Minita D Raja Vs. Cosmos Co-Op Bank Ltd. - The Explanation to Regulation 34 of the CIRP Regulations read with Regulation 31(d) of the CIRP Regulations, amplify that the fees payable to the resolution professional is also a part of the expenses to be incurred by the resolution professional.

  NCLAT (2026.03.12) in Minita D Raja Vs. Cosmos Co-Op Bank Ltd. [(2026) ibclaw.in 295 NCLAT,  Comp. App. (AT) (Ins) No. 1799 of 2024 and I.A. No. 6569 of 2023] held that;- 

• Thus, we find that Regulation 30A(7) of the CIRP Regulations makes it clear that Payment of expenses are payable up to date of approval order being passed by the Adjudicating Authority, which includes expenses incurred on or by the Resolution Professional. The Explanation to Regulation 34 of the CIRP Regulations read with Regulation 31(d) of the CIRP Regulations, amplify that the fees payable to the resolution professional is also a part of the expenses to be incurred by the resolution professional.

• However, the issue remains as to whether the work and responsibility of Resolution Professional get over after filing Section 12 A application and can the Resolution Professional walk away from the CIRP after filing 12A application. In our opinion, the answer is clear and categorically NO. The Resolution Professional is duty bound to continue looking after the affairs of the Corporate Debtor till it is handed over to the CoC.

• The final issue pending as to whether the Adjudicating Authority would have reduced the fee from Rs. 50,000/- per month to Rs. 10,000/- per month without any recommendation by the CoC. We note that rightly or wrongly, it was done earlier by the Adjudicating Authority, who reduced fee of the Resolution Professional from Rs. 2 Lakhs to Rs. 50,000/- per month and which was not challenged and attained finality. However, this cannot be ratified as correct law.

Excerpts of the Order;

# 1. The present appeal has been filed by the Appellant i.e., Minita D Raja who is the Erstwhile Resolution Professional of Crystal Clear Veg Oil Refinery Pvt. (Corporate Debtor) Ltd. under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘Code’) against the Impugned Order dated 25.07.2024 passed by the National Company Law Tribunal, Mumbai Bench, Court-II (“Adjudicating Authority“) in IA 838 of 2024 in CP(IB)/1792/MB/2017.

The Cosmos Co-Op Bank Limited, who is the Financial Creditor of the Corporate Debtor is the Respondent herein.

# 2. It is the case of the Appellant that the Impugned Order dated 25.07.2024 is contrary to the provisions of Code and Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons, 2016 (“CIRP Regulations”) as well as in contradiction to the Adjudicating Authority own order dated 11.08.2023 passed by the Ld. Adjudicating Authority whereby the fee of the Resolution Professional was fixed at Rs. 50,000/- per month. The Appellant submitted that the Adjudicating Authority wrongly observed that description of tasks undertaken by the Appellant during the said period does not justify the payment of professional fee at the rate of Rs. 50,000 per month. The Appellant submitted that the said finding is contrary to factual position. The Appellant submitted that the Resolution Professional, during the entire period of the CIRP till the date of handing over is duty bound to maintain the Corporate Debtor and complete the statutory compliances. The Appellant submitted that he pursued all litigation before various legal fora. The Appellant elaborated that reduction of fee from Rs.50,000/- to Rs.10,000/- is completely unjustified and contrary to the record of the case.

# 3. The Appellant submitted that from the date of commencement of CIRP on 16.04.2018 till 23.01.2024, the Appellant was in control of the Corporate Debtor and the handover of the Corporate Debtor to its management was done on 30.01.2024, in the presence of the officials of the Respondent Bank.

# 4. The Appellant explained that the CIRP could not succeed as the only one resolution plan was received which was not found to the satisfaction of the CoC. The COC in its 15th meeting held on 04.04.2019, passed a resolution by 100% of vote share in favour of withdrawal under Section 12A of the Code. The Appellant submitted that as per instructions of the CoC and the provisions of the Code, the Appellant had filed an application under Section 12A of the Code on 08.04.2019, which was numbered as M.A. No. 1339 of 2019. The Appellant stated that M.A. No. 1339 of 2019 was disposed of by the Adjudicating Authority vide order dated 04.01.2021 whereby the request of withdrawal of the CIRP was rejected. The Appellant further submitted that aggrieved by the same, the Respondent preferred an appeal before this Appellate Tribunal in Company Appeal (AT) (Ins.) No. 247 of 2021, which came to be allowed by this Appellate Tribunal vide its Order dated 17.11.2022; thereby remanding the matter back to the Adjudicating Authority with the direction to consider the application under Section 12A i.e. M.A. No. 1339 of 2019, on its merits. The Appellant elaborated that M.A. No. 1339 of 2019 was finally allowed by the Adjudicating Authority vide its Order dated 23.01.2024.

