Holding

The NCLT has jurisdiction under Section 60(5)(c) of the IBC to determine the amount payable to a professional valuer as part of insolvency resolution process costs, even if the CIRP is subsequently set aside.

Summary

The appellant, a registered valuer, was appointed by the resolution professional (RP) to value plant and machinery of Kavveri Telecom Infrastructure Ltd during a Corporate Insolvency Resolution Process (CIRP). His fee of Rs 7.5 lakhs and expenses were ratified by the Committee of Creditors, but after the National Company Law Appellate Tribunal (NCLAT) set aside the CIRP, the RP cancelled the appointment and paid only Rs 50,000. The appellant filed an application under Section 60(5) of the Insolvency and Bankruptcy Code (IBC) before the National Company Law Tribunal (NCLT) for the balance fee, which the NCLT dismissed as functus officio. The Supreme Court held that despite the CIRP being set aside, the claim arose during the period the appellant performed his duties and therefore fell within the NCLT’s jurisdiction under Section 60(5)(c) to determine such professional fees as part of CIRP costs. It clarified that the grievance redressal mechanism against the RP does not deprive the NCLT of this jurisdiction. Consequently, the Court set aside the NCLAT order and remitted the matter to the NCLT to determine the appellant’s fee claim.

Issues considered

What is the jurisdiction of the NCLT under Section 60(5)(c) of the IBC to determine professional fees when the CIRP is later set aside?
Does the grievance redressal mechanism under the IBC against a resolution professional bar the NCLT from adjudicating fee claims of other professionals?
Whether the NCLT can entertain an application for payment of valuer fees after it has been held functus officio?

Legislation cited

Insolvency and Bankruptcy Code, 2016s. 12A, s. 217, s. 218, s. 220, s. 60(5)(c), s. 62

Subjects

InsolvencyCIRPValuer feesSection 60(5)(c)NCLT jurisdictionGrievance redressalProfessional feesInsolvency resolution costs

Judgment

[2021] 4 S.C.R. 521 521

ALOK KAUSHIK A
v.
MRS BHUVANESHWARI RAMANATHAN AND OTHERS
(Civil Appeal No. 4065 of 2020)
MARCH 15, 2021 B
[DR. DHANANJAYA Y CHANDRACHUD AND
M. R. SHAH, JJ.]
Insolvency and Bankruptcy Code, 2016: s.60(5)(c) – Dispute
regarding fee of valuer – Pursuant to the initiation of CIRP against
corporate debtor, first respondent was appointed as the Resolution C
Professional (RP) – RP appointed appellant as a registered valuer
of the Plant and Machinery of the corporate debtor of 115 sites
and a fee of Rs.7.50 lakhs and other expenses were ratified by the
Committee of Creditor (CoC) – Appellant claims to have conducted
valuation work of 84 sites and he paid for expenses of Rs.52,000 – D
NCLAT set aside the CIRP against the corporate debtor and
remanded the matter to NCLT on the issue of CIRP costs – NCLT
decided on the fee of RP and reduced it by 20% from the fee ratified
by CoC – In view of order of NCLAT, RP cancelled the appointment
of the appellant and requested appellant for waiver of fee – In
return, appellant agreed to reduce his fee by 25% along with the E
expenses – However, RP informed appellant that the fee as ratified
cannot be paid and paid a sum of Rs.50,000 – Appellant filed
application under s.60(5) before the NCLT challenging non payment
of fees – However, the NCLT dismissed the application on the ground
that it had been rendered functus officio – NCLAT declined to exercise F
its appellate jurisdiction – Hence the instant appeal – Held: Though
the CIRP was set aside later, the claim of the appellant related to
the period when he was discharging his functions as a registered
valuer appointed as an incident of the CIRP – NCLT ought to have
exercised its jurisdiction under s.60(5)(c) of the IBC – In exercise
of jurisdiction under Art.142 of the Constitution, it is directed that G
in a situation such as the present case, NCLT is sufficiently
empowered under s.60(5)(c) of the IBC to make a determination of
the amount which is payable to an expert valuer as an intrinsic part
of the CIRP costs – Regn.34 of the IRP Regulations defines
‘insolvency resolution process cost’ to include the fees of other
H
521
522 SUPREME COURT REPORTS [2021] 4 S.C.R.

