appellant was replaced vide order dated 20.11.2020. 5. In the first meeting of the Committee of Creditors ("COC") held on 21.09.2019, the COC approved the modified remuneration of the Appellant from the proposed amount of Rs. 200,000 per month to Rs. 1,50,000/-. At no point was the said amount described or resolved to be a lump-sum for the entire tenure, however, the theme of the IBC is to remunerate the IRP/RP on monthly basis and the new RP was also paid monthly remuneration (Item No. 12 of the said minutes at Pg 102 of Volume I of the Main Appeal). 6. The Appellant after expiry of tenure of thirty days from the date of his appointment as Interim Resolution Professional discharged all the functions of the Reso....
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....9(3) of IBC on 31.10.2019 before the Hon'ble NCLT bearing Company Application No. 107/2019 connected in CP (IB) 889/ND/2019, seeking assistance, co-operation and information from the management of Corporate Debtor and handover of the management of Corporate Debtor to IRP as per the provisions of IBC. 13. In discharge of his statutory duties under the IBC had filed an application on 16.11.2019 under Sections 43, 45, 50, 66 and Section 60(5) of the Code read with Regulation 35A of the IBBI (CIRP) Regulations, 2016 before the Hon'ble NCLT bearing Company Application No. 872/2019 connected in CP (IB) No. 889/ND/2019, seeking appropriate reliefs for declaring the transaction as undervalued identified by the IRP during the CIRP. It is further submitted that the said application was withdrawn without providing any justification, and accordingly, the same was withdrawn without any adjudication on merits, despite the issues identified therein remaining unexamined. 14. The Appellant brings to our notice that Ms. Deepika Bhugra Prasad, was appointed Resolution Professional vide order dated 20.11.2020 passed by the Hon'ble NCLT, and subsequently, an order of liquidation was passed on 04.....
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.... entire tenure is inconsistent with its earlier approval and unsupported by any express stipulation of a lump-sum arrangement. The issue pertains to statutory entitlement and fairness in fixation of CIRP costs, not a commercial assessment of viability. The impugned order, by treating the matter as falling within unreviewable commercial wisdom, has therefore erred in law and warrants interference. The Respondents have selectively interpreted the minutes of the 1st COC meeting to arbitrarily restrict the Appellant's remuneration. Remuneration payable to an IRP/RP is a statutory CIRP cost under Section 5(13) of the IBC, read with Regulations 33 and 34 of the IBBI (CIRP) Regulations, 2016 and is not governed by the commercial wisdom of the COC. 19. To remove ambiguity regarding remuneration of IRP/RP, the Insolvency and Bankruptcy Board of India introduced Regulation 34B along with Schedule II to the IBBI (CIRP) Regulations, 2016 vide notification no. IBBI/2022-23/GN/REG091 dated 13.09.2022, prescribing minimum monthly fixed fee linked to the quantum of admitted claims. The Schedule provides that where admitted claims are ≤ Rs. 50 crore, the minimum fee payable is Rs. 1,00,00....
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....C members to make a payment of Rs. 3,00,000/- to the Appellant as remuneration. 24. The impugned order passed by the Ld. Adjudicating Authority is a well-reasoned order passed in accordance with the statutory provisions and guiding rules and regulations and hence, warrants no interference. 25. Appellant cannot take advantage of his own wrong and take refuge under Section 16 (5) read with Section 22 of IBC. Appellant's contention that he should be paid and compensated for the entire period till the time Adjudicating Authority has approved the appointment of the new Resolution Professional i.e. on 20.11.2020, cannot be considered in isolation. The same has to be seen along with the conduct of the Appellant in thwarting every effort of the COC to replace him. Reliance is placed upon the order dated 06.08.2021 passed by Co-ordinate bench of this Hon'ble Court in an appeal filed by Appellant titled as "Mohd Nazim Khan v COC & Ors" bearing case No. Company Appeal (AT) (Ins.) No. 1040 of 2020 challenging the order passed by NCLT for his replacement. Vide order dated 06.08.2021, the coordinate bench of this Appellate Tribunal in CA (AT) Insolvency No. 1040 of 2020 observed that "Appe....
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....rate misreading of the record. The CoC, in its commercial wisdom, specifically modified the proposed remuneration and approved a consolidated amount for the IRP's tenure. The distinction between remuneration and salary is well recognised in law. Remuneration refers to compensation for services rendered and does not necessarily imply periodic payment, whereas salary denotes a fixed periodic payment. In the present case, the CoC consciously approved remuneration and not salary, thereby negating any claim of monthly entitlement. 29. The fee claimed by the Appellant is not only contrary to the decision of the CoC but is also in violation of the guidelines issued by the Insolvency and Bankruptcy Board of India ("IBBI") vide circular dated 12.06.2018. The said circular mandates that an insolvency professional must charge a reasonable fee, having regard to factors such as the complexity of the case, value of assets, time devoted and effectiveness in discharging duties. The Appellant's claim is wholly disproportionate and fails to meet the standard of reasonableness envisaged under the regulatory framework. 30. The conduct of the Appellant during his tenure as IRP disentitles him fro....