# 5. The Appellant submitted that during the entire intervening period, the Appellant continued to perform its duties as the Resolution Professional and continued to run the Corporate Debtor. The Appellant conceded that, although the Corporate Debtor did not have any operational business, however, the Appellant was obliged to undertake the corporate and secretarial compliances including in respect of protecting the immovable property of the Corporate Debtor. The Appellant stated that the CoC mainly constituted of the Respondent who held 93.2 % voting share of the CoC and it was the Respondent that was also the applicant in the application filed under Section 7 of the Code i.e. Company Petition (IB) No. 1792 of 2017, whereby corporate insolvency resolution process was commenced against the Corporate Debtor vide Order dated 16.04.2018.

# 6. The Appellant submitted that the CoC had fixed the fees of the Appellant acting as the Resolution Professional at Rs 2,50,000/- per month in its second meeting held on 03.07.2018. Thereafter, the CoC renegotiated the fees of the Appellant to Rs. 2,00,000/- per month vide email correspondences exchanged between the Appellant and the Respondent Bank including email dated 10.07.2020 issued by the Respondent Bank to the Appellant.

# 7. The Appellant submitted that when the resolution for filing of application under Section 12A of the Code was passed by the CoC, the Respondent had submitted the Undertaking dated 04.04.2019 along with its Form FA dated 03.04.2019, wherein as per Regulation 30A of the CIRP Regulations, the Respondent undertook to bear and pay to the Appellant the actual expenditure and cost incurred on CIRP of the Corporate Debtor. The Appellant castigated the conduct of the Respondent and stated that while on the one hand, the Appellant performed all her statutory duties as per the Code, on the other hand the Respondent unilaterally and in an arbitrary manner stopped paying the fee of the Appellant from July 2020. The Appellant stated that the Respondent contended that as no CIRP process was continuing, the Appellant was not entitled for any fee. The Appellant, being aggrieved by the actions of the Respondent, preferred an application bearing I.A. No. 3791 of 2022 before the Adjudicating Authority seeking direction to the Respondent to pay the fee and reimburse the expenses incurred by the Respondent.

# 8. It is the case of the Appellant that he was entitled for the fee of Rs. 2 lakhs duly approved by the CoC in terms of Regulation 34 of the CIRP Regulations. However, the Adjudicating Authority in its order reduced the said fee from Rs 2,00,000/- per month to Rs 50,000/- per month for the period commencing from July, 2020 to March, 2023 vide order dated 11.08.2023 in I.A. No. 3791 of 2022. The Appellant conceded that since the Corporate Debtor was not operating and further no resolution of the Corporate Debtor was taking place, the Appellant did not challenge the same and accepted in graceful manner.

# 9. The Appellant reiterated that M.A. No. 1339 of 2019 (the application under Section 12A of the Code) could only be decided by the Adjudicating Authority vide its Order dated 23.01.2024 and the Corporate Debtor was handed over on 30.01.2024. The Appellant emphasized that during the period of April, 2023 upto 30.01.2024, the Appellant continued performing her duties as the Resolution Professional. Therefore, the Appellant requested that her fee be paid as per the quantum fixed by the Adjudicating Authority vide its Order dated 11.08.2023 for the said period as well however, the Respondent refused to pay any fee again contending that no work had been performed by the Appellant as the Resolution Professional during the said period.

# 10. The Appellant stated that she had to file another application bearing no. I.A. No. 838 of 2024 seeking her fee as the Resolution Professional at the rate as fixed by the Adjudicating Authority as well as other expenditure incurred by her; which led to the passing of the Impugned Order, whereby, the Adjudicating Authority passed the Impugned Order further reducing the already reduced fixed fees of Rs. 50,000/- by the Adjudicating Authority’s own earlier order dated 11.08.2023 to Rs. 10,000/-. The Appellant stated that Adjudicating Authority has erred in observing that description of tasks undertaken by the Appellant during the said period does not justify the payment of professional fee at the rate of Rs. 50,000/-. The Appellant further submitted that the said finding is contrary to the records of the case.

# 11. Concluding his arguments, the Appellant requested this Appellate Tribunal to set aside the Impugned Order and allow the present appeal.

# 12. Per contra, the Respondent refuted all the averments of the Appellant treating these as baseless and misleading.

# 13. The Respondent stated that during the CIRP of the Corporate Debtor namely Crystal Clear Veg Oil Refinary Pvt. Ltd., only solitary Resolution Plan amounting to Rs. 65,00,000/- was received from one of the Resolution Applicant against the claim of Financial Creditors of Rs. 17,67,00,000/-, however, since the said, Resolution Plan was not satisfactory, the same was rejected by the CoC in their commercial wisdom during 12th CoC Meeting held on 06.03.2019. The Respondent stated that the CoC also decided that the CIRP proceedings against the Corporate Debtor would be withdrawn, as a result of this, an application under the provisions of Section 12 A of the Code was filed, along with form FA on 4th April 2019, through Interlocutory Application under the provisions of Section 12 A of the Code on 8th April 2019.

