NCLT Jaipur Says Only CoC Can Approve CIRP Costs, Dismisses Plea By RP Of Aesthetic Stone Arts As Not Maintainable

The National Company Law Tribunal (NCLT) at Jaipur has dismissed an application filed by the erstwhile Resolution Professional of Aesthetic Stone Arts India Pvt. Ltd. seeking ratification of Corporate Insolvency Resolution Process (CIRP) costs, holding that determination of such costs lies exclusively within the domain of the Committee of Creditors (CoC).

A coram of Judicial Member Reeta Kohli and Technical Member Kavita Bhatnagar also held that no interlocutory application is maintainable after the disposal of the main petition.

The CIRP against Aesthetic Stone Arts India Pvt. Ltd. was initiated on March 4,2020. During the proceedings, the suspended director filed an application seeking termination of the proceedings, which was allowed in September 2024, with the Tribunal observing that the CIRP was being used as a recovery mechanism and served no useful purpose.

Earlier, a challenge by the suspended director to CIRP costs of Rs 8,98,729 approved by the CoC for the period 01.09.2021 to 31.12.2022 was rejected by the Tribunal, holding that CIRP cost approved by the CoC cannot be termed arbitrary.

In the 16th CoC meeting, a proposal to approve further CIRP costs was deferred. Following termination of the CIRP, the Resolution Professional could not secure approval for subsequent costs and, therefore, filed the application seeking ratification of Rs 9.5 lakhs towards CIRP costs for the period 01.01.2023 to 11.09.2024.

Referring to the CIRP Regulations and the framework of the IBC, the Tribunal observed:

“…the determination and ratification of CIRP costs exclusively falls within the domain of CoC attributing to the commercial wisdom of the committee. The role of Adjudicating Authority does not extend to determination and fixation of the CIRP costs as pleaded by the Applicant. “

It further noted that CIRP costs up to 31.12.2022 had already been approved by the CoC and paid to the RP. However, the costs claimed for the subsequent period were not ratified and the rest of the claim was never even placed before the CoC for approval.

On the issue of maintainability, the Tribunal reiterated:

“It is a settled position that once the original Petition is disposed of no IA is maintainable subsequent to such disposal. “

It added

“Since the original Petition bearing No. 131/9/JPR/2019 stood finally determined vide order dated 11.09.2024, the NCLT becomes functus officio.”

Accordingly, the application was dismissed as not maintainable.

For Applicant: Advocates Amol Vyas and Abhishek Purohit

For Respondent: Advocates Nitesh Shrivastava and Vikas Jain