A professionals appointed by the RP – Whether any work has been
done as claimed and if so, the nature of the work done by the valuer
is something which need not detain this Court, since it is purely a
factual matter to be assessed by NCLT – The availability of a
grievance redressal mechanism under the IBC against an insolvency
professional does not divest the NCLT of its jurisdiction under
B
s.60(5)(c) of the IBC to consider the amount payable to the appellant
– In any event, the purpose of such a grievance redressal mechanism
is to penalize errant conduct of the RP and not to determine the
claims of other professionals which form part of the CIRP costs –
The impugned judgment and order of the NCLAT is set aside – The
C proceedings accordingly is remitted back to the NCLT for
determining the claim of the appellant for the payment of the
professional charges as a registered valuer appointed by the RP in
pursuance of the initiation of the CIRP.
Allowing the appeal and remitting the matter to NCLT,
D the Court
HELD : 1.1 Where an application for withdrawal is filed
under Section 12A of the IBC, a provision has been made in
Regulation 30A(7) in regard to the deposit of expenses.
Regulation 30(A) would not apply specifically to the present
E situation, since it deals with a case where an application is
withdrawn under Section 12A of the IBC. The appellant is justified
in contending that there must be a forum within the ambit and
purview of the IBC which has the jurisdiction to make a
determination on a claim of the present nature, which has been
instituted by a valuer who was appointed in pursuance of the
F initiation of the CIRP by the RP. After the NCLAT set aside the
CIRP and remitted the proceedings to the NCLT to decide on
the CIRP costs, the NCLT held that it was rendered functus officio
in relation to the appellant’s claim. This would be an incorrect
reading of the jurisdiction of the NCLT as an Adjudicating
G Authority under the IBC. [Paras 16, 18][528-G-H; 529-F-H]
1.2 Though the CIRP was set aside later, the claim of the
appellant as registered valuer related to the period when he was
discharging his functions as a registered valuer appointed as an

H
ALOK KAUSHIK v. MRS BHUVANESHWARI RAMANATHAN 523
AND OTHERS

incident of the CIRP. The NCLT would have been justified in A
exercising its jurisdiction under Section 60(5)(c) of the IBC. In
exercise of jurisdiction under Article 142 of the Constitution, it
is directed that in a situation such as the present case, the
Adjudicating Authority is sufficiently empowered under Section
60(5)(c) of the IBC to make a determination of the amount which
B
is payable to an expert valuer as an intrinsic part of the CIRP
costs. Regulation 34 of the IRP Regulations defines ‘insolvency
resolution process cost’ to include the fees of other professionals
appointed by the RP. Whether any work has been done as claimed
and if so, the nature of the work done by the valuer is something
which need not detain this Court, since it is purely a factual C
matter to be assessed by the Adjudicating Authority.
[Para 19][530-D-G; 531-A]
Gujarat Urja Vikas Nigam Limited v. Amit Gupta and
Others 2021 SCC OnLine SC 194 – relied on.
2. The NCLT in its order while dismissing the application D
of the appellant for the payment of fees had observed that the
Insolvency and Bankruptcy Board of India (‘IBBI’) is the
competent authority to deal with allegations against the RP
relating to their failure to discharge statutory duties (paragraph
7). Section 217 of the IBC empowers a person aggrieved by the E
functioning of an RP to file a complaint to the IBBI. If the IBBI
believes on the receipt of the complaint that any RP has
contravened the provisions of IBC, or the rules, regulations or
directions issued by the IBBI, it can, under Section 218 of the
IBC, direct an inspection or investigation. Under Section 220 of
the IBC, IBBI can constitute a disciplinary committee to consider F
the report submitted by the investigating authority. If the
disciplinary committee is satisfied that sufficient cause exists, it
can impose a penalty. The availability of a grievance redressal
mechanism under the IBC against an insolvency professional does
not divest the NCLT of its jurisdiction under Section 60(5)(c) of G
the IBC to consider the amount payable to the appellant. In any
event, the purpose of such a grievance redressal mechanism is
to penalize errant conduct of the RP and not to determine the
claims of other professionals which form part of the CIRP costs.
[Para 20][531-A-E]
H
524 SUPREME COURT REPORTS [2021] 4 S.C.R.