# 14. The Respondent stated that the aforementioned application filed under the provisions of section 12A of the Code, which was rejected by the Adjudicating Authority, vide order dated 4th January 2021, referring the matter to the Reserve Bank of India. Aggrieved by the aforementioned order, the Respondent herein challenged the said order dated 4th January 2021 before this Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 247 od 2021 and this Appellate Tribunal set aside the order dated 4th January 2021, vide judgement dated 17th November, 2022, and directed the Adjudicating Authority to allow the section 12A application within 45 days. The Respondent stated that as a result of the above, the Adjudicating Authority, allowed the withdrawal of the CIRP against the CD on 23rd January 2024, whereas, the possession was handed over on 30th January, 2024.

# 15. It is the case of the Respondent that, wherein the Respondent on various occasions requested the Appellant to file an application for urgent listing of withdrawal application, however, only after receiving entire fees, the Appellant filed an urgent hearing application for listing the withdrawal application vide IA No. 1151 of 2020 before the Adjudicating Authority on 17th February 2020, whereas, the withdrawal application was filed by the Appellant on 8th April 2019. The Respondent assailed the conduct of the Appellant as the Appellant delayed in filing of the urgency application intentionally to the withdrawal proceedings and to extract the fees from the Respondent. The Respondent pleaded that since the CIRP period was over on 6th April 2019, the Respondent was not liable to pay any fees to the Appellant, especially so since the Corporate Debtor was not a going concern, and the Appellant did not have to do any work with regards to the CIRP of the Corporate Debtor, since withdrawal application had already been filed. Furthermore, there were no employees and only security guards were working, and the Respondent has been paying the security guards.

# 16. The Respondent brought to our notice that till February 2023, the Respondent has incurred CIRP expenses to the extent of Rs. 1,41,84,097/- out of which, Respondent has paid the RP and her support staff’s fee to the extent of Rs. 76,05,557/-, a case wherein, CIRP was supposed to be withdrawn in 2019 and no substantial work has been undertaken since 2019.

# 17. The Respondent admitted that the Appellant was not running the Corporate Debtor as a going concern and was not carrying out any specific duties as prescribed under the provisions of the Code or CIRP regulations. The Respondent conceded that even the Code is purposefully silent on the issue of payment of fees to the Resolution Professional during the pendency of a 12A application.

# 18. The Respondent submits that the Appellant has no right to claim any fees for the period starting from re-consideration of the MA 1339/2019 before the Adjudicating Authority, on the direction of this Hon’ble Tribunal, till the passing of the Order dated 23 January, 2024 allowing the withdrawal application. Despite the same, the Appellant has filed the present Appeal to merely extract more money from the Respondent under the garb of CIRP costs and has frivolously filed the present Appeal with mala fide intention even though she is absolutely not entitled to any further payment. The Respondent has already paid the Applicant a hefty sum amounting to almost 1.5 Crores, which is extremely unreasonable to begin with, especially considering that the Appellant has miserably failed to fulfil her duty as the RP of the Corporate Debtor.

# 19. Concluding arguments, the Respondent regards this Appellate Tribunal to dismiss the Appeal with costs.

FINDINGS

# 20. After noting rival contentions of the parties as noted above, we find that issue before us is limited as to whether after filing of an application under Section 12A of the Code read with Regulation 30A of the CIRP Regulations. The Appellant was entitled to be compensated for performing her duties as a resolution professional till the same was allowed by the Adjudicating Authority. Another issue is whether the Adjudicating Authority could, on its own fix, the fee of the Resolution Professional without any recommendations of the CoC.

# 21. We find that amount presently in dispute is ₹8.24 lakhs as the claim is limited to unpaid fees of the Appellant for period commencing from April, 2023 till 30.01.2024.

# 22. It is worth noting that the CoC fixed the fees of the Appellant originally at Rs. 2,50,000/- per month, in the 2nd CoC meeting hold on 03.07.2018 then re-negotiated to Rs. 2,00,000/- per month as communicated to the Appellant vide e-mail dated 10.07.2020. We also note that the Adjudicating Authority had fixed the fees of the Appellant at Rs. 50,000/- per month vide its Order dated 11.08.2023 passed in I.A. No. 3791 of 2022 and which has now further been reduced vide the Impugned Order dated 25.07.2024 to Rs. 10,000/- per month.

# 23. At this stage we take into consideration the relevant portion of the CIRP regulations which reads as under: –

“Regulation 30A: Withdrawal of application.

(1) An application for withdrawal under section 12A may be made to the Adjudicating Authority –

(a) before the constitution of the committee, by the applicant through the interim resolution professional;

(b) after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be:

Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A:, the applicant shall state the reasons justifying withdrawal after issue of such invitation.

(2) The application under sub-regulation (1) shall be made in Form FA of the Schedule accompanied by a bank guarantee-

(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 clauses (aa), (ab), (c) and (d) of regulation 31:, till the date of filing of the application under clause (b) of sub-regulation (1).

(3) Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt.

(4) Where an application for withdrawal is under clause (b) of sub-regulation (1), the committee shall consider the application, within seven days of its receipt.

