National Company Law Appellate Tribunal
West Bengal Financial Corporation vs Krishnaswami Cvr & Anr on 3 November, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH,
NEW DELHI
Company Appeal (AT) (Insolvency) No. 725 of 2021
[Arising out of order dated 06.08.2021 in I.A. (IB) No. 219/KB/2021 in C.P. (IB)
No. 185/KB/2018 passed by the Adjudicating Authority (National Company Law
Tribunal, Kolkata Bench, Kolkata.)]
IN THE MATTER OF:
West Bengal Financial Corporation,
Through its Managing Director
DD-22, Salt Lake City,
Kolkata-700064, West Bengal. ...... Appellant.
Versus
1. Krishnaswami CVR,
Resolution Professional
(An Insolvency professional
registered with the Insolvency and
Bankruptcy Board of India, having
Registration No. IBBI/IPA-001/IP-
P01302/2018-2019/12217,
EmailID: [email protected]
Having office at Flat 2D, Second
Point, 449 NSC Bose Road,
Mahamayatalla, Garia, Kolkata
700084, West Bengal.
...... Respondent No. 1.
2. M/S. GLAZE INFRASTRUCTURE
PRIVATE LIMITED
2
Registered Office at 591, Block-O,
New Alipore, 3rd Floor from Back
Gate, Kolkata- 700053, West Bengal.
...... Respondent No. 2.
(Corporate Debtor)
Present:
For Appellant: Mr. Madhumita Bhattacharjee, Advocate.
For Respondent:- Mr. Rishav Banerjee, Mr. Avik Chowdhuri and Ms.
Soumya Dutta, Advocates for R1.
JUDGMENT
(03rd November, 2022) Justice Anant Bijay Singh;
The present Appeal has been filed by the Appellant being aggrieved and dissatisfied by the order dated 06.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) in I.A. (IB) No. 219/KB/2021 in C.P. (IB) No. 185/KB/2018 whereby and whereunder I.A. (IB) No. 219/KB/2021 was disposed of with a direction that payment of Rs. 15,00,000/- as a consolidated fee to the Resolution Professional for the entire CIRP period and this shall be paid within a period of two weeks from today.
2. The facts giving rise to this Appeal are as follows:
i) The Appellant is the West Bengal Financial Corporation (henceforth WBCF) constituted under the State Financial Corporations Act, 1951 (as amended up to date), enacted by the Parliament of India. The Head Office of the Corporation is situated at DD-22, Salt Lake City, Kolkata-700064, West Bengal. The Company Appeal (AT) (Insolvency) No. 725 of 2021 3 Respondent No. 1, Mr. Krishnaswami C.V.R is an Insolvency Professional registered with the Insolvency and Bankruptcy Board of India. The Respondent No. 1 was appointed as an Interim Resolution Professional and later on was further appointed to be the Resolution Professional in the said matter.
ii) The Respondent No. 2, M/S Glaze Infrastructure Private Limited, a Company incorporated and registered under the Companies Act, 1956 and having its Registered Office at 591, Block-O, New Alipore, 3rd Floor from Back Gate, Kolkata- 700053, West Bengal and is the Corporate Debtor in the instant case.
iii) The Respondent No. 2 has an outstanding debt of Rs. 1,05,17,735/-
payable to the Operational Creditor - M/s Saint Gobain India Pvt. Ltd. which the Respondent No. 2 failed to pay within the stipulated dated i.e. by the end of 31st August, 2019, the Adjudicating Authority vide order dated 25.11.2019 passed a direction for initiation of Corporate Insolvency Resolution Process against the Respondent No. 2 and the Respondent No. 1 was accordingly appointed as the Interim Resolution Professional and then Resolution Professional.
iv) Further case is that in the first meeting of the Committee of Creditors of Glaze International Pvt. Ltd. held on 26.12.2019 it was decided that an amount of Rs. 2,76,240/- was approved towards the fees and preliminary expenses of the CIRP conducted by the IRP of which Rs. 2,50,000/- was the fees of the IRP for the CIRP period only i.e. for one month.
Company Appeal (AT) (Insolvency) No. 725 of 2021 4
v) Further the Adjudicating Authority vide order dated 31.12.2019 appointed the Interim Resolution Professional as the Resolution Professional (for short RP). In the 3rd meeting of the COC, the RP informed the Committee that his fees need to be decided which was postponed for subsequent meetings. In the 5th meeting of the COC, the RP placed a note under Agenda 8 wherein he sought approval of his fees at the rate of Rs. 2.50 Lacs per month with a maximum of Rs. 15 Lacs. The Agenda 8 is extracted below:
"Agenda 8: The resolution professional placed a note requesting for approval of his fees (appended) at the rate of Rs. 2.50 lacs per month with a maximum of Rs. 15 lacs. Members are requested to pass the following resolution:
Resolved to approve the fees to the resolution professional at the rate of Rs. 2,50,000.00/- (Rupees two lacs fifty thousand only) per month subject to a maximum of Rs. 15 lacs (Rupees Fifteen lacs only) for the entire CIRP process.
