In the instant case titled Sanjay Kumar Ruia vs. Catholic Syrian Bank Ltd. & Anr. three issues were raised before the NCLAT:
Whether the NCLT has the power to convert the CIRP into a Fast Track CIRP under Section 55 of the IBC?
Whether COC had jurisdiction to replace the Resolution Professional after completion of 270 days?
Whether the NCLT empowered to decide the resolution cost, including the resolution fee payable to the RP?
With regard to the first issue, NCLAT referred to Section 55 of the IBC which states that:
“55. Fast track corporation insolvency resolution process –
A Corporate Insolvency Resolution process carried out in accordance with this Chapter shall be called as fast track corporate insolvency resolution process.
An application for fast tract corporate insolvency resolution process may be made in respect of the following corporate debtors, namely:-
a corporate debtor with assets and income below a level as may be notified by the Central Government; or
a corporate debtor with such class of creditors or such amount of debt as may be notified by the Central Government; or
such other category of corporate persons as may be notified by the Central Government”.
The 'Corporate Debtor' does not fall under clauses (a), (b), or (c) of sub-section (2) of Section 55 since its assets and income are not below a level published by the Central Government, nor does it have a class of creditors or a debt amount notified by the Central Government. As a result, the Corporate Debtor cannot be sued under Section 55.
With regard to the second issue, section 12 specifies that the CIRP must be completed within 180 days of its start date. In addition, Section 12's Subsection (3) allows the NCLT to extend the time beyond 180 days, but not beyond 90 days. However, after 270 days, the NCLT must either adopt the Resolution Plan, if any, as agreed by COC or pass an order of liquidation if no Plan has been approved. Because the COC ceased to exist after 270 days, they no longer have the authority to replace a Resolution Professional. As a result, it was determined that the Committee of Creditors (COC) lacked the authority to replace RP after the 270-day period had passed.
With regard to the third issue, NCLAT referred to Regulation 31 & Regulation 34 of the IBBI Regulation, 2016. The COC is required to evaluate the expenses incurred on or by the RP, which shall also be considered Insolvency Resolution Process Costs, according to Regulation 34. Following that, the NCLT will adopt the Resolution Plan at the moment of approval. Because no order has been issued by the NCLT under Section 31 or Section 33 of the IBC in this case. As a result, the NCLAT determined that the NCLT lacked authority to decide the resolution cost, which included the charge of the "Resolution Professional."
Hence, NCLAT returned the case back to NCLT with instructions to pass an order under Section 31 if no Resolution plan is accepted, and if no Resolution plan is authorised, NCLT will issue a Liquidation order. Furthermore, NCLT directed NCLT to adjust the sum already paid to the Appellant RP when assessing the 'Resolution Cost.' If there is any more money owed, it should be given to Appellant RP. If, on the other hand, it is determined that a lower sum is due, the Appellant RP will immediately reimburse the difference.