A 3. The impugned judgment and order of the NCLAT is set
aside. The proceedings accordingly stood remitted back to the
NCLT for determining the claim of the appellant for the payment
of the professional charges as a registered Valuer appointed
by the RP in pursuance of the initiation of the CIRP. [Para 21]
[531-E-F]
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4065
of 2020.
From the Judgment and Order dated 21.03.2019 of the National
Company Law Tribunal in Company Appeal (AT) (I) No. 857 of 2020.
C Manish Paliwal, Vikas Kumar, M/S Corporate Legal Partners,
Advs. for the appellant.
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, J.
D 1. Admit.
2. The present appeal arises out of proceedings relating to the
insolvency of a company by the name of Kavveri Telecom Infrastructure
Limited (“Corporate Debtor”). The National Company Law Tribunal,
Bengaluru (“NCLT” or “Adjudicating Authority”) initiated the
E Corporate Insolvency Resolution Process (“CIRP”) against the
Corporate Debtor by its order dated 21 March 2019. By an order dated
26 August 2019, the first respondent was appointed as the Resolution
Professional (“RP”).
3. By a letter dated 16 September 2019, the first respondent
F appointed the appellant as a registered valuer of the Plant and Machinery
of the Corporate Debtor, under Regulation 27 of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Corporate
Persons) Regulations, 2016 (“IRP Regulations”). The appellant was
appointed to value the plant and machinery at 115 sites of the Corporate
Debtor across India. The appellant’s appointment fee (Rs 7.50 lakhs
G plus applicable GST) and other expenses were ratified by the Committee
of Creditors (“CoC”), led by the second respondent, in its meeting held
on 9 December 2019.
4. The appellant claims to have conducted valuation work of over
eighty-four sites and to have visited forty sites. Further, several outstation
H
ALOK KAUSHIK v. MRS BHUVANESHWARI RAMANATHAN 525
AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, J.]

meetings were also stated to have been conducted between the appellant A
and the first respondent. The appellant has stated that he paid for expenses
in the sum of Rs 52,000.
5. The National Company Law Appellate Tribunal (“NCLAT” or
“Appellate Authority”) set aside the initiation of CIRP against the
Corporate Debtor by an order dated 18 December 2019. The NCLAT B
remanded the matter back to the NCLT to decide on the issue of CIRP
costs. By an order dated 20 December 2019, the NCLT decided on the
fee of the RP and reduced it by 20% from the fee ratified by the CoC.
6. In view of the order dated 18 December 2019 of the NCLAT,
the first respondent cancelled the appointment of the appellant on 19 C
December 2019. In relation to the fee payable to the appellant, the first
respondent requested him to consider a waiver. In return, the appellant
agreed to reduce his fee by 25% from the fee ratified by the CoC, along
with the expenses payable. However, on 2 March 2020, the first
respondent informed the appellant that the fee as ratified could not be
paid, and paid a sum of Rs 50,000. D

7. The appellant then filed an application1 under Section 60(5) of
the Insolvency and Bankruptcy Code, 2016 (“IBC”) before the NCLT
challenging the non-payment of the fees. However, the NCLT dismissed
the application by an order dated 29 June 2020 concluding that it had
been rendered functus officio. In appeal, the NCLAT by an order dated E
13 October 2020 rejected the contention of the appellant, noting that an
amount of Rs 50,000 had already been paid over. The appellant moved
this Court in an appeal under Section 62 of the IBC, for challenging the
order of the NCLAT.
8. On 11 January 2021, this Court issued notice in the appeal and, F
while doing so, passed the following order:
“1. Mr Manish Paliwal, learned counsel appearing on behalf of
the appellant submits that:
(i) The appellant was appointed as a Registered Valuer on
G
16 September 2019, and that his professional fees and
other expenses in the amount of Rs 7.50 lakhs were
ratified by the Committee of Creditors on 19 December
2019;
1
CA No 192 of 2020 H
526 SUPREME COURT REPORTS [2021] 4 S.C.R.

A (ii) The NCLAT by its order dated 18 December 2019 set
aside the corporate insolvency resolution process and
the proceedings were remitted to the NCLT to decide
on the CIRP costs;
(iii) On 20 December 2019, the NCLT determined the fees
B which were payable to the Interim Resolution
Professional; and
(iv) However, despite the order of the NCLAT, no
determination was made by the NCLT of the amount
which was due and payable to the appellant for the work
which was done as a Registered Valuer, recording that
C an amount of Rs 50,000 has been paid.
2. Issue notice, returnable in four weeks.
3. Dasti, in addition, is permitted.”
9. The Office Report indicates that all the respondents have been
served. By an order dated 19 February 2021, fresh notice was directed
D
to be served on the Corporate Debtor, returnable in three weeks. Service
has since been completed.
10. The issue in the present appeal relates to the costs, charges,
expenses and professional fees payable to a registered valuer appointed
after the initiation of the CIRP under the IBC, in a situation where the
E CIRP is eventually set aside by the Adjudicating Authority or, as the
case may be, Appellate Authority.
11. The submission of the appellant is that neither the NCLT nor
the NCLAT have applied their mind to the professional charges payable
to him in his capacity as a registered valuer. According to the appellant,
F he had completed the valuation of eighty-four sites and undertaken
expenses of Rs 52,000 in the valuation exercise. During the course of
the hearing Mr Manish Paliwal, learned counsel appearing on behalf of
the appellant, also submits that an amount of Rs 35,000 was paid towards
GST by the appellant. But the real issue which has been sought to be
canvassed in the appeal is that in a situation such as present, where the
G
CIRP was set aside by the Appellate Authority, there has to be within
the framework of the IBC, a modality for determining the claim of a
professional valuer such as the appellant. The NCLT came to the
conclusion that it was functus officio. The NCLAT declined to exercise
its appellate jurisdiction.
H
ALOK KAUSHIK v. MRS BHUVANESHWARI RAMANATHAN 527
AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, J.]

