Case Note & Summary
The present appeals were filed by Mr. Immaneni Eswara Rao, a Resolution Professional, against four separate orders passed by the National Company Law Tribunal, Hyderabad Bench, in various company petitions. The common issue in all appeals was the reduction of the Appellant's fees by the Adjudicating Authority without providing any opportunity of hearing. The Appellant was appointed as the Resolution Professional in four different corporate insolvency resolution processes. The Committee of Creditors in each case had approved the fees of the Appellant. However, the NCLT, while disposing of the applications under Section 34 of the Insolvency and Bankruptcy Code, 2016, reduced the fees of the Appellant without any notice or hearing. The Appellant contended that the fees were fixed by the CoC and were reasonable, and the NCLT had no jurisdiction to reduce the fees suo motu. The Respondent banks argued that the fees were excessive and the NCLT had inherent powers to reduce them. The NCLAT held that the Adjudicating Authority cannot reduce the fees of the Resolution Professional without following principles of natural justice and without assigning valid reasons. The fees fixed by the CoC are binding and can only be interfered with if they are exorbitant or unreasonable. The impugned orders were set aside, and the matters were remanded back to the NCLT for fresh consideration after hearing the Appellant.
Headnote
A) Insolvency Law - Resolution Professional's Fees - Section 34, Insolvency and Bankruptcy Code, 2016 - The Adjudicating Authority cannot reduce or disallow the fees of the Resolution Professional fixed by the Committee of Creditors without providing an opportunity of hearing and without valid reasons. The fees fixed by the CoC are binding subject to reasonableness. (Paras 10-15) B) Insolvency Law - Natural Justice - Section 34, Insolvency and Bankruptcy Code, 2016 - The Adjudicating Authority must follow principles of natural justice before reducing the fees of the Resolution Professional. The impugned orders were passed without hearing the Appellant, violating natural justice. (Paras 16-18) C) Insolvency Law - Committee of Creditors - Fees Determination - Section 34, Insolvency and Bankruptcy Code, 2016 - The Committee of Creditors has the authority to fix the fees of the Resolution Professional, and such fees are binding on all stakeholders. The Adjudicating Authority cannot substitute its own view unless the fees are exorbitant or unreasonable. (Paras 19-22)
Issue of Consideration
Whether the Adjudicating Authority (NCLT) can suo motu reduce or disallow the fees of the Resolution Professional fixed by the Committee of Creditors under the Insolvency and Bankruptcy Code, 2016.
Final Decision
Appeals allowed. Impugned orders set aside. Matters remanded to NCLT for fresh consideration after hearing the Appellant.
Law Points
- Resolution Professional's fees cannot be reduced by Adjudicating Authority without valid reasons
- Fees fixed by CoC are binding subject to reasonableness
- Section 34 of IBC does not provide for reduction of fees
- Natural justice requires hearing before reduction of fees
