Nirav Tarkas (Erstwhile Irp) vs Vikash Jain (Erstwhile Resolution ...

[Arising out of the Impugned Order dated 09.06.2025 passed by the Adjudicating Authority, National Company Law Tribunal, Ahmedabad Bench, in I.A. No. 92/NCLT/AHM/2023 in C.P. (IB) No. 385/NCLT/AHM/2020] In the matter of: NIRAV TARKAS Erstwhile Interim Resolution Professional of Shreebhav Polyweaves Private Limited 209, BN Chambers, Opp. Welcome Hotel, R.C. Dutt Road, Vadodara, 390005 ...Appellant Versus VIKASH JAIN Erstwhile Resolution Professional of Shreebhav Polyweaves Private Limited 204, Wall Street-1, Near Gujarat College, Ellisbridge, Ahmedabad-380006 Email: ca.vikasjain2@gmail.com .... Respondent

Present: For Appellant : Mr. Arpit Gupta, Mr. Divya Pratap Parmar and Ms. Akansha Agarwal, Advocates. For Respondent : Mr. Karan Valecha, Advocate.

JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of Insolvency and Bankruptcy

Code 2016 ('IBC' in short) by the Appellant arises out of the Order dated

09.06.2025 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority (National Company Law Tribunal, Division Bench,

Court-I, Ahmedabad) in IA No. 92/NCLT/AHM/2023 in CP (IB) No. 385/NCLT/AHM/2020. By the impugned order, the Adjudicating Authority

has allowed I.A. No. 92 of 2023 and directed the Appellant herein to refund

the fees of Rs.12,46,248/- withdrawn by him from the account of the

Corporate Debtor. Aggrieved by the impugned order, the present appeal has

been preferred by the Appellant.

2. Coming to the facts of the present case, Shreebhav Polyweaves Pvt. Ltd-

the Corporate Debtor was admitted into CIRP vide CP(IB)No. 385 of 2020 filed

by State Bank of India ("SBI") as the Financial Creditor. The Adjudicating

Authority on the suggestion of SBI, had appointed Shri Nirav Tarkas-Appellant

as the Interim Resolution Professional ("IRP" in short) on 31.08.2021 to which

appointment the IRP had given his prior consent in Form-2. The Adjudicating

Authority while appointing the IRP had directed SBI to pay a sum of Rs

2,00,000/- only to the IRP as fees and expenses till the Committee of Creditor

("CoC" in short) took a decision on the fees and expenses. The CoC which

comprised of only one member with SBI having 100% exposure, in the 1st CoC

meeting held on 01.12.2021 resolved to replace the IRP as discussed in

Agenda Item No. 3. The Adjudicating Authority on 25.04.2022 allowed the

application filed by the CoC seeking replacement of the IRP based on the

resolution passed by the CoC in its first meeting. Accordingly, Mr. Vikash Jain

was appointed as the Resolution Professional ("RP" in short). The IRP was

invited to the 2nd CoC meeting scheduled on 02.05.2022 for handing over

formalities. The IRP however absented himself from the said meeting. During

the 3rd CoC meeting held on 27.05.2022, the IRP placed before the CoC the

expenses incurred by him for necessary ratification. The 3rd CoC meeting did Page 2 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 not ratify the fees of the IRP on the ground that the same was not approved

by the CoC. During the 4th CoC meeting held on 21.06.2022, the IRP informed

the CoC that he had already drawn the fees amounting to Rs 9,83,684/-. The

IRP had also drawn fees of Rs.2,62,564/- for the month of April, 2022. The RP

intimated the IRP to refund the fees since the fees had been drawn without

the approval of the CoC. The RP filed IA No. 92(AHM)/2023 seeking directions

of the Adjudicating Authority for refund of the fees which had been drawn by

the IRP without ratification of the CoC. Before this sum could be refunded by

the IRP, the Adjudicating Authority approved the resolution plan submitted

by the Successful Resolution Applicant ("SRA" in short) following which a

Monitoring Committee ("MC" in short) came to be constituted. The MC in its

3rd meeting passed a resolution that Shri Vikash Jain, erstwhile RP would

continue to pursue IA No. 92 of 2023 before the Adjudicating Authority. The

Adjudicating Authority allowed IA No. 92 of 2023 on 09.06.2025 directing the

IRP to refund Rs 12,46,248/- to the Corporate Debtor's account within 30

days. Aggrieved by this order, the present Appeal has been preferred by the

IRP.

