Insolvency and Bankruptcy Code, 2016: s.60(5)(c) – Dispute regarding fee of valuer – Pursuant to the initiation of CIRP against corporate debtor, first respondent was appointed as the Resolution Professional (RP) – RP appointed appellant as a registered valuer of the Plant and Machinery of the corporate debtor of 115 sites and a fee of Rs.7.50 lakhs and other expenses were ratified by the Committee of Creditor (CoC) – Appellant claims to have conducted valuation work of 84 sites and he paid for expenses of Rs.52,000 – NCLAT set aside the CIRP against the corporate debtor and remanded the matter to NCLT on the issue of CIRP costs – NCLT decided on the fee of RP and reduced it by 20% from the fee ratified by CoC – In view of order of NCLAT, RP cancelled the appointment of the appellant and requested appellant for waiver of fee – In return, appellant agreed to reduce his fee by 25% along with the expenses – However, RP informed appellant that the fee as ratified cannot be paid and paid a sum of Rs.50,000 – Appellant filed application under s.60(5) before the NCLT challenging non payment of fees – However, the NCLT dismissed the application on the ground that it had been rendered functus officio – NCLAT declined to exercise its appellate jurisdiction – Hence the instant appeal – Held: Though the CIRP was set aside later, the claim of the appellant related to the period when he was discharging his functions as a registered valuer appointed as an incident of the CIRP – NCLT ought to have exercised its jurisdiction under s.60(5)(c) of the IBC – In exercise of jurisdiction under Art.142 of the Constitution, it is directed that in a situation such as the present case, NCLT is sufficiently empowered under s.60(5)(c) of the IBC to make a determination of the amount which is payable to an expert valuer as an intrinsic part of the CIRP costs – Regn.34 of the IRP Regulations defines ‘insolvency resolution process cost’ to include the fees of other professionals appointed by the RP – Whether any work has been done as claimed and if so, the nature of the work done by the valuer is something which need not detain this Court, since it is purely a factual matter to be assessed by NCLT – The availability of a grievance redressal mechanism under the IBC against an insolvency professional does not divest the NCLT of its jurisdiction under s.60(5)(c) of the IBC to consider the amount payable to the appellant – In any event, the purpose of such a grievance redressal mechanism is to penalize errant conduct of the RP and not to determine the claims of other professionals which form part of the CIRP costs – The impugned judgment and order of the NCLAT is set aside – The proceedings accordingly is remitted back to the NCLT for determining the claim of the appellant for the payment of the professional charges as a registered valuer appointed by the RP in pursuance of the initiation of the CIRP.
Allowing the appeal and remitting the matter to NCLT, the Court
HELD : 1.1 Where an application for withdrawal is filed under Section 12A of the IBC, a provision has been made in Regulation 30A(7) in regard to the deposit of expenses. Regulation 30(A) would not apply specifically to the present situation, since it deals with a case where an application is withdrawn under Section 12A of the IBC. The appellant is justified in contending that there must be a forum within the ambit and purview of the IBC which has the jurisdiction to make a determination on a claim of the present nature, which has been instituted by a valuer who was appointed in pursuance of the initiation of the CIRP by the RP. After the NCLAT set aside the CIRP and remitted the proceedings to the NCLT to decide on the CIRP costs, the NCLT held that it was rendered functus officio in relation to the appellant’s claim. This would be an incorrect reading of the jurisdiction of the NCLT as an Adjudicating Authority under the IBC. [Paras 16, 18][528-G-H; 529-F-H]
1.2 Though the CIRP was set aside later, the claim of the appellant as registered valuer related to the period when he was discharging his functions as a registered valuer appointed as an incident of the CIRP. The NCLT would have been justified in exercising its jurisdiction under Section 60(5)(c) of the IBC. In exercise of jurisdiction under Article 142 of the Constitution, it is directed that in a situation such as the present case, the Adjudicating Authority is sufficiently empowered under Section 60(5)(c) of the IBC to make a determination of the amount which is payable to an expert valuer as an intrinsic part of the CIRP costs. Regulation 34 of the IRP Regulations defines ‘insolvency resolution process cost’ to include the fees of other professionals appointed by the RP. Whether any work has been done as claimed and if so, the nature of the work done by the valuer is something which need not detain this Court, since it is purely a factual matter to be assessed by the Adjudicating Authority. [Para 19][530-D-G; 531-A]
Gujarat Urja Vikas Nigam Limited v. Amit Gupta and Others 2021 SCC OnLine SC 194 – relied on.
2. The NCLT in its order while dismissing the application of the appellant for the payment of fees had observed that the Insolvency and Bankruptcy Board of India (‘IBBI’) is the competent authority to deal with allegations against the RP relating to their failure to discharge statutory duties (paragraph 7). Section 217 of the IBC empowers a person aggrieved by the functioning of an RP to file a complaint to the IBBI. If the IBBI believes on the receipt of the complaint that any RP has contravened the provisions of IBC, or the rules, regulations or directions issued by the IBBI, it can, under Section 218 of the IBC, direct an inspection or investigation. Under Section 220 of the IBC, IBBI can constitute a disciplinary committee to consider the report submitted by the investigating authority. If the disciplinary committee is satisfied that sufficient cause exists, it can impose a penalty. The availability of a grievance redressal mechanism under the IBC against an insolvency professional does not divest the NCLT of its jurisdiction under Section 60(5)(c) of the IBC to consider the amount payable to the appellant. In any event, the purpose of such a grievance redressal mechanism is to penalize errant conduct of the RP and not to determine the claims of other professionals which form part of the CIRP costs. [Para 20][531-A-E]
3. The impugned judgment and order of the NCLAT is set aside. The proceedings accordingly stood remitted back to the NCLT for determining the claim of the appellant for the payment of the professional charges as a registered Valuer appointed by the RP in pursuance of the initiation of the CIRP. [Para 21] [531-E-F]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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