Resolution Professional Is Not Entitled To Fees During Stay On Insolvency Proceedings: NCLAT
NCLAT principal bench comprising of Justice Ashok Bhushan & Ms. Shreesha Merla in the case of IndusInd Bank Ltd. versus Mr. Rajendra K Bhuta held that the Resolution Professional is not entitled for any professional fees during the period of stay on the corporate insolvency resolution process. IndusInd Bank filed an appeal under Section 61 of the Insolvency and Bankruptcy Code,...
NCLAT principal bench comprising of Justice Ashok Bhushan & Ms. Shreesha Merla in the case of IndusInd Bank Ltd. versus Mr. Rajendra K Bhuta held that the Resolution Professional is not entitled for any professional fees during the period of stay on the corporate insolvency resolution process.
IndusInd Bank filed an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 before the NCLAT against the order dated 16.12.2021 of NCLT Mumbai wherein it has directed the members of erstwhile COC to pay INR 30,81,719/- as reimbursement to Resolution Professional.
Brief Background
CIRP of Corporate Debtor was initiated on 05.03.2018 and the committee of creditors comprising of IndusInd Bank and Abhyudaya Co-operative Bank Limited was constituted on 26.06.2018. Suspended board of directors filed an appeal before NCLAT against the admission order which was dismissed by NCLAT. Thereafter, a Civil Appeal was filed before Supreme Court and Supreme Court vide its order dated 26.11.2018. Civil Appeal was allowed by Supreme Court vide its order dated 02.09.2019 and the CIRP was set aside.
Resolution Professional filed an application for reimbursement of fees and NCLT calculated fees for period between 13.06.2018 to 02.09.2019
Contentions of Parties
It was contended by IndusInd Bank when there is a stay on the insolvency proceedings there is no entitlement of fees on the part of the Resolution Professional whereas it was contended by the Resolution Professional that even though there was stay on insolvency proceedings, certain expenses were incurred by Resolution Professional and thus payment to Resolution Professional cannot be denied.
Decision/Analysis By NCLAT
NCLAT observed that there was a stay on the insolvency proceedings on 26.11.2018 and the insolvency proceedings were ultimately set aside on 02.09.2019 and therefore, no fees is payable to Resolution Professional for this period.
"7…we are of the view that Resolution Professional is not entitled for any fee after 26th November, 2018. The RP is entitled for fee from 13th June, 2018 to 25th November, 2018 hence the Order of the Adjudicating Authority in Paragraph 17 is modified to the above extent that RP fee shall be entitled to fee from the period 13th June, 2018 to 25th November, 2018. No fee shall be entitled with effect from 26th November, 2018."
Accordingly, NCLAT allowed the appeal field by IndusInd Bank.
Case Title: IndusInd Bank Ltd. versus Mr. Rajendra K Bhuta
Counsel for Appellant: Mr. Rohit Gupta and Ms. Rubina Khan
Counsel for Respondent: Mr. Rajeev K Pandey, Rajeev M Roy, Mr. Mayank Kshirsagar, Darryl Pereira