3. Making his submissions, Shri Arpit Gupta, the Ld. Counsel representing

the IRP submitted that there is a lack of correct appreciation on the part of

the Adjudicating Authority of statutory entitlement of an IRP for his fees.

Submitting that the IRP had been selected by SBI on a monthly fee of Rs.

1,21,000/-, the fees did not require any further approval of the CoC since the

CoC consisted of SBI as the sole member. Since the fee was approved by the

SBI at the time of his appointment, it had acquired a binding nature which Page 3 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 the SBI cannot resile from paying. The refusal on the part of SBI to pay the

fees was a breach of a concluded contract between the two parties which the

Adjudicating Authority failed to appreciate. The Appellant further asserted

that the IRP cannot be denied the fees and made to refund the fees already

drawn as he had undertaken multifarious steps to run the Corporate Debtor

as a going concern. Another flaw in the impugned order is that the

Adjudicating Authority did not consider the fact that when the resolution plan

already stood approved, the MC did not have the authority to further pursue

the IA filed earlier by the RP for recovery of IRP fees. Contention was also made

that the IRP fees anyways stood extinguished from the plan once the plan was

approved and hence recovery of the same was not possible. Thus, the MC had

no jurisdiction to maintain the present application post approval of the

resolution plan. It was also asserted that when no allegations of incompetence,

fraud or lack of diligence had been raised against the IRP on the conduct of

the CIRP proceedings, his replacement, without giving an opportunity of

hearing, was an act in violation of natural justice.

4. Refuting the contentions raised by the Appellant-IRP, the Ld Counsel

for the Respondent, Shri Karan Valecha submitted that the Adjudicating

Authority had rightly observed that IRP had unauthorisedly withdrawn fees

from the account of the Corporate Debtor since the fees had not been ratified

by the CoC which was a statutory requirement. The IRP had additionally

withdrawn fees even during April 2022 by which time he was even replaced.

Unless, the fees incurred by the IRP was ratified by the CoC, it did not qualify

to be treated as "CIRP Costs" in terms of Section 5(13) of IBC and Regulations Page 4 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 31 and 33 of IBBI (Insolvency Resolution Process for Corporate Persons)

Regulations, 2016 (hereinafter referred to as "CIRP Regulations"). Since the

fees had been drawn by the IRP without ratification of CoC, it became the

bounden duty of the RP to recover the fees from the IRP since it is the

responsibility of the RP to take custody of the assets of the Corporate Debtor

for maximisation of the value of the assets. Since it is the duty of the RP to

protect the estate of the Corporate Debtor and the interest of all stakeholders,

the RP was empowered, both in terms of law and equity, to recover the

unratified payments drawn by the IRP. Justifying the locus of the MC to

authorise the RP to continue prosecution of the I.A. for recovery of fees from

the IRP, it was contended that once the resolution plan is approved and the

CoC ceases to function, the MC fills the vacuum to take steps in furtherance

of the plan implementation. It was also pointed out that the conduct of the

IRP was manifestly obstructive and marked by non-cooperation. In support of

their contention that there were sufficient grounds for replacement of the IRP,

it was stated that even the IBBI vide Order No. IBBI/DC/197/2023 dated

21.12.2023 had suspended the license of the IRP in view of his unbecoming

conduct of indulging in repeated deviations from statutory responsibilities. It

was emphatically asserted that in replacing the IRP the provisions of the IBC

had been adhered to with the CoC having decided with majority share to

replace the Appellant-IRP in the 1st CoC Meeting followed by confirmation by

the Adjudicating Authority approving the replacement of the IRP with another

RP. The due process had been followed for replacement of the IRP and there

is no evidence of breach of natural justice.

Page 5 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025

5. We have duly considered the arguments advanced by the Learned

Counsel for the parties and perused the records carefully.