(5) Where the application referred to in sub-regulation (4) is approved by the committee with ninety percent voting share, the resolution professional shall submit such application along with the approval of the committee, to the Adjudicating Authority on behalf of the applicant, within three days of such approval.

(6) The Adjudicating Authority may, by order, approve the application submitted under subregulation (3) or (5).

(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 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.]

Regulation 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 under Regulation 32;

(b) [(aa) fee payable to authorised representative under sub-regulation (7) of regulation 16A;

(ab) out of pocket expenses of authorised representative for discharge of his functions under section 25;]

(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 interim resolution professional 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.

Regulations 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).

(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.

[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.]

Regulation 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 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 resolution professional.

Section 12A: Withdrawal of application admitted under section 7, 9 or 10.

[12A. The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be prescribed.]

“Regulation 34B. Fee to be paid to interim resolution professional and resolution professional.

(1) The fee of interim resolution professional or resolution professional, under regulation 33 and 34, shall be decided by the applicant or committee in accordance with this regulation.

(2) The fee of the interim resolution professional or the resolution professional, appointed on or after1st October 2022, shall not be less than the fee specified in clause 1 for the period specified in clause 2 of Schedule-II:

Provided that the applicant or the committee may decide to fix higher amount of fee for the reasons to be recorded, taking into consideration market factors such as size and scale of business operations of corporate debtor, business sector in which corporate debtor operates, level of operating economic activity of corporate debtor and complexity related to process.

(3) After the expiry of period mentioned in clause 2 of Schedule-II, the fee of the interim resolution professional or resolution professional shall be as decided by the applicant or committee, as the case may be.

(4) For the resolution plan approved by the committee on or after 1st October 2022, the committee may decide, in its discretion, to pay performance-linked incentive fee, not exceeding five crore rupees, in accordance with clause 3 and clause 4 of Schedule-II or may extend any other performance linked incentive structure as it deems necessary.

(5) The fee under this regulation may be paid from the funds, available with the corporate debtor, contributed by the applicant or members of the committee and/or raised by way of interim finance and shall be included in the insolvency resolution process cost.

“Schedule-II -(Under Regulation 34B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

1. Minimum Fixed Fee. 1. Minimum fixed fee as per the table -1 below shall be paid to the interim resolution professional or the resolution professional, as the case may be, for the period mentioned in clause 2

Period for minimum fixed fee.

2. The minimum fixed fee shall be applicable for the period, from appointment as interim resolution professional or resolution professional, till the time of

(a) submission of application for approval of resolution plan under section 30;

(b) submission of application to liquidate the corporate debtor under section 33; (c) submission of application for withdrawal under section 12A; or

(d) order for closure of corporate insolvency resolution process; whichever is earlier.

# 24. We find that the Adjudicating Authority has held that expenses to the Appellant are payable only up to the date of filing of the Section 12A of the Code application relying on Regulation 30A(2)(a) of the CIRP Regulations. However, when we take into consideration Regulation 30A, especially Regulation 30A(7), we find that Regulation 30A(2)(a) of the CIRP Regulations uses the term “estimated expenses incurred on or by the IRP…. till the date of filing of the application”; and further Regulation 30A(7) provide for “actual expenses incurred… till the date of approval by the Adjudicating Authority as determined by the interim resolution professional or resolution professional”. Thus, we find that Regulation 30A(7) of the CIRP Regulations makes it clear that Payment of expenses are payable up to date of approval order being passed by the Adjudicating Authority, which includes expenses incurred on or by the Resolution Professional. The Explanation to Regulation 34 of the CIRP Regulations read with Regulation 31(d) of the CIRP Regulations, amplify that the fees payable to the resolution professional is also a part of the expenses to be incurred by the resolution professional.

# 25. We note that Regulation 33 of the CIRP Regulations provides that the Applicant shall fix the expenses to be incurred on or by the Interim Resolution Professional. It further provides that if the same are not fixed under Regulation 33(1) of the CIRP Regulations, the Adjudicating Authority will fix the expenses to be incurred on or by the Interim Resolution Professional. Regulation 33 of the CIRP Regulations, additionally provides that the expenses shall be ratified by the CoC. We also note that, Regulation 34 of the CIRP Regulations provides for the CoC to fix the expenses to be incurred on/by the resolution professional and the expenses shall constitute insolvency resolution process costs. We observe that only in case, the applicant seeking initiation of CIRP, if do not propose fee of the IRP then only, there is a jurisdiction vested to the Adjudicating Authority to fix the expenses under Regulation 33(2) of the CIRP Regulations. We find that the CoC enjoys exclusive powers of fixing the fees and expenses to be incurred by the resolution professional based on the commercial wisdom of the CoC. We further observe that there is no jurisdiction vested to the Adjudicating Authority on this aspect.

