The Supreme Court in the case of Devarajan Raman v/s Bank of India Limited ruled that NCLT must make reasonable assessment of fees, expenses payable to Interim RP and cannot pass order in ad-hoc manner.
In December 2019, the order of the NCLT was set aside in appeal by the NCLAT at the behest of the Directors of the Corporate Debtor. By the order of the appellate authority, the proceedings were remitted to the NCLT to decide upon the fee and costs of the Corporate Insolvency Resolution Process incurred by the appellant which was to be borne by the respondent as a financial creditor.
The appellant addressed a letter to the respondent enclosing a statement showing the amount payable as fee and costs. The respondent replied to the appellant’s letter stating that it had verified the details of the fee and costs stated by the appellant and found them in conformity with the technical and financial bid based on which he had been awarded the assignment, together with the approval of the Committee of Creditors. The respondent stated that it would release the payment to the appellant, upon receipt of an order of the NCLT.
Ms Anjali Sharma, counsel appearing on behalf of the appellant, challenged the order of the NCLAT and contended that the statement of fee and expenses submitted by the appellant was in terms of the technical and financial bid. The NCLT did not scrutinize or verify the factual position and merely awarded an ad hoc amount while the NCLAT has committed a similar error on the ground that an amount was found to be reasonable.
Mr Vadlamani Seshagiri, counsel appearing on behalf of the respondent, submitted that the appellant accepted the order of the NCLAT remitting the proceedings back to the NCLT for determining the costs and fee payable to the RP. Moreover, it was sought to be urged that the payment which has been made to the RP is commensurate with the work which was done over a period of three months.
The division bench of Justice Dr Dhananjaya Y Chandrachud and Justice A S Bopanna noted that the appellant had addressed a letter to the respondent prior to the filing of the application to which the respondent responded stating that, upon verification, the costs and fees were found in conformity with both the technical and financial bid, based on which the assignment was awarded.
The court, while allowing the appeal, set aside the impugned judgment and order of the NCLAT and NCLT. The court asked NCLT, upon remand, to expedite the disposal of the MA and to complete the process within a period of one month.