Professional fees for an interim resolution professional are not automatic but contingent upon the actual discharge of statutory functions. During periods where judicial stay orders restrict the insolvency process and limit the performance of core duties, the professional is not entitled to full remuneration.

INDEVAR PANDEY, MEMBER (T)

The present appeal has been preferred by the Appellant, CMA Harshad Deshpande, who had been appointed as the Interim Resolution Professional (“IRP”) of the Corporate Debtor, namely M/s Shri Tradco Deesan Private Limited, challenging the Order dated 07.10.2024 passed by the Hon’ble National Company Law Tribunal, Mumbai Bench-V, (Adjudicating Authority) in IA (IBC) No. 4549/2024 in CP (IB) No. 1135/MB/2021. By the said order, the Adjudicating Authority partly allowed the application filed by the Appellant against Respondent No. 1, Shri Rakesh Kumar Relan, who was subsequently appointed as the Resolution Professional (“RP”) of the Corporate Debtor in the place of Appellant, and against Respondent No. 2, namely the Committee of Creditors (“CoC”) of M/s Shri Tradco Deesan Private Limited through State Bank of India, regarding payment of professional fees and reimbursement of expenses incurred by the Appellant during the Corporate Insolvency Resolution Process (“CIRP”).

2. The dispute in the present appeal arises from the grievance of the Appellant that despite discharging various statutory duties as IRP throughout the CIRP period, including during the period when this Appellate Tribunal had stayed the constitution of the CoC, the CoC/Respondent No. 2 refused to ratify and pay his professional fees for a substantial duration and further arbitrarily reduced the agreed fee structure. The Appellant has therefore filed this appeal contending that the Adjudicating Authority failed to grant him fees in accordance with the agreed remuneration as well as the minimum fee structure prescribed under Regulation 34B read with Schedule II of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Facts of the Case

3. The brief facts of the case relevant to deciding this case are as under:

(i) The Corporate Insolvency Resolution Process against M/s Shri Tradco Deesan Private Limited commenced pursuant to an Order passed by the Adjudicating Authority, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (herein referred to as ‘Code’ on 15.02.2023, whereby the Corporate Debtor was admitted into CIRP and the Appellant/ CMA Harshad Deshpande, was appointed as the Interim Resolution Professional for conducting the insolvency process in accordance with the provisions of the Code and the CIRP Regulations. Following his appointment, the Appellant assumed charge and commenced discharge of statutory duties required under the Code.

(ii) The admission order dated 15.02.2023 was thereafter challenged before this Appellate Tribunal by the Suspended Board of Directors of the Corporate Debtor through Company Appeal (AT) (Insolvency) No. 244 of 2023. During pendency of the said appeal, the Hon’ble NCLAT by an interim order passed on 28.02.2023 stayed the constitution of the Committee of Creditors, while specifically permitting the IRP to continue with collation and verification of claims. The order expressly directed