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Synopsis

The National Company Law Tribunal at Kolkata has recently directed a Committee of Creditors (COC) to pay all the fees and expenses incurred by the Resolution Professional for the Corporate Insolvency Resolution Process (CIRP) while observing that Resolution Professionals (RP) are entitled to fees approved by the COC.

“In our view that an Insolvency Professional who is engaged to perform his/her duty as a Resolution Professional is entitled to be remunerated by way of paying fees for his labour and work and accordingly the fees and expenses are to be approved by the COC,” the tribunal observed. 

The observation was rendered by the bench, comprising Justice Bidisha Banerjee and Technical Member Balraj Joshi, while considering an application filed by the Resolution Professional (RP).

The application pertained to the payment of services rendered by the RP during the Corporate Insolvency Resolution Process (CIRP) initiated against a company.

During a COC meeting, the remuneration for the RP was fixed at Rs. 50,000 per month, with an additional Rs. 2 lakhs designated for CIRP expenses. The RP was to receive this amount from HDFC Bank via an overdraft but he couldn’t as a lien had been established by the sales tax department.

Despite repeated reminders and notices issued by the Resolution Professional (RP), the Committee of Creditors (COC) failed to respond and neglected to make the payment owed to the RP. This non-payment amounted to Rs. 2,265,736 and spanned over two years from the time the RP was appointed.

The COC had also taken the matter to the Insolvency and Bankruptcy Board of India (IBBI), leveling allegations of misconduct against the RP. However, this complaint was dismissed. Following the dismissal, an appeal was filed before the high court, which was still pending at the time of the tribunal's decision. 

In its ruling, the tribunal referenced the minutes of the meeting during which the RP's fee had been determined and cited Section 34 of the Insolvency and Bankruptcy Code (IBC). This section explicitly states that the COC is responsible for setting the expenses to be incurred by or on behalf of the resolution professional. 

Consequently, the tribunal directed the COC to reimburse the RP for the outstanding fees.

“Hence, considering all the facts and circumstances abovementioned, we direct the Committee of Creditors to take necessary action in regard to reimbursing all the fees due including the CIRP costs and Professionals’ fees incurred by the Applicant herein, the Resolution Professional for the Corporate Debtor,” the order reads. 

In addition to directing the Committee of Creditors (COC) to reimburse the outstanding fees to the Resolution Professional (RP), the bench also recognized the RP's reluctance to continue in their role. Therefore, the bench further asked the COC to relieve the current RP of their responsibilities and appoint a new RP in his place.

Case title: PM Cold Storage Private Ltd vs Gouuksheer Farm Fresh Private Ltd.