6. Before we commence our analysis to return our findings on the rival

contentions raised by both the parties, it would be worthwhile to point out

that the Adjudicating Authority in the impugned order had outlined four

issues for determination which are as reproduced below:

"8. We have heard the learned counsel for the applicant and perused the documents on record. The issues for determination are as under: -

(1) Whether the Respondent's withdrawal of fees totaling Rs.12,46,248/- without CoC approval or ratification violates the IBC and CIRP Regulations, warranting a refund.

(2) Whether the IA is maintainable post-approval of the Resolution Plan on 27.09.2023, considering the Applicant's alleged functus officio status and the Monitoring Committee's resolution.

(3) Whether the Respondent's conduct, including delays and non-

compliance, impacts the adjudication of this IA.

(4) What relief, if any, is appropriate in the interest of justice?"

Needless to add, aggrieved with the findings of the Adjudicating Authority,

these issues have been agitated before us by the Appellant-IRP for our

consideration which we now propose to tackle hereunder.

7. Coming to the first limb of the argument of the Appellant, it is their case

that the SBI had selected the IRP and also approved a monthly fee of Rs

1,21,000/- as communicated in their appointment letter. This arrangement

was therefore in the nature of a concluded contract under the Indian Contract

Act, 1872 and refusal on the part of SBI to honour this contract is a breach of

Page 6 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 the provisions of the Contract Act. Even the Adjudicating Authority on

31.08.2021 had clearly mandated the payment of Rs 2,00,000/- upfront to

the IRP as fees/expenses. Accordingly, the expenses and fee was invoiced by

the Appellant to the SBI which was not objected to by SBI at any point of time.

IRP had also issued a letter on 18.12.2021 to the suspended management of

the Corporate Debtor and sent a letter dated 14.01.2022 to the SBI regarding

non-compliance of the directions of the Adjudicating Authority dated

31.08.2021 to pay their expenses/fees upfront of Rs 2,00,000/-. The SBI by

not complying with the order of the Adjudicating Authority not only violated

their contractual obligations but it also tantamount to contempt of the court.

It was vehemently contended that when the agenda item on fees of IRP and

CIRP expense was placed for decision in the 1st CoC meeting, SBI as the sole

CoC Member had even assured that the same would be looked into and

processed but that was not done. It is also submitted that since SBI, as the

sole CoC member, had tendered their in-principle approval for payment of fees

of the IRP, no further formal resolution of the CoC was required.

8. Per contra, it is the contention of the Respondent that the withdrawal of

fees by the IRP was unauthorised and illegal as it was not ratified by the CoC

which was a statutory requirement. It was pressed that the reversal of the fees

was justified as Appellant-IRP has not controverted that withdrawal of fees

was done bereft of ratification of the fees by the CoC. Even the order of the

Adjudicating Authority of 31.08.2021 had limited the fees of the IRP to Rs.

2,00,000/- until CoC approval, and IRP has failed to produce any document

evidencing CoC ratification.

Page 7 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025

9. Before we return our findings on whether the fees withdrawn by the IRP

was in order or not, we may first notice the statutory provisions of IBC and

other relevant rules, regulations and orders which govern the realm of CIRP

Costs and fees of the IRP/RP.

10. We first come to Section 5(13) of the IBC which defines CIRP Costs which

reads as follows:

"Section 5(13): Insolvency Resolution Process Costs (13) "Insolvency resolution process costs" means--

(a) the amount of any interim finance and the costs incurred in raising such finance;

(b) the fees payable to any person acting as a resolution professional;

(c) any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern;

(d) any costs incurred at the expense of the Government to facilitate the insolvency resolution process; and

(e) any other costs as may be specified by the Board;"

Section 5(13) of the IBC clearly includes fees payable to the IRP as integral to

CIRP Costs.

11. Further it is important to take notice of Chapter IX of the IBBI

(Insolvency Resolution Process for Corporate Persons) Regulations, 2016

which deals with "Insolvency Resolution Process Costs".

"33: Costs of the interim resolution professional.

(1) The applicant shall fix the expenses to be incurred on or by the interim resolution professional.

(2) The Adjudicating Authority shall fix expenses where the applicant has not fixed expenses under sub-regulation (1). (3) The applicant shall bear the expenses which shall be reimbursed by the committee to the extent it ratifies.

