Professional Entitled To Fees Based On Work, Payment Can't Rely On Court-Fee Refund: NCLT Mumbai

The National Company Law Tribunal, Mumbai Bench on 11 September held that professionals engaged by a corporate debtor are entitled to fees commensurate with the work performed, and that payment of professional fees cannot be made conditional upon the refund of court fees.

A Bench comprising Judicial Member Lakshmi Gurung and Technical Member Hariharan Neelakanta Iyer directed the Liquidator of Abhay Nutrition Pvt Ltd. to pay Advocate Roshan Raghunath Totla's fees in accordance with the Stakeholders Consultation Committee's (SCC) 3 October 2023 resolution, but without capping the fees at Rs. 5.50 lakh or adjusting them against any court-fee refund. The Tribunal held:

“While we endorse the decision of SCC to make payment to the Applicant on the basis on effective and non-effective hearings (which is a cogent and justified reasoning), what we do not approve is that such fee be capped to Rs. 5,50,000/- . Any professional is entitled to the receive fees commensurate with his efforts. Further, payment of fee to the Applicant cannot be made dependent on refund of court fees. The SCC can take independent steps to get the refund of court fees from the respective courts.”

Abhay Nutrition was admitted into the Corporate Insolvency Resolution Process (CIRP) on 2 April 2019 and was ordered to be liquidated on 7 February 2020. Totla, who had handled the company's civil and criminal cases on a retainership basis, claimed unpaid fees at Rs. 40,000 per month from April 2019, contending that he continued providing legal services during the CIRP and liquidation.

The Tribunal, however, noted that Totla had produced no communication with the Interim Resolution Professional (IRP) between April 2019 and 2022 and had first approached the Resolution Professional (RP) for payment of fees only on 22 January 2022.

It further noted that neither the IRP nor the Liquidator had instructed Totla to continue the litigation. He appeared to have continued providing services on the instructions of the suspended management. The Tribunal therefore did not approve his claim for a monthly retainership of Rs. 40,000.

The SCC had resolved on 3 October 2023 to pay Rs. 2,500 per effective hearing and Rs. 1,000 per non-effective hearing, subject to a cap of Rs. 5.50 lakh and adjustment against any court-fee refund.

The Tribunal upheld the per-hearing basis of payment as justified but rejected the Rs. 5.50 lakh ceiling and the condition linking payment to court-fee refunds. It said the SCC could independently pursue recovery of the court fees from the concerned courts.

Accordingly, the NCLT upheld the per-hearing basis of payment but rejected the Rs. 5.50 lakh ceiling and the condition linking payment to court-fee refunds.

For the Applicant: Adv. Ninad Deshpande, Adv. Aishwarya Darda.

For the Respondent: Adv. Aniruth Pursothaman, Adv. Moksh Godani, Adv. Rudresh Kawade.