# 26. We note that the Adjudicating Authority vide its own earlier order dated 11.08.2023 passed in I.A. No. 3791 of 2022 after considering all the facts and circumstances, fixed the fee of Rs 50,000/- per month for the Appellant, however, vide the Impugned Order the said amount has been reduced to Rs. 10,000/- per month, without any recommendation of the CoC. We have noted that the Adjudicating Authority can fix the fee only at the stage of initiation of the CIRP, if not recommended by the Applicant in terms of Regulation 33 of CIRP Regulations. The Code and the CIRP Regulations do not mention any other power to the Adjudicating Authority to fix the fee of the Resolution Professional on its own and the onus is on the CoC. Thus, the Adjudicating Authority is not correct in fixing the fee of the Resolution Professional.

# 27. We find that the Adjudicating Authority has erred in holding that the CIRP Regulations do not contemplate the payment of any further professional fee after filing of application under Section 12A of the Code. We have already noted that Regulation 30A (7) provides that the Applicant shall deposit an amount towards the actual expenses incurred till the date of approval by the Adjudicating Authority as determined by the Resolution Professional. Thus, the Adjudicating Authority has not taken into consideration the said provision while passing the Impugned Order.

# 28. We also tend to agree with both the Appellant and Respondent on the point that the fees and costs charged by an Insolvency Resolution Professional must be transparent and a reasonable reflection of the work necessarily and properly undertaken. However, we wonder if drastic reduction of fees payable to Resolution Professionals happens, then how can one expect the Resolution Professional to discharge duties. As a matter of fact, at no point, neither the Appellant nor the Respondent approached the Adjudicating Authority seeking directions for reduction of the fees that was payable to the Appellant for acting as the Resolution Professional.

# 29. It is undisputed fact that the CoC mainly constituted of the Respondent who held 93.2 % voting share. Furthermore, it was the Respondent that was also the applicant in the application filed under Section 7 of the Code i.e. Company Petition (IB) No. 1792 of 2017, whereby CIRP was commenced against the Corporate Debtor vide Order dated 16.04.2018.

# 30. It is noted that the Appellant was entitled for the fee as duly approved by the CoC in terms of Regulation 34 of the CIRP Regulations, whereas the Adjudicating Authority on its own reduced the said fee from Rs. 2,00,000/- per month to Rs. 50,000/- per month for the period commencing from July, 2020 to March, 2023 vide order dated 11.08.2023. It is a fact that the Appellant as well as the Respondent did not challenge the Order dated 11.08.2023 and therefore the said order has attained finality. It is also a fact that the Appellant continued to perform the same duties until the date of hand over to the CoC. This, however does not change the legal position. As a rule, it is prerogative of the CoC to fix fee of Resolution Professional and not for Adjudicating Authority, in normal course of business. Only, exception provided is when the Applicant in Section 7 does not propose the fee of IRP then only the Adjudicating Authority can fix the fee of the IRP. We do not find any other provision in the Code or CIRP Regulation empowering the Adjudicating Authority to fix/enhance/reduce fee of the Resolution Professional.

# 31. We wonder can it be anybody’s case that after filing application under section 12A of the Code but before being allowed the application by the Adjudicating Authority and handing over, no payment is to be made by the CoC to Resolution Professional? It may not be feasible to give actual amount of guarantee towards CIRP expenses including, fee of IRP/RP till date of approval of withdrawal application by the Adjudicating Authority, as the date would not be known when the application for withdrawal is being allowed by the Adjudicating Authority. Thus, the CoC is duty bound to make payment to the Resolution Professional as per regulations or as per negotiated terms.

# 32. We find that it is prerogative and privilege and function of CoC to fix suitable fee transparently for the Resolution Professional commensurate with work. We sympathize with CoC, who despite claims of Rs. 17.67 Crores against the Corporate Debtor were saddled with fee of Resolution Professional. We note that CoC had paid till February, 2023 Rs. 1,71,84,097/- out of which Rs. 76,05,557/- were paid to support staff. We are conscious of the fact that solitary Resolution Plan which was rejected by the CoC was only of Rs. 65 Lakhs. In other words, the CoC had already incurred twice the cost towards the Resolution Professional in comparison to much lower expected Resolution Plan value.

# 33. However, the issue remains as to whether the work and responsibility of Resolution Professional get over after filing Section 12 A application and can the Resolution Professional walk away from the CIRP after filing 12A application. In our opinion, the answer is clear and categorically NO. The Resolution Professional is duty bound to continue looking after the affairs of the Corporate Debtor till it is handed over to the CoC.

# 34. Another issue before us is as to who is competent to fix the fee of Resolution Plan. We hold, based on our discussion in previous paragraphs, that it is legitimate function of CoC and the Adjudicating Authority has hardly any role, except in situation noted earlier.

# 35. The final issue pending as to whether the Adjudicating Authority would have reduced the fee from Rs. 50,000/- per month to Rs. 10,000/- per month without any recommendation by the CoC. We note that rightly or wrongly, it was done earlier by the Adjudicating Authority, who reduced fee of the Resolution Professional from Rs. 2 Lakhs to Rs. 50,000/- per month and which was not challenged and attained finality. However, this cannot be ratified as correct law.

