RP not Entitled to Fees Beyond Sum already Received Since Insolvency Proceedings was Withdrawn: NCLAT [Read Order]

The New Delhi bench of the National Company Law Appellate Tribunal( NCLAT ) held that Resolution Professional(RP)is not entitled to fees beyond sum already received since insolvency proceedings was withdrawn. Laxman Singh (Ex-Director) of Divineseair Logistics Pvt. Ltd. ,the appellant had challenged the Order passed by the Adjudicating Authority (National Company Law Tribunal(NCLT)). The Adjudicating Authority has admitted the petition under Section 9 of the Insolvency Bankruptcy Code (IBC) and allowed the initiation of Corporate Insolvency Resolution Process (“CIRP” ) of the Corporate Debtor. Divineseair Logistics Pvt. Ltd - Corporate Debtor, who is the Appellant had engaged into a business relationship with Kerry Indev Logistics Pvt. Ltd.- Operational Creditor, Respondent No.1 providing their freight forwarding services since June 2018. Respondent No. 1 has claimed that having performed certain export services for the Appellant, certain dues remained outstanding for services rendered. The Respondent No. 1 sent a demand notice on 01.10.2019 under Section 8 of IBC claiming an amount of Rs.9,26,970/- and interest amount of Rs.1,38,055/- to the Corporate Debtor. No reply was received from the Corporate Debtor to the Section 8 notice following which the Respondent No.1 filed Section 9 application before the Adjudicating Authority. The Adjudicating Authority after hearing both parties admitted the Section 9 application. The Appellant has stated that there was no contractual agreement between the Appellant and the Respondent No.1. The Appellant submitted that it provided clients to Respondent No.1 for transporting their goods and in return received commission from the Respondent No.1 out of the freight charges collected. In the absence of any agreement between them, the Appellant cannot be fastened with any liability to pay by the Respondent No.1 being neither the consignee nor the beneficiary of any services. It was further stated that there were delays in the shipments on the part of Respondent No. 1 and hence consignees had not been clearing their payments. The recipient companies had made complaints to the Appellant regarding late delivery of goods and deficiency in the services of the Respondent No. 1 which in turn has affected their own reputation and caused financial losses. It was vehemently contended that the Adjudicating Authority by ignoring these preexisting disputes had erroneously admitted the Section 9 application. there is nothing on record to suggest that the Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice. There is no exchange of correspondence raising any dispute prior to issue of demand notice. Even the complaint of delay purportedly received by the Appellant from its customers does not seem to have been shared with the Operational Creditor prior to Section 9 application. Thus, we find that there is nothing credible to substantiate the pre-existence of dispute. Further, to prove their bonafide, it is submitted that the sole CoC member had approved fees of the IRP of Rs.2,00,000/- per month which the Resolution Professional reduced on his own to Rs.1 lakh per month being the minimum fees in consonance with the IBBI Regulation. It has also been stated that an amount of Rs.8 lakhs has been received so far from Respondent No.1, being the sole CoC member and the balance to be received is Rs.11,99,544/-. It is also submitted that the Resolution Professional had explained to the Respondent No.1 the procedure which is required to be followed for filing the CIRP withdrawal application but the same was yet to be complied with. We notice that the Resolution Professional has advised Respondent No.1 to file Form A and submit bank draft/bank guarantee in respect of CIRP expenses. A two member bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) held that “though the sole CoC member had admittedly approved the fees of the Resolution Professional that cannot become a cover to keep on claiming the fees and end up burdening the sole CoC member with a disproportionately heavy amount as fees/expenses. It was incumbent upon the Resolution Professional to keep in mind that the entire claim amount collated was only about Rs.10 lakhs. “ Since the Corporate debtor is released from the rigors of CIRP and the RP will close the CIRP proceedings, the Resolution Professional is not entitled to claim any fees/expenses beyond the sum of Rs.8 lakh which has already been received. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

RP not Entitled to Fees Beyond Sum already Received Since Insolvency Proceedings was Withdrawn: NCLAT [Read Order]

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