12. The expression ‘insolvency resolution costs’ has been defined A
in Section 5(13) of the IBC in the following terms:
“(13) “insolvency resolution process costs” means–
(a) the amount of any interim finance and the costs incurred
in raising such finance;
B
(b) the fees payable to any person acting as a resolution
professional;
(c) any costs incurred by the resolution professional in
running the business of the corporate debtor as a going
concern; C
(d) any costs incurred at the expense of the Government to
facilitate the insolvency resolution process; and
(e) any other costs as may be specified by the Board;”
13. Regulation 31 of the IRP Regulations is contained in Chapter
D
9, which is titled ‘Insolvency Resolution Process Costs’. Regulation 31
is in the following terms:
“31. Insolvency resolution process costs.– “Insolvency
resolution process costs” under Section 5(13)(e) shall mean–
(a) amounts due to suppliers of essential goods and services E
under Regulation 32;
(aa) fee payable to authorized representative under sub-
regulation (7) of regulation 16A;
(ab) out of pocket expenses of authorized representative for
discharge of his functions under section 25A; F
(b) amounts due to a person whose rights are prejudicially
affected on account of the moratorium imposed under
section 14(1)(d);
(c) expenses incurred on or by the resolution professional
G
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.” H
528 SUPREME COURT REPORTS [2021] 4 S.C.R.

A 14. Of the clauses of Regulation 31, of particular importance to
the present case is clause (c) which enunciates expenses incurred on or
by the IRP to the extent ratified under Regulation 33. Clause (e) refers
to other costs directly relating to the CIRP and approved by the CoC.
Regulation 33 provides for the costs of the IRP:
B “33. Costs of the interim resolution professional.– (1) The
applicant shall fix the expenses to be incurred on or by the interim
resolution professional.
(2) The Adjudicating Authority shall fix expenses where the
applicant has not fixed expenses under sub-regulation (1).
C
(3) The applicant shall bear the expenses which shall be reimbursed
by the committee to the extent it ratifies.
(4) The amount of expenses ratified by the committee shall be
treated as insolvency resolution process costs.
D
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.”
E
15 “Resolution professional costs” are defined in Regulation 34:
“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
F 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 any, and fee to be paid to
professionals, if any, and other expenses to be incurred by the
G resolution professional.”
16. Where an application for withdrawal is filed under Section
12A of the IBC, a provision has been made in Regulation 30A(7) in
regard to the deposit of expenses. Regulation 30A(7) provides as follows:

H “30A. Withdrawal of application.
ALOK KAUSHIK v. MRS BHUVANESHWARI RAMANATHAN 529
AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, J.]

[…] A
(7) Where the application is approved under sub-regulation (6),
the applicant shall deposit an amount, towards the actual expenses
incurred for the purposes referred to in clause (a) or clause (b) of
sub-regulation (2) till the date of approval by the Adjudicating
Authority, as determined by the interim resolution professional or B
resolution professional, as the case may be, within three days of
such approval, in the bank account of the corporate debtor, failing
which the bank guarantee received under sub-regulation (2) shall
be invoked, without prejudice to any other action permissible
against the applicant under the Code.” C
17. Clause 2 of Regulation 30A, which is referred to in clause 7,
is as follows:
“(2) The application under sub-regulation (1) shall be made in
form-FA of the Schedule accompanied by a bank guarantee–
D
(a) towards estimated expenses incurred on or by the interim
resolution professional for purposes of regulation 33, till
the date of filing of the application under clause (a) of
sub-regulation (1); or
(b) towards estimated expenses incurred for purposes of E
clauses (aa), (ab), (c) and (d) of regulation 31, till the
date of filing of the application under clause (b) of sub-
regulation (1).”
18. Regulation 30(A) would not apply specifically to the present
situation, since it deals with a case where an application is withdrawn F
under Section 12A of the IBC. The appellant is justified in contending
that there must be a forum within the ambit and purview of the IBC
which has the jurisdiction to make a determination on a claim of the
present nature, which has been instituted by a valuer who was appointed
in pursuance of the initiation of the CIRP by the RP. After the NCLAT G
set aside the CIRP and remitted the proceedings to the NCLT to decide
on the CIRP costs, the NCLT held that it was rendered functus officio
in relation to the appellant’s claim. This, in our view, would be an incorrect
reading of the jurisdiction of the NCLT as an Adjudicating Authority
under the IBC. In a recent judgment in Gujarat Urja Vikas Nigam
H
530 SUPREME COURT REPORTS [2021] 4 S.C.R.