# 36. In view of our comprehensive finding as above, we find merit in the Appeal. The appeal succeeds. The Impugned Order is set aside. I.A., if any, stand closed. No order as to cost. The case is remanded back to the Adjudicating Authority, to decide the same in accordance with law. The concerned parties are directed to appear before the Adjudicating Authority on 23.03.2026.

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Lamba Exports Pvt. Ltd. Vs. Dhir Global Industries Pvt. Ltd. and Ors - Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd. (2022) 9 SCC 803], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.

  SCI (2026.03.23) in Lamba Exports Pvt. Ltd. Vs. Dhir Global Industries Pvt. Ltd. and Ors.[   (2026) ibclaw.in 129 SC,  Misc. Application No. 1256 & 1257 of 2025 in Special Leave Petition (Civil) No. 12264 of 2024] held that;- 

• At this stage, we may also clarify that we are not inclined to accept the broad submission that the dismissal of the SLP on 25.02.2025, by itself, attracted the doctrine of merger. The law is clear that an order refusing special leave to appeal, whether speaking or non-speaking, does not attract merger.

• There can be no quarrel with the principle that fraud vitiates all proceedings and that a Court is not powerless where its order has been procured by fraud. But the exception is a serious one and cannot be invoked on the basis of assertion alone.

• The material now relied upon, even if taken at its highest, may at best furnish the applicant with a separate grievance arising out of subsequent or parallel proceedings. It does not persuade us to hold, in the present proceedings, that the order dated 25.02.2025 itself was procured by practicing fraud on this Court.

• The statutory scheme of Section 12A of the IBC contemplates withdrawal of the insolvency process, after constitution of the CoC, only upon approval by the requisite voting share of the CoC. Once the matter enters that domain, the decision whether to accept a settlement, whether to continue with the process, or whether to adopt one commercial course over another, falls essentially within the realm of the collective commercial wisdom of the CoC.

• In K. Sashidhar v. Indian Overseas Bank [(2019) 12 SCC 150], this Court emphasized that the legislature has consciously made the commercial wisdom of the financial creditors non-justiciable and that the adjudicating and appellate authorities do not sit in appeal over such business decisions.

• Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd. (2022) 9 SCC 803], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.

• It is necessary to state that primacy of commercial wisdom does not mean that every action taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challenge is laid in an appropriate proceeding on a legally sustainable foundation, such as statutory illegality or a jurisdictional infirmity, the matter would naturally be considered in accordance with law.

Excerpts of the Order;

# 1. The present Miscellaneous Application No. 1256 of 2025 (hereinafter referred to as the “MA”) has been filed in Special Leave Petition (Civil) No. 12264 of 2024 (hereinafter referred to as the “SLP”) seeking recall of whereby the SLP filed against the judgment and order  dated 06.05.2024 passed by the High Court of Punjab and Haryana at Chandigarh in Civil Revision No. 3916 of 2022 came to be dismissed. The case set up in the MA is that subsequent developments, including the alleged non-disclosure of the proposal for a One Time Settlement (hereinafter referred to as the “OTS”), the eventual settlement arrived at between the secured creditor and the corporate debtor, and the withdrawal of the Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) under Section 12A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”), have a material bearing on the foundation on which the matter proceeded earlier and warrant reconsideration of the order dated 25.02.2025.

# 2. The facts giving rise to the present MA are as follows:

2.1. The dispute between the parties arises out of an Agreement to Sell dated 13.08.2021 in respect of the subject property owned by Respondent No. 1.

The applicant claims rights on the basis of the said agreement. The respondents, on the other hand, dispute the enforceability of the said arrangement and contend that the agreement did not survive in the manner asserted by the applicant.

2.2. The applicant instituted Civil Suit No. 1248 of 2022 seeking specific performance of the Agreement to Sell dated 13.08.2021, along with consequential reliefs of declaration, mandatory injunction, and permanent injunction. The case set up by the applicant was that the suit property, bearing UV- 375, Udyog Vihar, Phase-IV, Gurugram, was agreed to be sold for a total sale consideration of Rs.21,00,00,000/-. It was alleged that the applicant had paid Rs.30,00,000/- as earnest Bank towards the upfront amount for the proposed OTS, and a further sum of Rs.30,00,000/- to Respondent Nos. 1 to 3. According to the applicant, Respondent Nos. 1 to 3 thereafter sought to resile from the Agreement to Sell by legal notice dated 25.03.2022 on the ground that the proposed OTS had not been accepted by the Bank, whereas the applicant maintained that the Agreement to Sell was not liable to be rescinded on that basis and that it had always been ready and willing to perform its part of the contract.

2.3. Along with the suit, the applicant moved an application seeking interim injunction restraining Respondent Nos. 1 to 3 from selling, alienating,  encumbering, or otherwise creating third party rights in respect of the suit property during the pendency of the suit. By order dated 19.07.2022, the Civil Judge (Junior Division), Gurugram allowed the said application and granted interim protection in favour of the applicant. Aggrieved thereby, Respondent Nos. 1 to 3 preferred an appeal, which came to be allowed by the learned Additional District Judge, Gurugram by order dated 06.09.2022, whereby the order dated 19.07.2022 passed by the Trial Court was set aside.

