NCLAT Upholds CoC’s Exclusive Authority on Fee Determination, Bars Fresh Challenge
- REEDLAW
- Aug 25
- 3 min read
REEDLAW Legal News Network reports: In a significant decision, the National Company Law Appellate Tribunal (NCLAT) affirmed that the Committee of Creditors (CoC) holds exclusive authority to determine fees and expenses in a Corporate Insolvency Resolution Process (CIRP). The ruling clarified that once such determinations are duly approved, any subsequent challenges to them are barred under the Insolvency and Bankruptcy Code (IBC).
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, while adjudicating a Company Appeal along with connected Interlocutory Applications, held that the Committee of Creditors (CoC) possesses exclusive authority to finalize fees and expenses during CIRP. The Tribunal further ruled that fresh objections against these determinations, after prior approval by the CoC, are not maintainable, thereby reinforcing the autonomy of the CoC in managing insolvency proceedings.
The National Company Law Appellate Tribunal (NCLAT) upheld the exclusive authority of the Committee of Creditors (CoC) to determine the fees and expenses of the Resolution Professional (RP) and other professionals engaged during the Corporate Insolvency Resolution Process (CIRP). The Tribunal emphasized that fee-related decisions are commercial in nature and fall squarely within the CoC’s domain, and such determinations cannot be reopened through fresh challenges once finalized.
The case arose when the Appellant challenged the Adjudicating Authority’s order approving the fees fixed by the CoC. The NCLAT observed that the Appellant had not objected to the fee structure during the resolution process or before the Adjudicating Authority at the relevant stage. Raising such objections after a considerable delay, when the CIRP was already concluded, was held to be impermissible.
Although the NCLAT condoned the delay in filing the appeal considering the explanations given, it categorically rejected the substantive challenge to the CoC’s decision. The Tribunal reaffirmed that fee fixation for the RP and professionals is a matter of commercial wisdom, which the judiciary cannot interfere with unless there is clear illegality or material irregularity. The order further clarified that allowing such belated objections would undermine the finality and sanctity of the insolvency process.
Mr. Akshay Petkar, Ms. Sonia Sharma, Mr. Pranav Shah and Ms. Anoushka Deo, Advocates, represented the Appellant.
Mr. Prashant Chari, Advocate, appeared for the Respondent No. 1.
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