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Judgment
Ashok Bhushan, J.
This Application by the new RP appointed by the Impugned Order dated 13.05.2024 has been filed praying for following reliefs:
“a. Allow the present application;
b. Permit the applicant to manage the operations of the corporate debtor as a going concern and also permit the applicant to perform all the duties under section 18 of IBC and exercise the powers required to fulfil the same except those that are specifically stayed by this Hon'ble Appellate Tribunal;
c. Permit the applicant to effect payments to professionals for rendering services for making the statutory compliances of the Corporate Debtor; to clear outstanding expenses including professional’s fees and salaries and employees from May’ 2024 including the fees of New Resolution Professional as per already approved fee of RP by the CoC and that are not specifically stayed by this Hon’ble Appellate Tribunal;
d. Any other and further orders that may be deemed fit and proper in the facts and circumstances of the case may be passed;”
The Applicant’s case in the Application is that the Applicant having been appointed by a Resolution Professional (RP) by replacing the earlier RP entitled to run the Corporate Debtor as a going concern and is incurring various expenses. By the Impugned Order, the Committee of Creditors (CoC) having been directed to be reconstituted, the reconstituted CoC being not in place, this Tribunal may grant approval to incur expenses which are necessary. It is submitted that salary to the employees need to be paid. Security agencies also required to be paid. The Professionals are required for payment. It is submitted that this Tribunal by an Interim Order has already directed that the new RP shall carry out duties regarding statutory compliances by Order dated 14.08.2024.
The Application is opposed by the Central Bank of India and Arrow Engineering Limited who has also filed Reply to the I.A. It is submitted by them that no direction be issued to make any payment. It is submitted that all payments are required to be approved by the CoC, hence the existing CoC be directed to vet the claims and expenses. It is prayed that the Appeal itself may be finally decided.
Learned Counsel appearing for Suraksha Reality Limited and Sheth Developers Pvt. Ltd. submit that expenses as prayed be allowed subject to ratification by reconstituted CoC.
We have considered the submissions of the Counsel for the Parties and perused the Application and the Reply filed therein.
The present Appeal as well as other Appeals have been filed challenging the Order dated 13.05.2024, by which Order the Adjudicating Authority on an Application filed by Suraksha Reality Ltd. has directed for replacement of the RP and directed for reconstituting the CoC after verifying the claims admitted. A Transaction Audit was also directed. An Interim Order was passed in this Appeal on 21.05.2024 “in the meantime, no further steps shall be taken in pursuance of the impugned order”, which was subsequently also clarified on 27.05.2024. This Tribunal also passed subsequently another Order directing the new RP to take steps towards statutory compliances.
There being direction to take steps towards the statutory compliances, steps have to be taken towards that end by the RP. On 14.08.2024, following Order was passed:
“I.A. No. 5776 of 2024
This application is filed by Mr. Sanjay Bulakichand Borad, Respondent No.2 seeking a direction that respondent no.2 to undertake all steps towards the statutory compliances as well as the in continuation of CIRP. We have already passed an interim order on 21.05.2024 :-
“In the meantime, no further steps shall be taken in pursuance of the impugned order which was subsequently also clarified on 27.05.2024.”
In view of the order passed in this appeal earlier RP cannot come back.
We are of the view that as for the statutory compliances are concerned the applicant may take steps towards the statutory compliances apart from which no further steps shall be taken.
Ex-management & Employees of the corporate debtors as well as earlier RP shall assist for completion of the compliances. Application is disposed of accordingly.”
It is disputed by Counsel for the Central Bank of India and Arrow Engineering Ltd. that Corporate Debtor is not running as a going concern, hence no payment be directed towards the salary as claimed by the RP. Learned Counsel has also relied on the Judgment of the Hon’ble Supreme Court in the matter of ‘Sunil Kumar Jain & Ors.’ Vs. ‘Sunaresh Bhatt & Ors.’ reported in AIR 2022 SC 1985 to support his submission that unless the employees have worked during CIRP period, no CIRP cost be paid.
We have already directed the Appeal to be listed ‘For Hearing’ on 31.01.2025, we are of the view that Appeal need to be decided as has been agreed by the Parties. However, for the time being, we are of the view that the new RP may incur expenses which are absolutely necessary for maintaining the Corporate Debtor i.e., security expenses, expenses which are incurred towards payment to Statutory Auditors, Practicing Company Secretary and as well as the RP which was permitted by the Adjudicating Authority itself, this shall be in addition to necessary payments towards the statutory compliances. We, however, direct that all payments which are to be made in pursuance of this Order shall be upon undertaking that the payments are subject to ratification by reconstituted CoC and in event of CoC not approving the payment, payments are to be refunded. With regard to other claims of payment as claimed by the RP, we are of the view that the said payment be placed before the reconstituted CoC and only after approval of the reconstituted CoC, other payments be undertaken.
In view of the aforesaid, we dispose of the I.A. 8546/2024 with a following directions:
RP is permitted to incur expenses towards statutory compliances. Payments towards Statutory Auditor, Practicing Company Secretary and RP shall be paid in accordance with the Order as approved by the Adjudicating Authority on 13.05.2024. The above payments shall be subject to ratification by the reconstituted CoC and shall be undertaken after undertaking from the Parties to whom the payments are being made that in event of payments not being approved, the said shall be refunded.
With regard to other claims of payment, including payment of salary to the employees, the same shall be placed before the reconstituted CoC for consideration and approval.
Payment to security agencies who have been appointed to securing the assets of the Corporate Debtor shall also be paid.
We, further direct that new RP shall not engage any new Professional in the CIRP process, for the time being. Application disposed of accordingly.