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....n the present case Section 9 petition was admitted against Tarang Exports Private Limited - the Corporate Debtor vide order dated 17.02.2020, which was subsequently modified vide corrigendum dated 20.02.2020. The Adjudicating Authority appointed the Appellant as the IRP on 08.08.2019. 36. The Appellant - ex-IRP contends that the decision of the Committee of Creditors (CoC) while fixing the remuneration of Rs. 1,50,000/- for remaining 15 months should be set aside. It further claims that the Adjudicating Authority has wrongly interpreted the judgment of K. Sashidhar Vs. Indian Overseas Bank & Ors. in Civil Appeal No. 10673 of 2018. The Hon'ble Supreme Court's decision addressed the critical issue in CIRP i.e. scope of judicial scrutiny over a commercial decision taken by the CoC to approve or reject a resolution plan but not for fixing the remuneration of Insolvency Resolution Professional (IRP). This decision has put the issue beyond doubt that the commercial decision of the CoC is non-justiciable and will not be open to scrutiny by the NCLT. However, this judgment does not make all decisions or duties entrusted upon the CoC under the Code as non-justiciable. As the control of t....
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....ON 33 OF IBBI (CIRP) REGULATION 2016. The Chairman to present before the COC the amount of remuneration to be paid to Mohd. Nazim Khan of Rs. 200,000 (Two Lakh) to act as IRP of Corporate Debtor for the purpose of ratification by COC. The COC may consider and approve the following resolutions: "RESOLVED THAT pursuant to the Regulation 33 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016, the remuneration of Rs. 200,000 (Two Lakh) (exclusive of applicable taxes) for the Interim Resolution Professional be and is hereby approved. RESOLVED FURTHER THAT Interim Resolution Professional be and is hereby authorised to do all such acts, deeds and things as may be required or considered necessary or incidental thereto." 40. In the same meeting, there was an Agenda Item No. 14 relating to fix the remuneration of the resolution professional which is noted as below: "ITEM NO. 14 TO FIX THE REMUNERATION OF RESOLUTION PROFESSIONAL The COC may fix the remuneration of Resolution Professional, which shall constitute Corporate Insolvency Resolution Process costs: ....
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....nvene the CoC, so that the resolution for their replacement can be considered. This request was repeated by the Respondent No. 2 vide their email dated 05.12.2019, 10.12.2019 and 12.12.2019. However, the Appellant kept on delaying the holding of the CoC meeting. Only on 17.12.2019 a meeting was held wherein the replacement of the Appellant with Ms. Deepika Bhugra Prasad was approved by the CoC. Accordingly, basis the approval of the 4th CoC meeting an application bearing IA No. 766/2019 was filed before the Adjudicating Authority seeking the replacement of the IRP. 44. During the 5th CoC meeting which was held on 29.01.2020 the Appellant informed the committee members that an Expression of Interest has been received for submitting their resolution plan. However, as the stipulated period 180 days as per Section 12 of the Code was to expire on 04.02.2020 and one of the resolution applicants had failed to submit its resolution plan, the Respondent No. 1 bank voted for liquidation of the Corporate Debtor as no rehabilitation plan had come forward. However, an opportunity was considered to be given to the prospective applicants. Accordingly, the Respondent bank wrote an email on 13.0....
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....spite the above-noted history of the working of the IRP, keeping in mind that the IRP has worked for more than a month, the CoC considered the initial amount of Rs. 150,000/- as a remuneration for the first month and for the remaining period, though IRP not working for the benefit of the Corporate Debtor as an IRP, the CoC had ratified for an amount of Rs. 150,000/- to be paid to the IRP/Appellant. As such the CoC had approved a total payment of Rs. 300,000/- to be payable to the Appellant IRP for the entire period, it has tendered his services as IRP. This has been notified also to the Appellant vide email dated 28.02.2021 and 30.08.2021. 50. We find that the appellant contends that the word remuneration is claimed to be periodic in nature and same has to be taken as monthly in the context of CIRP. On the other hand, Respondent contends that the Appellant has erroneously interpreted the word remuneration and salary to be one and the same thing. The two words are different and such difference has been acknowledged by Courts across globally. While remuneration is for a service that someone has performed, whereas as a salary is an agreed compensation for services especially profes....
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....d giving primacy to CoC in making payment to IRP for the professional duties performed by it. 55. We observe that the core legal framework for fixing fees for Interim Resolution Professionals (IRPs) and Resolution Professionals (RPs) is mainly governed by the Insolvency and Bankruptcy Code, 2016 (IBC), specifically Section 60(5) and Regulations 33 and 34 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Furthermore, the Hon'ble Supreme Court in Devarajan Raman vs. Bank of India Limited [Civil Appeal No. 3160 of 2020] has clarified that the NCLT, as the Adjudicating Authority, possesses jurisdiction under Section 60(5)(c) of the IBC to determine the fees and costs payable to professionals appointed during the Corporate Insolvency Resolution Process (CIRP), even if the CIRP order is subsequently set aside. This judgment emphasizes that fee fixation cannot be an ad hoc exercise; it requires proper scrutiny of the factual basis, work done, and any agreements. Similarly, in Alok Kaushik vs. Bhuvaneshwari Ramanathan and Ors. [Civil Appeal No. 4065 of 2020], the Hon'ble Supreme Court held that the NCLT retains jurisdiction under Section 60(5)(c) to de....