Monitoring Committee Cannot Override Fee Caps In Approved Resolution Plan: NCLT Bengaluru

The Bengaluru Bench of the National Company Law Tribunal (NCLT) on 22 June held that a Monitoring Committee cannot override or modify fee caps prescribed under an approved resolution plan through internal arrangements or mutual consent.

Judicial Member Radhakrishna Sreepada and Technical Member Sunil Kumar Aggarwal partly allowed an application filed by Padmanabhan Nair against Successful Resolution Applicant (SRA) Pulkit Agarwal arising out of the implementation of the resolution plan of Trell Experiences Private Limited. The Bench held:

“The Monitoring Committee is itself a creation of the Resolution Plan, constituted to oversee and ensure implementation of the Plan. It derives its authority and the limits of its functioning entirely from within the four corners of the Resolution Plan. It cannot, therefore, act in a manner that is inconsistent with, or in excess of, what the Plan itself permits.”

Padmanabhan Nair, erstwhile Resolution Professional and Chairman of the Monitoring Committee, approached the Tribunal seeking placement of the final implementation report of the approved resolution plan, recovery of Rs. 6.97 lakh towards pending Monitoring Committee costs, and dissolution of the committee.

He contended that the resolution plan had been substantially implemented and that most stakeholder payments had been completed. The dispute arose over unpaid Monitoring Committee costs, including legal and compliance-related expenses, which he sought to adjust from the security deposit lying in the CIRP account.

Opposing the plea, the Successful Resolution Applicant (SRA), Pulkit Agarwal, argued that the claimed expenses lacked documentary proof and that the approved resolution plan capped Monitoring Committee fees at Rs. 50,000 per member per month, making any higher claim impermissible.

Nair, however, contended that his fee had been fixed at Rs. 1 lakh per month with the SRA's consent and that additional costs arose due to alleged non-cooperation by the SRA during implementation.

The Tribunal examined the approved resolution plan and noted that it expressly fixed the fee payable to each Monitoring Committee member at Rs. 50,000 per month. It rejected reliance on any internal arrangement, holding:

“The Monitoring Committee cannot, by an internal resolution or by mutual consent of its members, including the Respondent/SRA, modify or override this stipulated fee cap. Such an arrangement would amount to an impermissible modification of an approved Resolution Plan outside the framework of Section 31 of the IBC, and is therefore void and unenforceable.”

It further observed that waiver of fee by one member could not enlarge the entitlement of another beyond the prescribed ceiling. It stated:

“A waiver by one member of a Monitoring Committee of its own fee entitlement is a personal relinquishment of that member's right and nothing more. It does not, and cannot, operate to enlarge the fee entitlement of another member beyond what is expressly sanctioned under the approved Resolution Plan.”

On the claim for legal and miscellaneous expenses, the Tribunal noted that no supporting documents had been produced.

Accordingly, the NCLT partly allowed the application and directed that Nair's fee be computed at Rs. 50,000 per month plus GST for the period of his functioning. It also allowed two-thirds of the claimed legal and miscellaneous expenses as a reasonable estimate.

For Erstwhile RP: Advocate Theerthesh BS

For Respondents: Advocate Dhanisha Giri