NCLAT Delhi Upholds Reduction Of Resolution Professional’s Fee By NCLT

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Rohit J. Vora v Religare Finvest Ltd. & Ors., has upheld the NCLT order whereby the fee of the Resolution Professional was reduced from Rs. 3.75 Lakhs + GST to Rs. 1 Lakh + GST. The Bench observed that there was deficiency in the Resolution Professional’s performance, such as failure to publish Form G, invite Expression of Interest and to obtain any successful resolution plan for the Corporate Debtor within 180 days from the initiation of CIRP. “Given the material on record and the facts and circumstances in the present matter, we are therefore inclined to agree with the finding of the Adjudicating Authority that the active CIRP period having expired with no substantial work to be taken up further and the Covid pandemic also having generally disrupted work, the scaling down of the fees to Rs 1 lakh was not discriminatory or unfair.” Background Facts Jogma Laminates Industry (P) Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”). Mr. Rohit J Vora was appointed as the Resolution Professional of the Corporate Debtor. In the first meeting of Committee of Creditors (“CoC”) the fee of the Resolution Professional was approved as Rs. 3.75 Lakhs per month alongwith GST. On 18.07.2019, the Committee of Creditors decided to remove the Resolution Professional, subject to his continuance until replacement by a new person. However, the Resolution Professional continued to function since no application was filed for replacing him. Subsequently, the Resolution Professional raised the issue of non-payment of his fees and expenses to the tune of Rs. 23,57,635/- and the non-contribution of fees by any CoC member. The CoC decided to go for liquidation of the Corporate Debtor and replace the Resolution Professional with a Liquidator. On 10.05.2022, the Resolution Professional filed an application claiming fees and other expenses from 25.04.2019 to 24.12.2022. The NCLT vide an order dated 06.12.2022 directed the CoC to pay the fees, but reduced the fees of the Resolution Professional from Rs. 3.75 Lakhs + GST to Rs.1 lakh per month + GST. The Resolution Professional challenged the order before the NCLAT. NCLAT Verdict The issue before the Bench was whether the reduction of the Resolution Professional’s fees by the NCLT was justified or not. The Bench observed that there was deficiency in the Resolution Professional’s performance, such as failure to publish Form G, invite Expression of Interest and to obtain any successful resolution plan for the Corporate Debtor within 180 days from the initiation of CIRP. Further, there was tussle between the Resolution Professional and the CoC which hampered the CIRP. “We find that the Adjudicating Authority had also taken notice of the fact that the RP had entered into a tussle with the CoC which put hurdles in the progress of the CIRP. That resolution of the Corporate Debtor had not taken place due to ongoing tussle between the Appellant and CoC is writ large. In fact, the Adjudicating Authority while considering the liquidation application filed vide MA 3668/2019 had been constrained to note of serious misunderstanding between the RP and the CoC causing a deadlock in the CIRP process leaving no option but for liquidation.” The Bench opined that since the active CIRP period had expired and no substantial work was undertaken post that, the reduction of fee was not discriminatory or unfair. The NCLT was well within its rights while adjudicating on the reasonableness of the Resolution Professional’s fee. The reduction has been done with application of mind by the NCLT. “Given the material on record and the facts and circumstances in the present matter, we are therefore inclined to agree with the finding of the Adjudicating Authority that the active CIRP period having expired with no substantial work to be taken up further and the Covid pandemic also having generally disrupted work, the scaling down of the fees to Rs 1 lakh was not discriminatory or unfair. The Adjudicating Authority was therefore well within its rights in exercising its wisdom in adjudicating on the reasonability quotient of fees payable to the RP. We find no error in the proportionate reduction of fees/expenses as carried out by the Adjudicating Authority as the rationalization has been done with proper application of mind.” The appeal has been dismissed. Case Title: Rohit J. Vora v Religare Finvest Ltd. & Ors. Case No.: Company Appeal (AT)(Insolvency) No. 104 of 2023 Counsel for Appellant: Mr. Partho Sarkar, Advocate. Counsel For Respondent: Mr. Kaushik Mishra, Advocate. Click Here To Read/Download Order

NCLAT Delhi Upholds Reduction Of Resolution Professional’s Fee By NCLT

Pallavi Mishra

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

NCLAT Delhi Upholds Reduction Of Resolution Professional’s Fee By NCLT

Pallavi Mishra

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers