Will look into conduct of resolution professionals: SC | The Financial Express

Will look into conduct of resolution professionals: SC

The mere fact that the CIRP had triggered and the moratorium had been imposed does not absolved the corporate debtor to pay for the premises and facilities, which were being enjoyed by the corporate debtor during the CIRP period, it stated.

Will look into conduct of resolution professionals: SC
The RP had argued that it was entitled to retain the possession of the licensed premises till the security deposit was not refunded and although the premises were in possession of the corporate debtor during the CIRP, but Mackstar was not entitled to claim any license fee during the CIRP period, as the agreement stood terminated prior to initiation of the CIRP.

The Supreme Court said that it will have to look into the conduct of resolutions professionals (RPs), who are appointed to manage the affairs of debt-laden companies and implement the approved resolution plans, as some of them have not been acting in the best interests of creditors and corporate debtors.

A bench led by Justice MR Shah, while hearing the case Ashish Chhawchharia (erstwhile resolution professional of Jet Airways) vs Mackstar Marketing, said, “We are seriously looking at the conduct of resolution professionals, how they are running the institution. We know how they are appointed and how they are spending the money (of the corporate debtor).”

The apex court noted that the approved resolution plan in this case had been implemented, and the erstwhile RP had still preferred an appeal against the National Company Law Appellate Tribunal (NCLAT) order. “The RP does not seem to be an aggrieved person who will get the corporate insolvency resolution process (CIRP) cost. We refuse to entertain the present petition and consider anything on merits. However, we reiterate that the erstwhile RP has no locus to challenge the NCLAT order,” the order stated, while directing the RP to hand over the vacant possession of the premises.

The SC upheld the NCLAT’s order that the resolution professional had continued in the possession of the premises and exposed the corporate debtor for liabilities to pay license fees during the CIRP period, which could be CIRP costs. The mere fact that the CIRP had triggered and the moratorium had been imposed does not absolved the corporate debtor to pay for the premises and facilities, which were being enjoyed by the corporate debtor during the CIRP period, it stated.

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In this case, Jet Airways had vacated some of the office premises in a building owned by Mackstar Marketing in 2018, but had not paid substantial dues for the two units retained by it. Despite Mackstar asking Jet to pay, the latter neither paid the monthly licence fees nor vacated the premises. After initiation of the corporate insolvency resolution process in June 2019, Mackstar again wrote to the resolution professional for vacation of premises and also about the outstanding dues and arrears. Besides, Macstar also asked the IRP to confirm if the monthly fee payable to it formed a part of the CIRP, and would be paid once the proceeds under the resolution plan or under the liquidation process are distributed in terms of the IBC.

The RP had argued that it was entitled to retain the possession of the licensed premises till the security deposit was not refunded and although the premises were in possession of the corporate debtor during the CIRP, but Mackstar was not entitled to claim any license fee during the CIRP period, as the agreement stood terminated prior to initiation of the CIRP.

The National Company Law Tribunal (NCLT) had in March last year ruled against Mackstar, but the NCLAT on May 6 reversed the NCLT’s findings, holding that Mackstar was not liable to return the security deposit and was entitled to recover dues, which should be treated as CIRP costs for the period during which Jet occupied the premises. The appellate tribunal had also ordered the handover of the vacant possession of the premises to Mackstar within 15 days.

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