DEVARAJAN RAMAN versus BANK OF INDIA LIMITED

Citation: [2022] 1 S.C.R. 975 · Decided: 05-01-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

Judgment (excerpt)

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[2022] 1 S.C.R. 975
975
DEVARAJAN RAMAN
v.
BANK OF INDIA LIMITED
(Civil Appeal No. 3160 of 2020)
JANUARY 05, 2022
[DR. DHANANJAYA Y CHANDRACHUD AND
A.S. BOPANNA, JJ.]
Insolvency and Bankruptcy Code, 2016 – Costs and expenses
incurred by Resolution Professional (RP) – In pursuance to an email
of the respondent, the appellant submitted his bid for appointment
as an Interim Resolution Professional – Corporate Insolvency
Resolution Process (CIRP) was initiated by the order of NCLT and
the appellant was appointed as Interim Resolution Professional –
The order of NCLT was set aside in appeal and the proceedings
were remitted back to determine fee and costs of the CIRP incurred
by appellant – Appellant addressed the letter to respondent showing
the amount payable as fees and cost – The total amount was of Rs
14,75,660/- – Amount of Rs. 5,66,667/- was reimbursed by the
respondent leaving the balance amount Rs 9,08,993/- – Respondent
replied to the appellant’s letter 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 –
Appellant filed application before NCLT for obtaining release of
remaining cost and fees – NCLT directed the respondent to pay
the expenses incurred and an amount of Rs 5,00,000 plus GST
towards the fee of the RP – Appeal was filed by appellant for
challenging reduction in cost and fees by NCLT – NCLAT dismissed
the appeal of appellant and held that the amount of Rs 5,00,000/
- as fee, in addition to the expenses, appears to be reasonable –
Before the Supreme Court, the appellant submitted that both NCLT
and NCLAT erroneously have not scrutinized the factual position
and awarded the ad hoc amount – On appeal, held: Considering
the respondent’s reply to the letter of appellant and absence of
consideration of submissions made by appellant by the NCLT –
Neither the basis of the claim nor its reasonableness was
considered by the Adjudicating Authority – The Appellate Authority
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SUPREME COURT REPORTS
[2022] 1 S.C.R.
proceeded in an ad hoc manner – Both the orders suffers from
abdication in the exercise of jurisdiction – Remand ordered – The
order and judgement of NCLAT and NCLT set aside – NCLT to
decide the matter afresh – Insolvency and Bankruptcy Board of
India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016 – Regulation 34.
Allowing the appeal, the Court
HELD: 1. In the present case, after the NCLAT set aside
the order of the NCLT initiating the CIRP, the proceedings were
remitted back for determining the insolvency resolution costs.
It is material to note that the appellant had addressed a letter to
the respondent on 13 December 2019 prior to the filing of the
application to which the respondent responded on 24 January
2020 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. In the application which was
filed by the appellant before the NCLT, the appellant annexed a
statement of costs, the amount which was reimbursed with the
balance dues at Annexure ‘D’. The order of the NCLT, however,
reveals that none of the submissions of the appellant have been
considered. The adjudicating authority merely directed the
respondent to pay the expenses incurred and an amount of
Rs 5,00,000 plus GST towards the fee of the RP. Neither the
basis of the claim nor its reasonableness has been considered by
the adjudicating authority. The appellate authority has merely
proceeded in an ad hoc manner on the ground that the amount of
Rs 5,00,000 as fee, in addition to the expenses, appears to be
reasonable. Both the orders suffer from an abdication in the
exercise of jurisdiction. In the absence of any reasons either in
the order of the NCLT or the appellate authority, it is impossible
for this Court to deduce the basis on which the payment of an
amount of Rs 5,00,000 together with expenses has been found to
be reasonable. Consequently, an order of remand becomes
necessary. [Para 16][982-C-G]
Alok Kaushik v Bhuvaneshwari Ramanathan (2021) 5
SCC 787 – referred to.
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3160
of 2020.
From the Judgment and Order dated 30.07.2020 of the National
Company Law Appellate Tribunal at New Delhi in Company Appeal
(AT) (Insolvency) No. 646 of 2020.
Ms. Anjali Sharma, Ms. Shagun Matta, Deepak Bashta, Advs.
fo

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