One Page #1 – In matter of Kavveri Telecom Infrastructure Limited

One Page #1 – In matter of Kavveri Telecom Infrastructure Limited
Application withdrawn u/s 12A without making payment to the Registered valuer.
NCLT & NCLAT dismissed the application stating functus officio.
Courts: NCLT-Blr, NCLAT-Delhi, Supreme Court (CA#4065/2020-15.03.021)

  1. Facts of the Case:
    1. RP appointed valuer (RV) to value P&M at 115 sites for a fee of Rs.7.7 lacs + GST + other expenses)
    2. Valuation done at 84 sites and valuer visited 40 sites.
    3. NCLAT set aside the CIRP order and remanded the matter back to NCLT to decide on CIRP costs.
    4. NCLT decided the fee of RP reducing 20% from fee ratified by COC.
    5. RP cancelled appointment of RV and RV agreed to reduce his fee by 25% fee including the expenses of Rs.52000 incurred by him. But RP informed that COC ratified only Rs.50,000/-.
    6. RV filed an application before NCLT u/s 60(5) but NCLT dismissed the application concluding that it had been rendered functus officio. (officer who is no longer is office)
    7. RV then filed appeal before NCLAT and NCLAT rejected the contention of the RV noting that Rs.50000/- has already been paid to the RV.
    8. RV then moved SC u/s 62.
  1. Points of Law observed by SC:
    1. Section 5(13) of the Code – Insolvency resolution process costs
    2. Regulation 31 of CIRP regulations – Insolvency resolution process costs
    3. Regulation 33 of CIRP regulations – IRP Costs
    4. Regulation 34 of CIRP regulations – RP Costs
    5. Regulation 30A (7) – Deposit of Expenses during withdrawal of application
  1. Case Laws:
    1. Gujarat Urja Vikas Nigam Limited v Amit Gupta & Others: NCLT & NCLAT u/s 60(5)(c) has jurisdiction to adjudicate disputes which arise solely from or which relate to insolvency of the Corporate Debtor.
  1. Held:
    1. NCLT is sufficiently empowered under Section 60(5)(c) of the Code to decide the amount which is payable to an expert valuer as an intrinsic part of the CIRP costs.
    2. Availability of a grievance redressal mechanism u/s 217 the IBC against an insolvency professional does not divest the NCLT of its jurisdiction u/s 60(5)(c) of the IBC to consider the amount payable to RV. 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
    3. Proceedings are remitted back to the NCLT for determining the claim of the RV for the payment of his professional charges.

MS Mano Ranjani

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