Bhasin Infotech And Infrastructure ... vs Gurpreet Singh

[Arising out of Order dated 10th August, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in Company Petition No. (IB)-75(PB)/2018)

IN THE MATTER OF:

Bhasin Infotech and Infrastructure Pvt. Ltd. Through its Authorised representative Mr. P. N. Joshi Having its registered office at: 28, Raja Garden, New Delhi - 110015. ...Appellant

Vs

Gurpreet Singh Erstwhile Resolution Professional for Bhasin Infotech and Infrastructure Pvt. Ltd. 2nd Floor, 2921A, C/1, Sushant Lok I, Gurgaon, Haryana - 122002. ....Respondent

Present: For Appellant: Mr. Ravinder and Ms. Prachi Johri, Advocates. For Respondent: Mr. Vinod Chaurasia, Chartered Accountant.

SUDHANSU JYOTI MUKHOPADHAYA, J.

This appeal has been preferred by 'M/s Bhasin Infotech and

Infrastructure Private Limited' (Corporate Debtor) against order dated 10th

August, 2018 passed by the Adjudicating Authority (National Company Law

Tribunal), Principal Bench, New Delhi, whereby the Adjudicating Authority

directed the Appellant to pay lump sum fee of Rs.5 lakh (Rupees Five Lakh

Only) in favour of the Interim Resolution Professional within a week. -2-

2. The Corporate Debtor has challenged the impugned order on the

ground that the lump sum fees of Rs.5 lakh fixed by the Adjudicating

Authority for payment in favour of Interim Resolution Professional for

performing duty for 27 days is excessive and arbitrary.

3. On the other hand according to learned counsel appearing on behalf

of the Interim Resolution Professional the Interim Resolution Professional

had claimed fee of Rs.6.50 lakhs from the Financial Creditor by letter dated

24th July, 2018 for his functioning of 30 days. The Financial Creditor

having accepted the same and on the basis of such assurance, he having

appointed, the Interim Resolution Professional has right to claim Rs.6.50

lakh for 30 days of functioning as finally agreed upon by the parties.

4. To decide the issue whether the payment of Rs.5 lakh to Interim

Resolution Professional for his working for 30 days is excessive and

arbitrary or not, it will be desirable to refer to the relevant facts and

provisions of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to

as 'I&B Code').

5. The Financial Creditor before filing application under Section 7 of I&B

Code has asked for consent of the Interim Resolution Professional pursuant

to which he forwarded email on 22nd December, 2017, relevant of which

reads as follows:-

Company Appeal (AT) (Insolvency) No. 491 of 2018 -3-

Company Appeal (AT) (Insolvency) No. 491 of 2018 -4-

6. Pursuant to the said communication while application under

Section 7 was filed by the Financial Creditor, one Mr. Gurmeet Singh was

proposed as Interim Resolution Professional for initiation of Corporate

Insolvency Resolution Process against 'M/s Bhasin Infotech and

Infrastructure Private Limited' (Corporate Debtor - Appellant herein).

7. The application under Section 7 was admitted by the Adjudicating

Authority on 13th June, 2018, which was challenged by the shareholder of

the Corporate Debtor (Appellant) before this Appellate Tribunal. On 22nd

June, 2018, this Appellate Tribunal stayed the public announcement of

insolvency. Subsequently, the Appellate Tribunal heard the parties on

merit and quashed the order of admission by judgment dated 17th July,

2018 and set aside the initiation of Corporate Insolvency Resolution

Process against the Corporate Debtor and remitted the matter to the

Adjudicating Authority to decide the 'fee payable to the Interim Resolution

Professional'.

8. Thereafter when the matter was taken up, the Adjudicating

Authority passed the order dated 10th August, 2018 directing the

Corporate Debtor to pay a sum of Rs.5 Lakh (Rupees Five Lakhs Only) to

the Interim Resolution Professional for his 27 days of working.

9. We have heard learned counsel for the parties and perused the

record.

Company Appeal (AT) (Insolvency) No. 491 of 2018 -5-

10. Section 7(3)(b) of I&B Code empower a 'Financial Creditor' to name

the Resolution Professional proposed to act as an Interim Resolution

Professional.