Page 8 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 (4) The amount of expenses ratified by the committee shall be treated as insolvency resolution process costs."

Explanation. - For the purposes of this regulation, "expenses" include the fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional.

34: Resolution professional costs.

The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process costs.

Explanation. - For the purposes of this regulation, "expenses" include the fee to be paid to the resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the resolution professional.

34-A: Disclosure of Costs.

The interim resolution professional or the resolution professional, as the case may be, shall disclose item wise insolvency resolution process costs in such manner as may be required by the Board."

A plain and conjoint reading of above CIRP Regulations makes it amply clear

that expenses incurred by IRP/RP assumes the colour of CIRP costs only if

ratified by the CoC. Therefore, it follows therefrom that fees, if not ratified, do

not fall within the definition of CIRP Costs in terms of Section 5(13) of IBC.

12. Having noticed the statutory construct, we may now glance at the orders

of the Adjudicating Authority dated 31.08.2021 on the fees/expenses payable

to the IRP on commencement of the CIRP proceedings which reads as under:

"10. We direct the Financial Creditor/Applicant to pay the IRP a sum of Rs.2,00,000/- (Rs. Two lakh) as fees & expenses till the COC decides about his fees /expenses."

Page 9 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 When we look at the above order, it is unambiguously clear that the IRP was

only entitled to Rs. Two lakhs only towards fees/expenses until the fees and

expenses were ratified by the CoC. The caveat of ratification by the CoC is

clearly etched out in the said order.

13. Material placed on records reveal that the IRP had admittedly withdrawn

Rs. 9,83,684/- during the CIRP and Rs. 2,62,564/- in April 2022 towards his

fees. Having already noticed the CIRP Regulations which make it imperative

that the fees of the IRP need to be ratified and approved by the CoC, we also

notice that the Adjudicating Authority in its order of 13.08.2021 had also

mandated the approval of the fees by the CoC. That brings us to the question

as to whether the fees so withdrawn was ratified by the CoC in its meetings.

14. At this stage, we may turn to the findings of the Adjudicating Authority

in the impugned order on the aspect of fee withdrawal undertaken by the IRP

and the validity of such withdrawal. The relevant excerpts of the impugned

order read as follows:

"13.1. The Applicant alleges that the Respondent withdrew Rs. 9,83,684/- during the CIRP and Rs. 2,62,564/- in April 2022 without CoC approval or ratification, violating Regulation 33 and the Tribunal's order. The CoC's minutes (27.05.2022 and 21.06.2022) confirm that the fees were neither approved nor ratified, and the Applicant's emails (Annexure-F) demanding a refund went unanswered.

13.2. The Respondent claims that SBI, as the sole CoC member, gave in-principle approval for fees at Rs. 1.65 lakhs per month, and no formal resolution was required. However, the Respondent has not produced any document post-31.08.2021 evidencing CoC ratification. The Tribunal's order explicitly limited fees to Rs. 2,00,000/- until CoC approval, which was not obtained.

Page 10 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 13.3. Regulation 33(3) mandates that IRP expenses, including fees, be reimbursed only to the extent ratified by the CoC. The IBBI Circular reinforces this requirement. The CoC's explicit refusal to ratify the fees (Annexures-D, E) renders the withdrawals unauthorized. The additional withdrawal of Rs. 2,62,564/- in April 2022, after the Respondent's tenure ended (25.04.2022), is particularly egregious, as it lacks any legal basis.

13.4. The Respondent's claim of in-principle approval by SBI is insufficient, as Regulation 33 and the Circular require formal CoC ratification, not informal consent. The discrepancy between the claimed fee (Rs. 1.65 lakhs/month) and invoiced amount (Rs. 1.21 lakhs/month) further undermines the Respondent's credibility."

(Emphasis supplied)

15. We notice that the Adjudicating Authority has gone through the

meetings of the CoC dated 27.05.2022 and 21.06.2022 to return the findings

that the CoC had not approved or ratified the fees of the IRP. The IRP being

the person responsible for drawing up these minutes cannot deny the

authenticity of these minutes. To be fair to the Appellant, the veracity of these

minutes has not been controverted by him nor do we notice any denial on his

part that the CoC did not ratify the fees of the IRP. The only defence which

has been taken by the Appellant is that since SBI was the sole CoC member

and it had already given its in-principle approval for fees at the time of issuing

the appointment letter and had assured to process the fees during the 1st CoC

meeting, no formal resolution of the CoC was required. As far as the alleged

assurance given by the SBI is concerned, we do not find substance in this

argument canvassed by the IRP as the CoC minutes at page 102 of Appeal

Paper Book do not show any such assurance having been extended by SBI.

