ALOK KAUSHIK VS BHUVANESHWARI RAMANATHAN : CASE SUMMARY
The Supreme Court in Alok Kaushik Vs Bhuvaneshwai Ramanathan AIR (2021) SC 2216 held that the NCLT does not become functus officio if CIRP is set aside. NCLT has jurisdiction under Section 60 (5) to determine amount payable to the Registered Valuer even after CIRP has been set aside.
FACTS OF THE CASE
National Company Law Tribunal initiated insolvency proceedings in the matter of Kavveri Telecom Infrastructure Ltd. The NCLT vide order dated 21st March, 2019 appointed the Respondent as Resolution Professional. The Appellant was appointed as valuer of Plant and Machinery. The appointment of the valuer was ratified by the Committee of Creditors. The Appellant conducted valuation work for eighty four sites and visited forty sites. Several outstation meetings were also conducted between the appellant and the first Respondent.
National Company Law Appellate Tribunal set aside the initiation of CIRP vide order dated 18th December, 2019.
In light of order of the NCLAT, the appointment of the Appellant was cancelled. On request of the First Respondent , the Appellant reduced fee by 25%. However, the First Respondent informed the Appellant that the fee agreed cannot be paid and paid a sum of Rs. 50,000/-
The Appellant filed an Application before NCLT under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 challenging the non-payment of fee. NCLT dismissed the Application by stating that it has become functus officio. The Appellant filed an appeal before the NCLAT which was also dismissed.
FINDINGS OF THE SUPREME COURT
The Supreme Court noted that “Insolvency Resolution Costs” has been defined under Section 5 (13) of the Code. Regulation 31 of IRP regulations further defines Insolvency Resolution Process Costs. Clause (c) of Regulation 31 enunciates expenses incurred on or by the IRP to the extent ratified under Regulation 33. Regulation 33 deals with costs of Interim Resolution Professional. Regulation 34 deals with Resolution Professional Costs.
The Supreme Court observed that the view of NCLT is incorrect that it has become functus officio after setting aside of CIRP. The Supreme Court relied on Gujarat Urja Vikas Nigam Ltd Vs. Amit Gupta & Ors (2021) SCC Online SC 194 wherein it has been held that NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the Corporate Debtor.
The claim of the Appellant as registered valuer related to period when he was discharging function as a registered valuer appointed as an incident of the CIRP. NCLT would have been justified in exercising its jurisdiction under Section 60 (5) of the IBC.
The Supreme Court exercised jurisdiction under Article 142 and directed that in such situations the NCLT will be empowered under Section 60 (5) to make a determination.
That Supreme Court observed that availability of grievance redressal mechanism against insolvency professional does not divest the NCLT of its jurisdiction under Section 60(5) (c) to consider amount payable to the appellant. The purpose of grievance redressal mechanism is to penalize errant conduct of the Insolvency Professional and not to determine claims of other professional which form part of CIRP Cost.
The Supreme Court allowed the appeal and remanded the matter back to the NCLT for determining claim of the Appellant.
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Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.