11. The 'Financial Creditor' before proposing the name is required to

obtain the written consent in Form-2 from the proposed Insolvency

Professional, in terms of Regulation 9 of the 'Insolvency and Bankruptcy

(Application to Adjudicating Authority) Rules, 2016', which is as follows:

"Regulation 9. Interim resolution professional. - (1)

The applicant, wherever he is required to propose or

proposes to appoint an insolvency resolution professional,

shall obtain a written communication in Form 2 from the

insolvency professional for appointment as an interim

resolution professional and enclose it with the application

made under rules 4, 6 or 7, as the case may be.

(2) The application under sub-rule (1) shall be

accompanied by a certificate confirming the eligibility of

the proposed insolvency professional for appointment as a

resolution professional in accordance with the Insolvency

and Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons) Regulations, 2016."

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12. From clause 2 of Regulation 9, it is clear that the Application under

Sub-regulation (1) should be accompanied by a certificate confirming the

eligibility of the proposed Insolvency Resolution Professional.

13. Form-2 is the written communication to be submitted by the

proposed Interim Resolution Professional, which is as follows:

"FORM 2

(See sub-rule (1) of rule 9)

WRITTEN COMMUNICATION BY PROPOSED INTERIM RESOLUTION PROFESSIONAL

[Under rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016]

Date................

To,

The National Company Law Tribunal [Address]

From,

[Name and address of the registered office of the proposed interim resolution professional] In the matter of [name of the corporate debtor]

Subject: Written communication in connection with an application to initiate corporate insolvency resolution process in respect of [name of the corporate debtor]

Company Appeal (AT) (Insolvency) No. 491 of 2018 -7-

Madam/Sir,

I, [name of proposed interim resolution professional], an insolvency professional registered with [name of insolvency professional agency] having registration number [registration number] have been proposed as the interim resolution professional by [name of applicant financial creditor] in connection with the proposed corporate insolvency resolution process of [name of the corporate debtor].

In accordance with rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, I hereby:

(i) agree to accept appointment as the interim

resolution professional if an order admitting the

present application is passed;

(ii) state that the registration number allotted to me

by the Board is [insert registration number] and

that I am currently qualified to practice as an

insolvency professional;

(iii) disclose that I am currently serving as an interim

resolution professional / resolution professional

/ liquidator in [insert number of proceedings]

proceedings;

Company Appeal (AT) (Insolvency) No. 491 of 2018 -8-

(iv) certify that there are no disciplinary proceedings

pending against me with the Board or [name of

the insolvency professional agency he is a

member of];

(v) affirm that I am eligible to be appointed as a

resolution professional in respect of the corporate

debtor in accordance with the provisions of the

Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate

Persons) Regulations, 2016;

(vi) make the following disclosures in accordance

with the code of conduct for insolvency

professionals as set out in the Insolvency and

Bankruptcy Board of India (Insolvency

Professionals) Regulations, 2016;

............................................................ (Signature of the insolvency professional)

.................................

(Name in block letters)

............................................................................ (Name of insolvency professional entity, if applicable)

[Optional certification, if required by the applicant making an application under these Rules]

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I, hereby, certify that the facts averred by the

applicant in the present application are true, accurate and

complete and a default has occurred in respect of the

relevant corporate debtor. I have reached this conclusion

based on the following facts and/or opinion: -

[Please give details].

............................................................ (Signature of the insolvency professional)

................................. (Name in block letters)

............................................................................. (Name of insolvency professional entity, if applicable)"

14. From the aforesaid Form-2 r/w Regulation 9, it is clear that an

Interim Resolution Professional, who has been proposed is required to give

its Registration Number and other details to function as Interim

Resolution Professional.

15. Normally, for the Corporate Insolvency Resolution Process, if it is

successful, Resolution Applicant is required to pay the fee of the

Resolution Professional and the resolution cost, as apparent from Section

30(2)(a) of the I&B Code. As per Regulation 33 of 'The Insolvency and

Bankruptcy Board of India (Insolvency Resolution Process for Corporate

Company Appeal (AT) (Insolvency) No. 491 of 2018 -10-

Persons) Regulations, 2016', the applicant (Financial Creditor in the case)

is required to fix the expenses to be incurred on or by the Interim

Resolution Professional. However, where Applicant has not fixed the

expenses as per sub-regulation (1) of Regulation 33, the Adjudicating

Authority is required to fix the expenses of the Interim Resolution

Professional. As per explanation below Regulation 33, the expression

'expenses' means 'the fee to the paid to the Interim Resolution

Professional' and 'other expenses', including the cost of engaging

professional advisors, to be incurred by the Interim Resolution

Professional.

