NCLAT held that IBBI has jurisdiction to regulate the payment of remuneration of RP and IRP both by framing regulations or by issuing executive instructions till regulations are not framed to regulate the subject.
In the instant case titled Sumit Bansal, Insolvency Professional Vs. Committee of Creditors of JP Engineers Pvt. Ltd. & Ors the issue that was raised before the NCLAT was:
Whether IBBI has no jurisdiction to decide the question of payment of the fees?
The Appellate Tribunal referred to the judgment of the Hon’ble Supreme Court in the matter of “Alok Kaushik vs. Mrs Bhuvaneshwari Ramanathan and Ors.- Civil Appeal No. 4065 of 2020” and stated that there is no quarrel to the proposition that it is the AA which has the power to make a final decision regarding payment of a fee to which IRP or RP may be entitled.
Further, the issue which has been raised in this Appeal, is that IBBI has no jurisdiction nor AA should have referred the matter for a recommendation. The Appellate Tribunal stated that from pursuing the order, it is clear that the ultimate decision regarding this issue was raised in I.A was to be taken by the AA and the AA had not directed the IBBI to decide the issue and only recommendations were called for from IBBI and it did not agree with the submissions of the Appellant that IBBI has no jurisdiction with regard to the question of fee which is entitled to be paid to the IRP/ RP, stating that the IBBI is clothed with Regulations making power under Section 240 of the IBC.
It further stated that as per the Regulation 7(2)(h) of IBBI(Insolvency Professionals) Regulations, 2016, an IRP has to abide by the Code of Conduct specified in the First Schedule to these Regulations which requires an IP to provide services for remuneration which is charged in a transparent manner and is a reasonable reflection of the work.
The tribunal categorically held that:
“An insolvency professional must provide services for remuneration which is charged in a transparent manner, is a reasonable reflection of the work necessarily and properly undertaken, and is not inconsistent with the applicable regulations.”
Hence, The Appellate Tribunal in view of the above observations stated that IBBI has jurisdiction to regulate the payment of remuneration of RP and IRP both by framing regulations or by issuing executive instructions till regulations are not framed to regulate the subject. Further, in the present case, it dismissed the appeal by stating that the AA may dispose of it immediately after receiving recommendations from the IBBI.