The NCLAT, Principal Bench consisting of Justice Ashok Bhushan, Chairperson and V.P. Singh, Technical Member in the case of Sumit Bansal, Insolvency Professional v. Committee of Creditors of JP Engineers held that the IBBI is clothed with the jurisdiction to regulate payment of remuneration of the RP and IRP both by framing regulations or by issuing executive instructions till...
The NCLAT, Principal Bench consisting of Justice Ashok Bhushan, Chairperson and V.P. Singh, Technical Member in the case of Sumit Bansal, Insolvency Professional v. Committee of Creditors of JP Engineers held that the IBBI is clothed with the jurisdiction to regulate payment of remuneration of the RP and IRP both by framing regulations or by issuing executive instructions till regulations are not framed to regulate the subject.
The Appellant was appointed as the Interim Resolution Professional (IRP) by the Adjudicating Authority. In the first meeting of the CoC, he claimed that he should be paid a sum of Rs. 2 Lakhs per month, however, the CoC ratified payment of only Rs. 50,000/- per month. The IRP was subsequently replaced by the Resolution Professional.
Thereafter, the IRP filed an Application before an Adjudicating Authority claiming the payment of fees at Rs. 2 Lakhs per month. The Adjudicating Authority, wide the impugned order, directed the IBBI to decide the claim of the Insolvency Professional regarding his fee.
Against this order, the Appellant preferred an appeal on the ground that the IBBI has no jurisdiction to decide the question of payment of fees of the IRP and that the Adjudicating Authority ought not to have asked for recommendation of the IBBI with regard to fee of the Appellant. The Appellant claimed that the Adjudicating Authority ought to have decided the matter regarding fee itself.
The NCLAT placed reliance on Section 240(1) of the Insolvency and Bankruptcy Code, which empowers the IBBI to make regulations and rules consistent with the Code, to carry out the provisions of the Code.
In furtherance of this provision, the IBBI has framed the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, under which, Regulation 7(2)(h) provides that the Insolvency Resolution Professional has to be abide by the Code of Conduct specified in the First Schedule to these Regulations. In the First Schedule, Item 25 requires an Insolvency Professional to provide services for remuneration which is charged in a transparent manner, is a reasonable reflection of the work.
The NCLAT disposed of the appeal and held that-
"We thus are of the view that IBBI is fully clothed with jurisdiction to regulate payment of remuneration of RP and IRP both by framing regulation or by issuing executive instructions till regulation are not framed can regulate the subject. We thus are of the view that IBBI till necessary regulations are not framed regulating fee is empowered to issue executive instructions in this regard. The issue of payment of fee to the IRP/RP occur very frequently which needs to be regulated by Regulating Authority who is clothed with the power. The mere fact that IBBI has been asked to submit its recommendations by the Adjudicating Authority, in the present case, we see no reason to question the jurisdiction of IBBI to submit a recommendation."
The Appellant Tribunal directed the Adjudicating Authority to dispose of the application after receiving recommendations from the IBBI.
Counsel for the Appellant: Mr. Abhishek Garg, Mr. Ayush Kuchhal, Advocates
Counsel for the Respondent: PBA Srinivasan, Mr. Parth Tandon, PS Chandralekha, Ms. Nikitha Ross, Ms. Sneha Iyer, Advocates for R1. Mr. K.D. Sharma, Advocate for R2.