Sumit Bansal vs Committee Of Creditors Of Jp Engineers ...

Sumit Bansal, Insolvency Professional ....Appellant Vs.

Committee of Creditors of JP Engineers Pvt. Ltd. & ...Respondents Ors. For Appellant: Mr. Abhishek Garg, Mr. Ayush Kuchhal, Advocates. For Respondents: PBA Srinivasan, Mr. Parth Tandon, PS Chandralekha, Ms. Nikitha Ross, Ms. Sneha Iyer, Advocates for R1. Mr. K.D. Sharma, Advocate for R2.

ORDER

(Through Virtual Mode)

18.02.2022: Heard Shri Abhishek Garg, Learned Counsel for the

Appellant, Shri PBA Srinivasan, Learned Counsel for Committee of Creditors

and Shri K.D. Sharma, Learned Counsel for the Resolution Professional. With

the consent of the parties, the Appeal may be disposed of at the stage of

admission.

2. This Appeal has been filed against the order dated 07.01.2022 passed

by the Adjudicating Authority (National Company Law Tribunal), New Delhi,

Court-II on the Application being I.A 5274 of 2021 filed by the Appellant.

Appellant before us was appointed as Interim Resolution Professional (IRP) by

the Adjudicating Authority by its order dated 26.02.2020. In the first CoC

meeting, he claimed that he should be paid Rs.2 Lakhs per month. The matter 2

of fee, however, could not be decided by the CoC and ultimately CoC ratified

payment of Rs. 50,000/- per month only. The Appellant's claim that he worked

up to 27.01.2021 when he was replaced by the Resolution Professional-

Respondent No.2. The Appellant thereafter filed an Application I.A 5274 of

2021 before the Adjudicating Authority claiming the payment of fees @ Rs.2

Lakh per month on which Application the Adjudicating Authority took a

decision to refer the matter to the Insolvency and Bankruptcy Board of India

(IBBI) to examine the claim of Ex-IRP vis-à-vis his agreement with the CoC and

to submit their specific recommendations and thereafter the matter be

directed to be listed again before the Adjudicating Authority on 22.02.2022.

3. Learned Counsel for the Appellant challenging the order submits that

IBBI has no jurisdiction to decide the question of payment of fees of the

Appellant. He further submits that the Adjudicating Authority ought not to

have asked for recommendation of the IBBI with regard to fee of the Appellant.

He submits that the Adjudicating Authority ought to have itself decided the

matter regarding fee.

4. Learned Counsel for the Respondent No.2 as well as Learned Counsel

for the CoC submit that whatever amount was approved by the CoC has

already been paid to the Appellant i.e. Rs. 50,000 per month and on the

sufficiency of fee, it is the CoC which has jurisdiction to take a decision and

Appellant ought not to have filed an Application before the Adjudicating

Authority regarding his fee.

3

5. We have considered the submissions of the Learned Counsel for the

Appellant and perused the record.

6. There is no quarrel to the preposition that it is the Adjudicating

Authority which has power to take a final decision with regard to payment of

fee to which IRP or RP may be entitled. In this context, judgment of the Hon'ble

Supreme Court is referred in "Alok Kaushik vs. Mrs. Bhuvaneshwari

Ramanathan and Ors.- Civil Appeal No. 4065 of 2020". It is thus settled

law that the Adjudicating Authority is clothed with jurisdiction to take a final

decision regarding entitlement of IRP or RP claiming his fee because i.e. part

of the CIRP costs.

7. However, the issue which has been sought to be raised in this Appeal is

that IBBI has no jurisdiction nor Adjudicating Authority ought to have referred

the matter for a recommendation. From tenor of the order, it is clear that the

ultimate decision regarding this issue raised in I.A 5274 of 2021 is to be taken

by the Adjudicating Authority and the Adjudicating Authority has not directed

the IBBI to decide the issue and only recommendations have been called for

from the IBBI.

8. We do not agree with the submissions of the Counsel for the Appellant

that IBBI has no jurisdiction with regard to question of fee which is entitled to

be paid to the IRP/ RP. The IBBI is clothed with Regulations making power

under Section 240 of the Code. Section 240(1) is to the following effect:- 4

"240. Power to make regulations.- (1) The Board

may, by notification, make regulations consistent with

this Code and the rules made thereunder, to carry out

the provisions of this Code."

9. The general power of framing regulations to carry out the provisions of

this Code encompasses in itself the power to regulation regarding Insolvency

Professionals. The Insolvency and Bankruptcy Board of India (Insolvency

Professionals) Regulations, 2016 has already been framed where as per

Regulation 7(2)(h), 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. Item 25 of the First Schedule is as follows:-

"25. An insolvency professional must provide services

for remuneration which is charged in a transparent

manner, is a reasonable reflection of the work

necessarily and properly undertaken, and is not

inconsistent with the applicable regulations."

10. 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 5

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 recommendations may

be helpful to determine the issue in accordance with guidelines and circulars

issued by the IBBI in this respect, if any. We however, looking into the facts of

the present case, observe that the Adjudicating Authority may dispose of I.A

5247 of 2021 immediately after receiving recommendations from the IBBI so

that the issues raised before the Adjudicating Authority may come to an end.

11. With these observations, the Appeal is disposed of.

[Justice Ashok Bhushan] Chairperson

[V.P. Singh] Member (Technical) Anjali/nn