With no further item to discuss the meeting ended with a vote of thanks for the active participation by the members."
vi) Further case is that the aforesaid fees were not paid the Respondent No. 1 / RP filed application bearing I.A. (IB) No. 219/KB/2021 in C.P. (IB) No. 185/KB/2018 before the Adjudicating Authority for none payment of fees, thereafter, the Adjudicating Authority disposed of the said I.A. with certain directions (supra) which led to filing of this Appeal. Company Appeal (AT) (Insolvency) No. 725 of 2021 5 Submissions on behalf of the Appellant
3. The Ld. Counsel for the Appellant during the course of argument and in his memo of Appeal along with written submissions submitted that they have provided term loans aggregating Rs. 1550 Lakh to Glaze Infrastructure Pvt. Ltd. between 2010 and 2013 for setting up a laminated and toughened glass manufacturing unit at Ganipur, South 24 Parganas. The account of the Corporate Debtor is in heavy default for a long time and there has not been any recovery during last few years and a huge amount of public fund is blocked and the account position has taken an alarming shape, the outstanding-cum-default amount as on 30.06.2021 is Rs. 20,64,81594.41 including interest. As against such a huge demand, the Appellant was not able to recover any amount from the Corporate Debtor and as such they are unable to make such payment towards the fees of Resolution Professional.
4. It is further submitted that the voting share of WBFC is 74.01% and thus the proportionate amount of the Resolution Professional fees that WBFC needs to pay is Rs. 11,10,150/-. The resolution plan submitted by the Resolution Professional was not a pragmatic one and it failed to attract prospective buyers. The tenure of the Resolution Professional is long and other than conducting a few meetings, he failed to function satisfactorily and place a practical resolution plan to revive the unit as a result of which the unit needs to be liquidated.
5. It is further submitted that the impugned order directing the Appellant to pay the Resolution Professional 15 Lacs towards his fees is uncalled for as the CoC have already voted against it and it is unfair to saddle a government Company Appeal (AT) (Insolvency) No. 725 of 2021 6 institution dealing with public money with unnecessary burden. It is further submitted that without prejudice to the aforesaid, the Appellant herein is ready and willing to pay Rs. 5,55,075/- towards the fees of the Resolution Professional which can be adjusted from the sale proceeds of the liquidation. Based on these submissions, the ex-parte impugned order is bad in law and deserves to be set aside as it is illegal and the Appeal be allowed.
Submissions on behalf of the Respondent
6. The Ld. Counsel for the Respondent No. 1/Resolution Professional during the course of argument and in his reply affidavit along with written submissions submitted that the Respondent No. 1 was constrained to file an application before the Adjudicating Authority praying for payment of fees which the Respondent No. 1 in good faith had restricted to a total of Rs. 15 Lakhs though he was actually entitled to much higher fees (more than Rs. 35 lakhs calculated @ Rs. 2.50 lakhs per month, which was approved as IRP fees). It is a matter of undisputed record that despite several notices issued to the CoC members, nobody appeared to represent the CoC Members at the time of hearing of the application. The impugned order was passed ex-parte because none of the CoC members chose to appear despite service of notice.
7. It is further submitted that the Respondent No. 1 has not received any fees whatsoever throughout the CIRP. It is absurd and contrary to the provisions of the Code for the CoC to force the Resolution Professional to conduct the CIRP without any fees whatsoever. It is further submitted that the CoC comprised of total 6 members including the Appellant (who enjoyed 74.01% share). All the 5 Company Appeal (AT) (Insolvency) No. 725 of 2021 7 other CoC members has duly complied with the order dated 06.08.2021 and paid their share of the fee to the Resolution Professional. This goes to show that there is actually no grievance of the CoC against the Resolution Professional and that the appellant is wrongfully withholding payment of Resolution Professional.
8. The Ld. Counsel for the Respondent No. 1 relying on an order dated 10.01.2020 passed by this Appellate Tribunal in the case of Committee of Creditors, M/s Smartec Build Systems Pvt. Ltd. Vs. B. Santosh Babu & Ors. [Company Appeal (AT) (Ins.) No. 48 of 2020] wherein this Appellate Tribunal held as follows:
"........
8. At this stage, learned counsel for the Appellant submits that the 'Resolution Professional' having charged high fee, we specifically asked the counsel whether the 'Committee of Creditors' is agreeable to the fees, we may determine and to be paid by them, it is submitted that he is having no such instructions.
As the plea taken by the 'Committee of Creditors' is frivolous, we dismiss the appeal with cost of Rs. 1,00,000/- (Rupees One Lac only)."
9. It is further submitted that the aforesaid decision was upheld by the Hon'ble Supreme Court vide order dated 15.10.2020 filed by the Committee of Creditors, M/s Smartec Build Systems Pvt. Ltd. in Civil Appeal Nos. 2190/2020. Based on these submissions, the Adjudicating Authority has rightly passed the impugned order, therefore, there is no merit in the present Appeal, the Appeal is fit to be dismissed.
Company Appeal (AT) (Insolvency) No. 725 of 2021 8 FINDINGS
10. After hearing the parties and going through the pleadings made on behalf of the parties and also in view of the resolution in its fifth meeting of Committee of Creditors held on 23rd September, 2020 whereby the Committee of Creditors approved the fees of Resolution Professional at the rate of Rs. 2.50 lacs per month with a maximum of Rs. 15 lacs (at page 41 to 43 of the Appeal Paper Book), we are of the view that the Adjudicating Authority has rightly considered all these facts and also recommendation of the Committee of Creditors.
11. Taking all the facts aforenoted, we agree with the reasons given by the Adjudicating Authority. The Impugned Order dated 06.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) in I.A. (IB) No. 219/KB/2021 in C.P. (IB) No. 185/KB/2018 is hereby affirmed. The instant Appeal is hereby dismissed devoid of merit.
12. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata), forthwith.
[Justice Anant Bijay Singh] Member (Judicial) [Dr. Ashok Kumar Mishra] Member (Technical) New Delhi 03rd November, 2022 R. Nath.
Company Appeal (AT) (Insolvency) No. 725 of 2021