A Limited vs Amit Gupta and Others2, this Court clarified the jurisdiction
of the NCLT/NCLAT under Section 60(5)(c)3 of the IBC in the following
terms:
“71. The institutional framework under the IBC contemplated the
establishment of a single forum to deal with matters of insolvency,
B which were distributed earlier across multiple fora…Therefore,
considering the text of Section 60(5)(c) and the
interpretation of similar provisions in other insolvency
related statutes, NCLT has jurisdiction to adjudicate
disputes, which arise solely from or which relate to the
insolvency of the Corporate Debtor. However, in doing do,
C
we issue a note of caution to the NCLT and NCLAT to ensure
that they do not usurp the legitimate jurisdiction of other courts,
tribunals and fora when the dispute is one which does not arise
solely from or relate to the insolvency of the Corporate Debtor.
The nexus with the insolvency of the Corporate Debtor must exist.”
D
(emphasis supplied)
19. Though the CIRP was set aside later, the claim of the appellant
as registered valuer related to the period when he was discharging his
functions as a registered valuer appointed as an incident of the CIRP.
The NCLT would have been justified in exercising its jurisdiction under
E Section 60(5)(c) of the IBC and, in exercise of our jurisdiction under
Article 142 of the Constitution, we accordingly order and direct that in a
situation such as the present case, the Adjudicating Authority is
sufficiently empowered under Section 60(5)(c) of the IBC to make a
determination of the amount which is payable to an expert valuer as an
F intrinsic part of the CIRP costs. Regulation 34 of the IRP Regulations
defines ‘insolvency resolution process cost’ to include the fees of other
professionals appointed by the RP. Whether any work has been done as
claimed and if so, the nature of the work done by the valuer is something
2
2021 SCC OnLine SC 194
3
G “Section 60 (5) (c) – Adjudicating Authority for Corporate Persons: (5)
Notwithstanding anything to the contrary contained in any other law for the time being
in force, the National Company Law Tribunal shall have jurisdiction to entertain or
dispose of—
……
(c) any question of priorities or any question of law or facts, arising out of or in relation
to the insolvency resolution or liquidation proceedings of the corporate debtor or
H corporate person under this Code.”
ALOK KAUSHIK v. MRS BHUVANESHWARI RAMANATHAN 531
AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, J.]

which need not detain this Court, since it is purely a factual matter to be A
assessed by the Adjudicating Authority.
20. The NCLT in its order dated 29 June 2020, while dismissing
the application of the appellant for the payment of fees, observed that
the Insolvency and Bankruptcy Board of India (“IBBI”) is the competent
authority to deal with allegations against the RP relating to their failure B
to discharge statutory duties (paragraph 7). Section 217 of the IBC
empowers a person aggrieved by the functioning of an RP to file a
complaint to the IBBI. If the IBBI believes on the receipt of the complaint
that any RP has contravened the provisions of IBC, or the rules,
regulations or directions issued by the IBBI, it can, under Section 218 of
the IBC, direct an inspection or investigation. Under Section 220 of the C
IBC, IBBI can constitute a disciplinary committee to consider the report
submitted by the investigating authority. If the disciplinary committee is
satisfied that sufficient cause exists, it can impose a penalty. The
availability of a grievance redressal mechanism under the IBC against
an insolvency professional does not divest the NCLT of its jurisdiction D
under Section 60(5)(c) of the IBC to consider the amount payable to the
appellant. In any event, the purpose of such a grievance redressal
mechanism is to penalize errant conduct of the RP and not to determine
the claims of other professionals which form part of the CIRP costs.
21. We accordingly allow the appeal and set aside the impugned E
judgment and order of the NCLAT dated 13 October 2020. The
proceedings shall accordingly stand remitted back to the NCLT for
determining the claim of the appellant for the payment of the professional
charges as a registered Valuer appointed by the RP in pursuance of the
initiation of the CIRP. In order to facilitate a fresh determination by the
NCLT, the order passed by the NCLT on 18 December 2019 is also set F
aside and CA No 192 of 2020 shall stand restored to the file of the
NCLT for determination afresh in the light of the above observations.
22. Pending applications, if any, stand disposed of.

G
Devika Gujral Appeal allowed.

H