2.4. The applicant thereupon challenged the appellate order before the High Court of Punjab and Haryana at Chandigarh in Civil Revision No. 3916 of 2022. By judgment and order dated 06.05.2024, the High Court dismissed the revision petition. The High Court held, in substance, that the Agreement to Sell dated 13.08.2021 was itself contingent in nature, inasmuch as its performance was predicated upon the acceptance of the OTS by the Bank. The High Court noted that the suit property was mortgaged, that the Bank was not a party to the Agreement to Sell, and that without the Bank’s approval to the OTS, Respondent Nos. 1 to 3 were  not in a position to convey title in respect of the property. On that reasoning, the High Court held that no prima facie case for grant of interim injunction was made out and that, at the highest, the applicant could claim recovery of the amounts paid by it, but could not, at that stage, insist upon specific performance of an agreement the performance of which had become uncertain in the absence of the Bank’s approval.

2.5. It appears that the underlying suit for specific performance, being Civil Suit No. 1248 of 2022, continues to remain pending, the proceedings before this Court having arisen from orders passed on the interlocutory application seeking interim protection.

2.6. When the SLP came up before this Court on 04.06.2024, notice was issued. This Court also directed the applicant to deposit a sum of Rs.13,00,00,000/- (Rupees Thirteen Crores Only) with the Registry of this Court within four weeks and to file an undertaking to deposit an additional amount of Rs.13,00,00,000/- (Rupees Thirteen Crores Only) within four weeks after Respondent No. 4 entered appearance. It is the case of the applicant that, in compliance with the said order, a  total sum of Rs.26,00,00,000/- (Rupees Twenty-

Six Crores Only) came to be deposited with the Registry of this Court.

2.7. The SLP was ultimately dismissed by order dated 25.02.2025. The present MA has thereafter been filed seeking recall of the order dated 25.02.2025 on the basis of subsequent events which, according to the applicant, have a direct bearing on the matter. The respondents have raised a preliminary objection to the maintainability of the MA and contend that no such recall application would lie after dismissal of the SLP.

2.8. The subsequent events relied upon in the MA are that during the pendency of the SLP, Respondent No. 1 is stated to have addressed a proposal dated 14.02.2025 to Respondent No. 4 for an OTS and for withdrawal of the CIRP under Section 12A of the IBC. It is further the case of the applicant that an OTS was thereafter concluded on 21.03.2025 for an amount of Rs.34.85 crore, and that the Committee of Creditors (hereinafter referred to as the “CoC”), in its meeting dated 05.04.2025, approved withdrawal of the CIRP under Section 12A of the IBC. The applicant also relies upon an email dated 23.03.2025 addressed by it to the Resolution  Professional expressing its willingness to participate in the process.

2.9. It is on the strength of the aforesaid developments that the applicant alleges suppression of material facts and seeks recall of the order dated 25.02.2025. The respondents dispute the said allegations. Their stand is that the proceedings before the National Company Law Tribunal were independent of the proceedings arising from the suit for specific performance, that the MA is not maintainable after dismissal of the SLP, and that the OTS has already been acted upon.

# 3. Having heard learned counsel for the parties and having perused the material placed on record, we are of the considered view that the present MA does not merit acceptance.

# 4. The first obstacle in the way of the applicant is one of maintainability. The order dated 25.02.2025, recall of which is sought, is not an executory order. It merely records that this Court was not inclined to interfere with the impugned judgment and order and, accordingly, dismissed the SLP. The present MA does not seek correction of any clerical or arithmetical error. Nor is it a case where directions contained in an  executory order of this Court have become impossible of implementation by reason of subsequent events. The settled position is that a post-disposal miscellaneous application can be entertained only in rare situations of that nature. The present case does not fall within that limited class.

# 5. In Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power Rajasthan Ltd.[(2024) 19 SCC 353], this Court has held in clear terms that, once a matter stands disposed of, the Court becomes functus officio and does not retain jurisdiction to entertain an application except in the narrow situations recognized by law. The same position was reiterated in Ajay Kumar Jain v. The State of Uttar Pradesh & Anr.[2024 INSC 958], where this Court deprecated the growing practice of filing miscellaneous applications in disposed of proceedings and clarified that such an application would be maintainable only in the limited situations already noticed above. The maintainability objection, therefore, goes to the root of the matter and cannot be brushed aside merely because notice had been issued in the present MA.

# 6. That apart, the controversy which is now sought to be projected in the present MA travels well beyond the four corners of the proceedings from which the SLP had arisen. The SLP arose from a suit-based dispute concerning the Agreement to Sell dated 13.08.2021 and the correctness of the order passed by the High Court in Civil Revision No. 3916 of 2022. The present MA, however, seeks to found a case for recall on the basis of later developments said to have taken place in the insolvency proceedings, including the proposal for One Time Settlement, the subsequent settlement, the decision of the Committee of Creditors, and the order passed by the National Company Law Tribunal under Section 12A of the IBC. Whether those later steps were proper or otherwise cannot be examined collaterally in an MA filed in a disposed of SLP arising out of a civil revision. If the applicant is aggrieved by any act done or order passed in that separate statutory framework, it is always open to the applicant to avail of such remedy as may be permissible in law before the competent forum.