The plea taken by the IRP that SBI had informally consented to pay is

insufficient as it is not found to be in consonance with Regulations 33 and 34 Page 11 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 of CIRP Regulations which clearly mandate that approval of CoC was required

in respect of fees/expenses. When we look at the wordings of the order of the

Adjudicating Authority of 31.08.2021, we find that there is no ambiguity that

the order had clearly directed that the fees/expenses of the IRP will have to be

decided by the CoC. However, the IRP had failed to get the stamp of approval

of the CoC before drawing the fees.

16. In the given backdrop, we find no infirmity in the impugned order that

the withdrawal of fees by the IRP was unauthorised and in contravention of

the statutory provisions of IBC and CIRP Regulations as well as the order of

the Adjudicating Authority dated 31.08.2021.

17. It is an incontrovertible fact that IRP had withdrawn Rs. 2,62,564/- in

April 2022 and Rs 9,83,684/- during CIRP towards fees without the approval

of the CoC. Unless the fee was ratified by the CoC, the IRP could not have

taken such fee from the account of the Corporate Debtor. The CoC having

refused to ratify the fees clearly rendered the withdrawal of fees by the IRP as

an unauthorized act. Once the Corporate Debtor had been admitted into the

rigours of CIRP, it is the responsibility of the RP to take custody of the assets

of the Corporate Debtor. Hence, the RP cannot be faulted for having sent an

e-mail to the IRP seeking refund of the fees which had been unauthorisedly

drawn. However, the IRP did not even respond to the said e-mail to clarify his

position as to why and how the drawal of his fees was not unauthorised.

Consequently, when such unratified and unauthorized amounts had been

withdrawn from the account of Corporate Debtor, the IRP was statutorily

bound to refund the amount so withdrawn to the estate of the Corporate Page 12 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 Debtor. The RP sought reversal of the fees as he was statutorily bound to do

so to protect the interest of all stakeholders and to ensure that there is no

depletion or diminution of the assets of the Corporate Debtor. On this count,

we find that the Adjudicating Authority has taken the correct view that since

the withdrawal of fees by the IRP was done in an unauthorized manner and

was in breach of the statutory provisions of IBC and CIRP Regulations but

also the order of the Adjudicating Authority dated 31.08.2021, the said

amount was directed to be reversed to the account of the Corporate Debtor.

18. We now come to the next limb of the argument of the Appellant that

there is no provision in the IBC or the CIRP Regulations which permits the MC

to initiate/continue litigation for recovery of funds or pursue claims like

refund of fees from a former IRP. Submission was also pressed that in terms

of Regulation 38(4) of the CIRP Regulations, the function of MC is to primarily

monitor and supervise the implementation of the resolution plan. The powers

of the MC are purely restricted to overseeing the implementation of the

resolution plan. Once the resolution plan had been approved, the MC had no

authority to pursue or revive any application for recovery of IRP fees and hence

did not have the locus to pursue I.A.92 of 2023. It was also submitted that the

MC had no jurisdiction to maintain the present application post approval of

the resolution plan as the claim with respect to IRP fees stood extinguished

once the plan was approved. The Adjudicating Authority should have

examined the terms of the approved resolution plan before permitting

continuation of proceedings by the erstwhile RP who had already become

functus officio.

Page 13 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025

19. Repelling the arguments of the Appellant, it was contended by the

Respondent that it is an admitted fact that upon approval of the resolution

plan on 27.09.2023, the CoC stood dissolved and MC came into place to

oversee and ensure plan implementation. Be that as it may, it was submitted

that the MC thereafter became responsible for safeguarding the objectives of

the approved plan. Therefore, any action undertaken by the RP in pursuance

of a resolution duly passed by the MC for pursuing pending CIRP related legal

proceedings was legally tenable and justifiable.

