TMI Blog2022 (11) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... with their participation. It is noted that both the Appellants again chose to be absent in the re-assembled 7th CoC meeting, which was taking place after being adjourned once, and wherein decision regarding the CIRP cost, RP s fees, etc. were taken. Regulation 22(2) and 22(3) of CIRP Regulations provide that when a meeting could not be held for want of quorum, the meeting automatically stand adjourned at the same time and place on the next day and regulation 22(3) provide that when the adjourned meeting takes place with the members attending the meeting, it shall be quorate - there are no illegality in either holding of the 7th meeting of CoC dated 6.12.2019 and in the decisions taken in the meeting regarding the payment of CIRP cost and RP fees. RP and the CoC have acted in the true spirit of the law for fixing of the shares of the operational creditors in the CIRP cost and RP s fees (since there are no financial creditors) which are required to be deposited with the liquidator immediately. The Impugned Order does not suffer from any error and, therefore, needs no interference - appeal dismissed. - Company Appeal (AT) (Insolvency) No.32 of 2022 Company Appeal (AT) (Insolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses are not reasonable in terms of Regulation 15 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Circular no. IBBI/IP/013/2018 issued by the Insolvency and Bankruptcy Board of India on 12.6.2018 on the subject Fee and Other Expenses incurred for CIRP . He has lastly stated that the Income Tax Department will be gravely prejudiced if such a high CIRP cost was recovered from the Department and moreover, the power to approve such payments with the Assessing Officer is only upto Rs. 2,00,000/-. Company Appeal (AT) (Ins) No. 1123 of 2022 (Appeal II) 5. The Appellant Excise and Taxation Department, Government of Haryana in Company Appeal (AT) (Insolvency) No.1123 of 2022 has stated in the appeal that it filed its claim for an amount Rs.2,67,96,740 and the Respondent Resolution Professional has raised a big amount Rs.12,14,855 as the proportionate share of the Excise and Taxation Department in the total CIRP cost. He has claimed that Regulation 34 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 merely authorizes the CoC to fix the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has further argued that Regulations 31, 33 and 34 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (in short CIRP Regulations ) stipulate various components of insolvency resolution process cost and the fees of Interim Resolution Professional/RP. In particular, Regulation 34 provides that the CoC shall fix the expenses to be incurred in the CIRP including the fees of RP and such expenses which shall constitute insolvency resolution process cost. He has argued that, in view of the fact that the decisions taken in the 7th meeting of CoC were not in accordance with the requirement of the minimum threshold voting percentage in favour of the resolution as required by section 21(8), such a resolution is null and void and the Appellants cannot be called upon to pay very high CIRP cost on the basis of such a non-est decision, which is not taken in accordance with law. 10. The Learned Counsel for Respondent Resolution Professional has argued in Appeal I that Regulation 25(3) of CIRP Regulations stipulates that the RP shall take vote of the members of CoC present in the meeting and in such a situation, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponents and details of various items in the CIRP costs and RP s fees. Since no clear decision could be taken in this meeting, the RP was left with no option but to pursue his application IA No. 182/2020, wherein the Adjudicating Authority has given clear directions to the Income Tax Department and the Excise and Taxation Department to immediately pay in proportion to the voting share in the CoC the expenses incurred by the RP, which has been ratified by the 7th meeting of the CoC. 13. The Learned Counsel for Respondent RP has cited the judgment dated 10.1.2020 of NCLAT in the matter of Committee of Creditors, M/s. Smartec Build Systems Pvt. Ltd. vs. B. Santosh Babu Ors. [CA (AT) (Insolvency) No. 48 of 2020) to point out that the CoC is bound to pay the fees and cost incurred by the IRP/RP. She has also rebutted the claim made of the Learned Counsel for Appellant on the requirement of taking decisions with votes of more than 50% mandatorily by citing judgment in K. Sashidhar v. Indian Overseas Bank (2019 12 SCC 150) case, by stating that the judgment relates to voting to approve resolution plan, where the threshold voting percentage is stipulated in section 30(4) of the IBC, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred on or by the interim resolution professional to the extent ratified under Regulation 33; (d) expenses incurred on or by the resolution professional fixed under Regulation 34; and (e) other costs directly relating to the corporate insolvency resolution process and approved by the committee. 33. Costs of the interim resolution professional.- xx xx xx xx (4) The amount of expenses ratified by the committee shall be treated as insolvency resolution process costs. Explanation. - For the purposes of this regulation, expenses include the fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional.] 34. Resolution professional costs . - The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process costs. Explanation. - For the purposes of this regulation, expenses include the fee to be paid to the resolution professional, fee to be paid to insolvency professional entity, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of two most important members of the CoC viz. the Income Tax Department and Excise and Taxation Department, Government of Haryana, who jointly controlled a vote share of 96.756% in the CoC. We are also aware of the fact that if both these Appellants had chosen not to participate in the CoC meeting, any decision taken in this meeting would not have been taken with more than 51% voting share. Thus, the compliance of section 21(8) of IBC would have an impossibility. We are of the view that in the given circumstance, necessary care and caution was exercised by the RP in holding of the CoC meeting. 19. Regulation 22(2) and 22(3) of CIRP Regulations provide that when a meeting could not be held for want of quorum, the meeting automatically stand adjourned at the same time and place on the next day and regulation 22(3) provide that when the adjourned meeting takes place with the members attending the meeting, it shall be quorate, Thus, we find no illegality in either holding of the 7th meeting of CoC dated 6.12.2019 and in the decisions taken in the meeting regarding the payment of CIRP cost and RP fees. It is also reasonable and prudent to expect that if the two Appellants had refus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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