# 7. At this stage, we may also clarify that we are not inclined to accept the broad submission that the dismissal of the SLP on 25.02.2025, by itself, attracted the doctrine of merger. The law is clear that an order refusing special leave to appeal, whether speaking or non-speaking, does not attract merger. However, that  does not carry the matter any further for the applicant. The absence of merger does not mean that a disposed of SLP can be reopened through a miscellaneous application on grounds which do not satisfy the settled parameters of maintainability.

# 8. Much emphasis was placed by the applicant on alleged suppression and on the submission that the order dated 25.02.2025 deserves to be recalled on the ground that fraud was practiced upon this Court. There can be no quarrel with the principle that fraud vitiates all proceedings and that a Court is not powerless where its order has been procured by fraud. But the exception is a serious one and cannot be invoked on the basis of assertion alone. In the present case, the order dated 25.02.2025 is a non-speaking order dismissing the SLP. The order dated 25.02.2025 does not indicate that the dismissal turned upon any specific representation which is now alleged to have been suppressed. The material now relied upon, even if taken at its highest, may at best furnish the applicant with a separate grievance arising out of subsequent or parallel proceedings. It does not persuade us to hold, in the present proceedings, that the order dated 25.02.2025 itself was procured by practicing fraud on this Court.

# 9. There is yet another aspect of the matter. The challenge to the judgment and order dated 06.05.2024 passed by the High Court had to be considered on the record and circumstances as they then stood. Subsequent developments in another forum, howsoever strongly relied upon by the applicant, cannot retroactively render the earlier adjudicatory exercise vulnerable in a disposed of SLP. A later event may, in a given case, furnish an independent cause of action. It cannot, by itself, be used to reopen finality in proceedings of a different character and origin.

# 10. Even otherwise, we are unable to accept the applicant’s attempt to invite this Court, in the present MA, to comparatively assess the alleged superiority of its offer vis-à-vis the settlement which came to be accepted in the insolvency process. The statutory scheme of Section 12A of the IBC contemplates withdrawal of the insolvency process, after constitution of the CoC, only upon approval by the requisite voting share of the CoC. Once the matter enters that domain, the decision whether to accept a settlement, whether to continue with the process, or whether to adopt one commercial course over another, falls essentially within the realm of the collective commercial wisdom of the CoC. In K. Sashidhar v. Indian Overseas Bank [(2019) 12 SCC 150], this Court emphasized that the legislature has consciously made the commercial wisdom of the financial creditors non-justiciable and that the adjudicating and appellate authorities do not sit in appeal over such business decisions.

# 11. The same principle was reiterated and explained in Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta [(2020) 8 SCC 531], where this Court held that it is the commercial wisdom of the majority of the CoC which determines, through negotiations and assessment of viability, how and in what manner the corporate insolvency resolution process is to proceed. More particularly, this Court observed that the adjudicating authority cannot make any inquiry beyond the limited statutory parameters, nor can it issue directions in relation to the exercise of commercial wisdom of the CoC, whether in approving, rejecting, or otherwise dealing with a proposal. Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd. (2022) 9 SCC 803], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.

# 12. At the same time, it is necessary to state that primacy of commercial wisdom does not mean that every action taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challenge is laid in an appropriate proceeding on a legally sustainable foundation, such as statutory illegality or a jurisdictional infirmity, the matter would naturally be considered in accordance with law. However, that is not the exercise which can be undertaken in the present MA. In these proceedings, which arise out of a disposed of SLP in a civil revision concerning an Agreement to Sell, this Court cannot be called upon to sit over the comparative financial attractiveness of rival offers or to substitute its own view for the business decision taken by the CoC in the statutory process under the IBC. The mere assertion by the applicant that its offer was higher would not, by itself, furnish a ground to reopen the dismissal of the SLP or to unsettle steps taken in a separate insolvency framework.

# 13. For all the aforesaid reasons, we are not persuaded to entertain the present MA as a vehicle either for reopening the dismissal of the SLP dated 25.02.2025  or for examining the legality of the subsequent steps taken in the insolvency proceedings.

# 14. Accordingly, Miscellaneous Application No. 1256 of 2025 is dismissed. In view of the same, MA No. 1257 of 2025 for ad-interim relief is not required to be dealt with.

# 15. It is, however, clarified that we have expressed no opinion on the merits of any proceedings undertaken under the Insolvency and Bankruptcy Code, 2016, including the order dated 14.05.2025 passed by the National Company Law Tribunal, or on the merits of Civil Suit No. 1248 of 2022, which, as per the record before us, remains pending. All rights and contentions of the parties in such proceedings are left open to be urged before the competent forum in accordance with law.

# 16. Pending application(s), if any, shall stand disposed of.

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