The National Company Law Appellate Tribunal (“NCLAT”) on September 11, 2022 in the matter of Bharat Hotels Ltd. v. Tapan Chakraborty held that the issue of Corporate Insolvency Resolution Process (“CIRP”) cost is to be decided in the meeting of the Committee of Creditors (“CoC”) and not to be examined by the Adjudicating Authority even before the CoC takes a decision.

In the instant matter, an appeal was filed against the order of National Company Law Tribunal, Kolkata (“Adjudicating Authority”) rejecting an Interlocutory application of Bharat Hotels Ltd. (“Appellant/ Financial Creditor”) praying for order directing the Resolution Professional to disclose item wise insolvency resolution process costs and to follow the steps needed under Section 18 and Section 20(2)(a) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) before proposing liquidation of the Corporate Debtor, after the CoC in its 7th meeting passed a resolution for liquidation of the Corporate Debtor. The Bench observed that:

“The resolution for liquidation was passed after more than two years from the CIRP date. The Application filed by the Appellant on the very next day of passing of the resolution was indirectly for challenging the liquidation as the Appellant being a minority shareholder in the Committee of Creditors cannot resist the passing of the resolution.”

It was held that the question of cost and its approval lays in the domain of the CoC. The CoC may ratify, modify or set aside the cost claimed. These issues may be decided in the meeting of the CoC and are not to be examined by the Adjudicating Authority even before the CoC takes a decision.

Thus, the Bench rejected the Financial Creditor’s plea seeking disclosure of item wise insolvency resolution cost and held that the Adjudicating Authority had rightly rejected the application filed under Section 18 of IBC and Regulation 34A.