TMI Blog2022 (9) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... also had taken steps on his part before the Adjudicating Authority on 17.10.2021 for stay on the CIRP and also filed an application on 22.10.2021 for withdrawal of the CIRP. It is therefore amply clear that all the important stakeholders in the process were in unison in seeking closure of CIRP and awaiting final directions of the Adjudicating Authority. The Adjudicating Authority after categorizing the costs as essential and non-essential have allowed the CIRP costs to the extent of Rs. 8,36,001/- to be reimbursed by the Corporate Debtor. The Adjudicating Authority has also allowed certain amount as the expenses of the IRP and for payment towards his fees - since the Section 12A application was filed by the IRP before the Adjudicating Authority well before the constitution of CoC, the IRP s continuance with the CIRP process without making adequate efforts to seek pointed clarification from the Adjudicating Authority on whether to proceed with the CIRP or not, does not reflect well on his conduct. IRP cannot afford to be unmindful of the fact that he is the driving force and the nerve-center in the resolution process and is expected to assist in the CIRP process in a fair and obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority dismissed the main petition filed under Section 9 of the IBC bearing CP(IB) No. 352/Chd/CHD/2018 as withdrawn, released the Corporate Debtor from the rigors of the IBC subject to payment of Rs. 8,36,001/- towards reimbursement of the expenses incurred by the IRP. The present appeal has been preferred by the Appellant, being aggrieved that CIRP cost and fees payable to him as Interim Resolution Professional ( IRP in short) have been rejected and erroneous remarks passed with respect to duties and functions carried out by him as IRP. 2. The Learned Counsel for the Appellant has also filed I.A. No. 2497 in Company Appeal (AT)(Ins.) No. 896 of 2022 seeking condonation of delay of 05 days in curing defects and refiling of the present appeal citing sufficient cause. The I.A. is allowed and delay in refiling after curing defects is allowed. 3. The brief facts of the case, as stated by the Learned Counsel for the Appellant, is that a petition under Section 9 of IBC was filed before the Adjudicating Authority by Kotak Commodity Services Pvt. Ltd., Operational Creditor for initiating Corporate Insolvency Resolution Process ( CIRP in short) against M/s Cheema Spintex Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that with a view to ensure that the Corporate Debtor could run as a going concern, the Appellant had incurred expenses which had been placed before the CoC and duly ratified by the CoC. It has been claimed that as part of this CIRP exercise, 6 CoC meetings were conducted by the IRP and 10 progress reports filed before the CoC including steps undertaken for valuation of the assets of the Corporate Debtor. It has also been claimed that the Adjudicating Authority on 30.03.2022 while considering the stay application of the Corporate Debtor had also directed the Appellant/IRP to file the details of his fee charged for conducting the business of the Corporate Debtor. 6. Learned Counsel for the Appellant has further stated that the withdrawal application bearing No 510/2021 was finally heard by the Adjudicating Authority on 05.04.2022 and in the impugned order as issued on 30.05.2022 the Adjudicating Authority held that CIRP process be closed and that the withdrawal application having been filed prior to constitution of the CoC, there is no requirement to obtain the consent of the members of the CoC in this regard. Feeling aggrieved by this impugned order, the Learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities mentioned in Sr. No. 1 to 7 of the afore-mentioned table in Para 14, consisting of expenses on account of e-voting agency, security services, publishing house, payments to advocates and transaction auditor as essential and allow the expenses incurred on those activities. The expenses relating to the valuation are disallowed because the Directors have admittedly not handed over the records and assets. Similarly, the payment to advocate for a PUFE transaction for application under preparation is disallowed because in the absence of records, it is difficult to justify any payment for the preparation of such an application. While, we allow the expense of the IRP amounting to Rs. 1,48,237/-, the payment towards his fees is restricted to Rs. 2 lakhs as we strongly disapprove his conduct in not pursuing the present application filed by himself only and unnecessarily adding to the costs by carrying out non-essential activities. In the result, the CIRP costs are allowed to the extent of Rs. 8,36,001/- and the same is to be reimbursed by the corporate debtor i.e. M/s Cheema Spintex Limited. 8. We have duly considered the detailed arguments advanced by the Learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also filed an application on 22.10.2021 for withdrawal of the CIRP. It is therefore amply clear that all the important stakeholders in the process were in unison in seeking closure of CIRP and awaiting final directions of the Adjudicating Authority. It is also pertinent to note that the withdrawal applications were filed by the stakeholders before the constitution of CoC which had its first meeting on 06.11.2021. It is also observed that the IRP had been present before the Adjudicating Authority as and when the matter came up for hearing on the related IAs and that details of the expenses incurred on CIRP was filed by the IRP in pursuance to the orders dated 30.03.2022 passed by the Adjudicating Authority. Yet another crucial point to be borne in mind is that while examining the expense-details filed by the IRP, the Adjudicating Authority took cognizance of the fact that records and assets were not handed over to the IRP by the ex-management of the Corporate Debtor consequent upon their settlement with the Operational Creditor and therefore only the expenses found essential have been allowed while the remaining disallowed and treated as non-essential. The Adjudicating Authority aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on valuation exercise and payment to advocate is justified particularly because these tasks were contingent upon the records and assets being handed over to the IRP by the ex-management of the Corporate Debtor which in fact had not happened. That these records and assets were not available with the IRP is substantiated by the fact that the Appellant/IRP on his own had filed an application before the Adjudicating Authority for non-cooperation on the part of the former management of the Corporate Debtor on 30.10.2021. The contention of the Learned Counsel for the Appellant that creation of an artificial classification by the Adjudicating Authority of essential and non-essential activities during CIRP is ultra vires the provisions of the IBC is not a tenable argument since the Adjudicating Authority has used these terms more as an easy reckoner to decide on whether to allow or disallow the item of expenditure and not acted in any manner contrary to the form and spirit of IBC. In sum, we find no reasons to differ with the evaluation exercise of CIRP expenses filed by the IRP as carried out by the Adjudicating Authority in allowing some expenses and disallowing some. 14. We now dwel ..... 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