Whether Resolution Professional is entitled for the same fee as was fixed by the CoC without doing any work? – RP of Jogma Laminates Industry (P) Ltd. Vs. COC Jogma Laminates Industry (P) Ltd. – NCLT Mumbai Bench

The only contention of Mr. Partho Sarkar, counsel appearing for the RP is that even though the COC has resolved to replace the RP in the third COC meeting held on 18.07.2019, no such application was filed by the COC for change of RP and therefore the present RP is entitled for the agreed fee till the RP was discharged through an order of this tribunal. In the present application, the RP is claiming an amount @ 3.75 lacs per month both for himself and his team besides expenses in a sum of Rs. 1,68,60,372/- without doing any work. The RP cannot claim fee by taking advantage of the inaction of the COC in filing an application for his replacement nor on certain observations made in MA 3399/2019 as the above MA was filed for fee and expenses during the active period of CIRP.

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I. Case Reference

Case Citation : (2022) ibclaw.in 947 NCLT
Case Name : RP of Jogma Laminates Industry (P) Ltd. Vs. COC Jogma Laminates Industry (P) Ltd.
Corporate Debtor : Jogma Laminates industry Pvt. Ltd.
Application/Appeal No. : I.A. 1312/2022 in C.P. No. (IB) 4065/MB/2018
Judgment Date : 06-Dec-22
Court/Bench : NCLT Mumbai Bench
Member (Judicial) : Shri H. V. Subba Rao
Member (Technical) : Ms. Anuradha Sanjay Bhatia
Case Status : Upheld by NCLAT, reported at (2023) ibclaw.in 509 NCLAT

II. Brief about the decision

The issue that needs to be decided in the present I.A is whether the Resolution Professional is entitled for the same fee as was fixed by the COC without doing any work?

The Adjudicating Authority held that:

The only contention of Mr. Partho Sarkar, counsel appearing for the RP is that even though the COC has resolved to replace the RP in the third COC meeting held on 18.07.2019, no such application was filed by the COC for change of RP and therefore the present RP is entitled for the agreed fee till the RP was discharged through an order of this tribunal. In the present application, the RP is claiming an amount @ 3.75 lacs per month both for himself and his team besides expenses in a sum of Rs. 1,68,60,372/- without doing any work. The RP cannot claim fee by taking advantage of the inaction of the COC in filing an application for his replacement nor on certain observations made in MA 3399/2019 as the above MA was filed for fee and expenses during the active period of CIRP. This Bench made certain observations in M.A. 3399/2019 since the COC is objecting for payment of fee and expenses of the team of RP even during the active CIRP period which was the lis in M.A 3399/2019. The Applicant cannot claim the same amount for subsequent period even without considering Covid circumstances etc. by taking advantage of certain observations in M.A. 3399/2019.(p4)

It is also pertinent to observe here that the Resolution Professional has already claimed his fee and expenses till 31.08.2019 in the earlier M.A. 3399/2019 and in the present I.A. 1312/2022, he claimed fee and expenses from 24.04.2019 to 24.04.2022. The Resolution Professional has already claimed the expenses of Rs. 1,50,000/- for preferring M.A. 3399/2019 which was allowed by this Bench. Surprisingly, he claimed another 7,95,407/- towards legal fee and expenses for moving the present I.A. for the same relief of payment of fee. It is an admitted fact that human life was completely paralyzed, business activities, production, transport everything has come to standstill all over globe due to COVID-19 pandemic from 25.03.2020 till the end of 2021 due to three waves of COVID. This tribunal is unable to understand how the RP can claim fee not only for himself but also his team for the COVID period more so by creating a tussle between the COC and himself with regard to way forward of the CIRP process. This bench also observes that the RP having filed an application for liquidation orally opposed for passing an order of liquidation contending that the Corporate Debtor is viable for resolution. The major COC member is alleging that the RP has handed over interim custody of the Corporate Debtor to the members of the suspended board which is not denied by RP. This Bench has taken a very serious note about the conduct as well as the way of charging fee by RP without doing any work.(p5)

Therefore, for the aforesaid reasons, this bench is of the considered opinion that the RP is merely entitled for his fee of Rs. 1,00,000/-+GST per month from 01.09.2019 to 24.04.2022 as fairly agreed by M/s Relegere Finvest Ltd who is a major COC member along with actual expenses like valuation expenses etc. incurred by Resolution Professional for protecting the property. against production of bills till the property is handed over to liquidator as certified by COC. The COC is also at liberty to approve any other expenses incurred by RP as it deems fit without being influenced by any of the above observations made in this order. The CoC is hereby directed to act accordingly.(p6)

With the above observations and directions, the above I.A is disposed of.(p7)

 

III. Full text of the judgment

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