20. Coming to our analysis, we are of the considered view that it cannot be

denied that with the approval of the resolution plan, the role of the RP comes

to an end and so does the CoC cease to exist. Regulation 38 of CIRP

Regulation, however, envisages an MC to come into position for overseeing the

implementation of the plan. There is no statutory bar on the MC which is

entrusted with overseeing the plan implementation to delegate on to the

erstwhile RP to pursue applications/court proceedings if the MC is either

authorised either by the terms of the plan or by the stakeholders to act

accordingly. We notice that I.A. No. 92 of 2023 for recovery of fees was filed

before Adjudicating Authority on 12.01.2023, while Resolution Plan came to

be approved on 27.09.2023. Thus, the IA was already validly instituted prior

to plan approval. When we look at the statutory provisions of IBC, we do not

come across any specific provision which lays down that approval of the

resolution plan automatically terminates or dissolves all pending proceedings

connected with the CIRP of the Corporate Debtor. Since the subject matter of

the I.A. concerned CIRP costs which was intrinsic to the insolvency process, Page 14 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 pursuing its adjudication by the MC even after plan approval did not stand

nullified.

21. At this stage, we may notice how the MC had considered the matter. We

notice that this matter was considered in the 3rd MC meeting. The minutes of

the meeting are as extracted below:

3) Discussion on handling IA 92 of 2023 in CP (IB) 385 of 2020

The Chairman shall inform the members of the monitoring committee that as per the order dated 10th February, 2025 passed by the Hon'ble NCLT, Ahmedabad Bench in IA 92 of 2023 in CP (IB) 385 of 2020 it was pointed out by the counsel of respondents that in this matter the Resolution Plan has already been approved by the Hon'ble NCLT vide order dated 27th September, 2024 and the present RP has no locus to pursue this application. In view of the same, decision is to be taken by the members of the monitoring committee as to who shall handle the said application from now onwards.

The members of the monitoring committee unanimously decided that Mr. Vikash Jain being erstwhile RP and Chairman of Monitoring Committee of Shreebhav Polyweaves Private Ltd shall continue to handle IA 92 of 2023 in CP (IB) 385 of 2020 in the matter of Mr. Vikash Jain versus CA Nirav Tarkas IRP of Shreebhav Polyweaves Private Limited pending at the Hon'ble NCLT, Ahmedabad Bench. The members of the monitoring committee further decided that the benefit arising from the said application shall be for the benefit of stakeholders.

In view of the same, the members of the monitoring committee unanimously resolved by show of hands as under:

"RESOLVED THAT, Mr. Vikash Jain shall continue to handle IA 92 of 2023 in CP (IB) 385 of 2020 in the matter of Mr. Vikash Jain versus CA Nirav Tarkas IRP of Shreebhav Polyweaves Private Limited pending at the Hon'ble NCLT, Ahmedabad Bench.

RESOLVED FURTHER THAT, that the benefit arising from the said application shall be for the benefit of stakeholders."

Page 15 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025

22. When we look at the above proceedings of the third meeting of the MC

held on 07.03.2025, we find that it had been resolved therein that IA No. 92

of 2023 would be pursued by the Chairman of the MC who happened to be

the former RP. The locus of the RP to pursue IA No. 92 of 2023 therefore cannot

be said to be questionable because the RP as the Chairman of the MC had

been duly authorised by the MC to pursue the IA No. 92 of 2023 in the interest

of all stakeholders. Nothing has been placed on record by the Appellant to

demonstrate how the MC exceeded its mandate in having passed a resolution

on 07.03.2025 authorising the RP to recover the fees which had been

unauthorisedly withdrawn by the IRP. We therefore feel that it was sufficient

for the Adjudicating Authority to note that the MC had passed a resolution

authorising the former RP to pursue the matter. When the MC had passed this

resolution after detailed deliberations, we feel it is irrelevant to examine the

terms of the resolution plan in this regard.

23. Hence, we find nothing wrong in the impugned order, for holding that

IA No. 92 of 2023 seeking refund of unratified fees of IRP was fully

maintainable as applications relating to CIRP costs including fees and

expenses of IRP/RP incurred during CIRP continue to survive for adjudication.

