NCLT Delhi Rules, No Direction Pertaining To Fees & Expenses Of Resolution Professional Can Be Passed Prior To Adjudication Of S.99 Report
Pranav B Prem
The National Company Law Tribunal (NCLT), New Delhi Bench, has ruled that issuing any order on the fees and expenses of a Resolution Professional (RP) before adjudicating the report under Section 99 of the Insolvency and Bankruptcy Code, 2016 (IBC) would be premature and inconsistent with the statutory scheme.
The Bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Shri Atul Chaturvedi (Technical Member) made the observation while allowing applications filed by the Central Bank of India under Section 98(1) of the IBC read with Rule 11 of the NCLT Rules, seeking the replacement of Mr. Sudhir Kumar Agarwal as RP in the personal insolvency resolution process of Mrs. Ritu Garg.
Background of the case
The Financial Creditor had moved the Tribunal under Section 95 of the IBC against the Personal Guarantor, following which, on 26.07.2024, the Tribunal appointed Mr. Sudhir Kumar Agarwal as RP under Section 97(5) and directed him to file his report under Section 99 within 10 days. According to the Bank, the RP failed to submit the report within the statutory period and instead issued an invoice for ₹2,00,000 per case, demanding 50% of the amount as advance payment before taking further steps.
The Bank alleged that even after the expiry of the 10-day statutory period, the RP made repetitive and unnecessary demands for information already on record and sought irrelevant details under the pretext of “non-cooperation” from the Financial Creditor. It argued that this behaviour hindered the statutory process and was inconsistent with the RP’s role of facilitating negotiations for a repayment plan between debtor and creditor.
RP’s defence
In reply, the RP denied refusing to work without full payment of his fee. He stated that the documents provided by the Bank were illegible and incomplete, and despite sending multiple requests through emails and letters—including requests for a clear hard copy of the application—the Bank failed to provide the necessary documents. He claimed that, due to this non-cooperation, he had to personally visit the locations of four guarantors and send several communications to both the Financial Creditor and the guarantors.
The RP justified his fee demand as reasonable and consistent with earlier NCLT-approved rates for personal guarantor insolvency cases. He further submitted that he had already filed the Section 99 report and that any replacement of the RP should follow the procedure under Section 98(4) of the Code, which requires a creditors’ meeting decision for replacement during the implementation of a repayment plan.
Tribunal’s observations
After hearing the parties and examining the record, the Bench noted that the RP had not filed the Section 99 report within the statutory timeframe despite explicit directions in the appointment order. It also recorded that the RP raised an invoice before the adjudication of the report, which, in the Tribunal’s view, was “exorbitant” and inconsistent with the process envisaged under the IBC.
The Tribunal remarked that “any directions pertaining to the fees and expenses of the Resolution Professional, prior to adjudication of the Section 99 report, would be premature and contrary to the scheme envisaged under the Code.” It found that the explanation provided by the RP did not satisfactorily account for the delay or justify the procedural lapses, particularly the failure to perform statutory duties within time.
Order of replacement
Referring to Section 97(1) of the Code, which permits replacement of an RP upon application by the debtor or creditor, the Bench allowed the Central Bank of India’s request. Mr. Sudhir Kumar Agarwal was replaced with Mr. Manindra Kumar Tiwari (IBBI Registration No. IBBI/IPA-001/IP-P02612/2021-2022/14015) as the new RP to take the process forward.
The outgoing RP was directed to hand over all records and extend full cooperation to the new RP. The newly appointed RP was instructed to file a valid Authorisation for Assignment within three days. Further, the Registry was directed to send a copy of the order to the Insolvency and Bankruptcy Board of India (IBBI) for its records and necessary action. With these directions, the applications were allowed and disposed of.
Appearance
For the Applicant: Mr. Brijesh Kumar Tamber and Mr. Prateek Kushwaha, Advocates
For the RP: Adv. Rachit Ranjan
Cause Title: Central Bank of India v/s Mrs. Ritu Garg, Anurag Garg, Mrs. Manju Lata Garg, Akresh Garg, Mr. Sudhir Kumar Agarwal
Case No: I.A. No. 4923/ND/2024 IN C.P. (IB) No. 96/ND/2024, I.A. No. 4919/ND/2024 IN C.P. (IB) No. 89/ND/2024, I.A. No. 4918/ND/2024 IN C.P. (IB) No. 98/ND/2024, I.A. No. 4920/ND/2024 IN C.P. (IB) No. 94/ND/2024
Coram: Shri Manni Sankariah Shanmuga Sundaram [Judicial Member], Shri Atul Chaturvedi [Technical Member]