16. It is not in dispute that the Interim Resolution Professional has not

incurred any expenses such as issuance of advertisement, the cost of

engaging professional advisors in view of the interim order passed by this

Appellate Tribunal. Therefore, it is to be determined that what fee is

payable to the 'Interim Resolution Professional'.

17. From the record and the e-mail communication dated 22nd

December, 2017, as quoted above, we find that no communication was

made between the 'Financial Creditor' (applicant) and the 'Interim

Resolution Professional' as required under the provisions of I&B Code and

Regulation framed therein (including Form-2), which is required to be

filed. The 'e-mail' aforesaid shows that the said 'e-mail' was sent by one

'Mr. Sanjeev Ahuja, Insolvency Professional', as the Founder Director of

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'Ensemble Resolution Professionals Pvt. Ltd.' which is a registered

Insolvency Professional Entity ('IPE' for short) with IBBI. Said IPE have a

group of 'Insolvency Professionals' and quoted fee for naming a person for

acting as an Interim Resolution Professional @ Rs.6 Lakh for 30 days plus

applicable tax. It was indicated that any extension will be charged and

billing shall be split between the firm 'Ensemble' and the Interim

Resolution Professional.

18. From the aforesaid communication we find that the consolidated

amount of Rs.6 lakh has been charged jointly for the firm - 'Ensemble

Resolution Professionals Pvt. Ltd.' and the 'Interim Resolution

Professional' and not towards the fee of 'Interim Resolution Professional'.

19. Admittedly, the Applicant (Financial Creditor) had not fixed the

expenses to be incurred by the Interim Resolution Professional. Therefore,

as per Sub-regulation (2) of Regulation 33, the Adjudicating Authority was

required to fix the expenses which includes the fee to be paid to the

Interim Resolution Professional and other expenses.

20. The application under Section 7 was admitted on 13th June, 2018.

The copy of which was received by the Interim Resolution Professional on

20th June, 2018. Finally the proceeding was terminated by judgment of

this Appellate Tribunal dated 17th July, 2018, thereby we find that the

Interim Resolution Professional has worked for 27 days.

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21. In the aforesaid background, as we find that the 'Interim Resolution

Professional' has performed duty only for 27 days and not incurred any

expenses, except for travelling allowance which he is entitled to, we hold

that Rs.5 Lakh (Rupees Five Lakhs Only) allowed by the Adjudicating

Authority is excessive.

22. The Adjudicating Authority has failed to notice that claim of

Rs.6 Lakh (Rupees Six Lakhs Only) was made by the firm namely

'Ensemble Resolution Professionals Pvt. Ltd.', payable to the Interim

Resolution Professional. As the aforesaid firm is not eligible or entitled to

receive any fees or any cut or commission from the fees of the 'Interim

Resolution Professional', demand of Rupees Six Lakhs cannot be accepted.

23. Taking into consideration the facts and circumstances of the case,

we are of the view that a sum of Rs.1.5 Lakhs (Rupees One Lakh Fifty

Thousand) should be paid in favour of the 'Interim Resolution Professional'

for his functioning for period of 27 days (which is approximately 30 days).

In addition Rs.25,000/-, is allowed towards travel expenditure, if any,

incurred by the Interim Resolution Professional. Thus, Interim Resolution

Professional is allowed a sum of Rs.1.75 Lakh (Rupees One Lakh Seventy

Five Thousand Only) to be paid by the Appellant (Corporate Debtor), which

should be paid within two weeks. The impugned order dated 10th August,

2018 stands modified to the extent above.

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24. The appeal stands disposed of with aforesaid observations and

directions. There shall be no orders as to costs.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI 13th December, 2018

AM

Company Appeal (AT) (Insolvency) No. 491 of 2018