We find that it has been correctly noticed by the Adjudicating Authority that

the MC had passed a resolution on 07.03.2025 authorising the RP, as

Chairman of MC, to pursue IA No. 92 of 2023 to recover the fees from the IRP

for the benefit of the stakeholders which aligned with the IBC's objective of

maximizing value for creditors. We entirely agree that even though on approval

of the resolution plan, the role of the RP becomes functus officio, however, Page 16 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 once the MC comes into existence to supervise the plan implementation, it can

always delegate to the RP in his capacity as Chairman of MC specific tasks

including pursuing of pending applications before the Adjudicating Authority

as long as the subject matter of any such application lay within the

jurisdiction of the Adjudicating Authority. In the present case, as the IA No.92

of 2023 was connected with CIRP-related disputes, the MC did not exceed its

mandate to authorize the RP to pursue the said application. Thus, the

impugned order does not suffer from any infirmity in holding that the MC had

the locus to pursue IA No.92 of 2023 through the erstwhile RP who now

donned the cap of Chairman of MC.

24. This brings us to the issue of the decision of the CoC to replace the IRP

which has been questioned by the Appellant. Much emphasis was laid to claim

that inspite of his medical challenges, the IRP had undertaken several

activities towards smooth conduct of CIRP process from 31.08.2021 until

25.04.2022 including convening of CoC meetings, verification of claims,

engagement of professionals, statutory filings and meeting of statutory

compliances. Nevertheless, it is an admitted fact that IRP had convened the

1st CoC Committee after efflux of nearly three months though in terms of

Regulations 17(2) of CIRP Regulations, the IRP is required to hold the first

meeting of the CoC within seven days of filing of the report certifying

constitution of the CoC to the Adjudicating Authority. Even though the delay

has been explained on health grounds, it is the contention of the Respondent

that this has not been supported by any medical documentation. We also

notice that the Respondent has alleged lack of cooperation on the part of the

Page 17 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 IRP having failed to attend the 2nd CoC meeting which had been scheduled for

facilitating handing over formalities of the IRP. We however do not wish to

enter into the allegations and counter-claims on the conduct of the IRP as this

is not germane for the issue at hand since we have to be guided by the

statutory provisions of the IBC to assess whether the replacement was done

by following the due process.

25. It may be pertinent to deal with the assertion raised by the IRP that his

unilateral replacement by the CoC was done without giving him an

opportunity to defend himself. When we look at Section 27 of the IBC which

deals with the replacement of the IRP by the CoC, we find that this statute

empowers the CoC to replace an IRP at any time during the CIRP. In the

present case, the CoC in the 1st meeting, after passing a resolution to replace

the IRP with majority vote had thereafter filed an application for this purpose

before the Adjudicating Authority.

26. If we look at Section 27 of IBC, there can be no disagreement that the

process of the replacement of IRP is complete when the required decision is

taken by the CoC in its meeting with requisite majority. The law nowhere says

that the CoC is required to give an opportunity for hearing to the IRP or to

adduce reasons for seeking replacement of the IRP . It is well settled that the

relationship between the IRP and the CoC is one of trust and confidence. In

the present case, the CoC decided to replace the IRP in the 1st CoC meeting

which was followed up by an application before the Adjudicating Authority

which was subsequently affirmed by the Adjudicating Authority on

25.04.2022 approving the replacement of the IRP with another RP. That being Page 18 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025 the case, once the IRP lost the trust of the CoC and the CoC as per its wisdom

decided to replace the IRP, that decision should have been accepted gracefully

by the IRP. We have no hesitation in holding that the replacement of the IRP

was done by following the due process and this order having acquired finality

on 25.04.2022 cannot be open for challenge now.

27. In the light of the above discussions, we do not find any substance in

the submissions raised by the Appellant to warrant any interference in the

impugned order. The impugned order passed by the Adjudicating Authority,

not suffering from any infirmities, is hereby affirmed including the directions

to refund Rs.12,46,248/- to the Corporate Debtor's account by 10.10.2025.

The Appeal being devoid of merit is dismissed. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Place: New Delhi Date: 09.09.2025 Harleen/ Abdul

Page 19 of 19 Company Appeal (AT) (Insolvency) No. 1154 of 2025