NCLAT Strikes Down Non-Speaking Order on IRP Fees, Commands Detailed Justification and Prompt Reconsideration
- REEDLAW
- 1 day ago
- 3 min read
The NCLAT set aside the non-speaking order on IRP fees and directed a detailed justification along with a prompt reconsideration of the matter.
On 26 May, 2025, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Rakesh Kumar Jain and Justice Mohammad Faiz Alam Khan (Judicial Members) and Mr. Naresh Salecha (Technical Member), reviewed an appeal and connected interlocutory application and observed that a Tribunal’s order must be a reasoned and speaking order explaining the basis for its conclusions; where such reasons are absent or vague—particularly when limiting a claim—the order is liable to be set aside and the matter remanded for fresh adjudication with proper reasoning.
The National Company Law Appellate Tribunal (NCLAT) heard an appeal against the order dated 20.10.2023, which had limited the payment of professional fees and CIRP expenses claimed by the Interim Resolution Professional (IRP), Sudha Pravin Navandar, to Rs. 20 lakhs plus GST and expenses, despite her claim exceeding Rs. 93 lakhs along with legal costs. The matter arose from insolvency proceedings initiated under Section 7 of the Insolvency and Bankruptcy Code, 2016, where the Financial Creditor filed an application against Shah Group Builders Ltd. The IRP was appointed following admission of the case by the National Company Law Tribunal (NCLT), Mumbai Bench, and during the pendency of the case, a settlement was reached between the Suspended Director and the Financial Creditor, which led to the filing and allowance of an application under Section 12A, terminating the CIRP proceedings.
Following the settlement, the IRP sought reimbursement of her fees and CIRP costs as per the settlement agreement and the order dated 17.03.2023, which confirmed that the Corporate Debtor was liable to pay outstanding fees and expenses totalling approximately Rs. 93.8 lakhs. However, despite these directions, the Corporate Debtor failed to make the payments, prompting the IRP to file an interlocutory application seeking the full amount along with legal costs. The NCLT granted an interim order directing payment of Rs. 20 lakhs plus GST as part payment, but did not order the entire claimed amount. Subsequently, the Tribunal’s final order restricted the IRP’s claim to the interim amount already directed, observing that “no substantial professional work was done by the IRP after the date of settlement” and therefore the full fee claim was neither fair nor reasonable.
The appellant challenged the impugned order on the ground that it was non-speaking and violated principles of natural justice, particularly because the Tribunal referred to a “sequence of events” justifying the limitation of fees without specifying what those events were. The NCLAT examined the record and found that neither the impugned order nor the proceedings disclosed any such sequence of events, and even the Respondent’s counsel was unable to clarify the basis of the Tribunal’s conclusion. Consequently, the appellate bench held that the impugned order was non-speaking and failed to provide any reasons for restricting the IRP’s claim to Rs. 20 lakhs, thereby rendering the order unsustainable.
The NCLAT allowed the appeal, set aside the impugned order, and restored the interlocutory application for fresh consideration by the NCLT. The matter was remanded with directions to pass a reasoned order addressing the entitlement of the IRP to the claimed amount of Rs. 93,78,920/- plus legal costs. The parties were directed to appear before the Tribunal on a specified date, and the NCLAT emphasised that no observations were made on the merits of the claim, leaving the decision entirely to the Tribunal’s discretion. Both parties were directed to bear their own costs, and the Tribunal was requested to expedite the disposal of the matter, preferably within two months of the hearing.
Ms. Anjali Sharma and Ms. Thanglunkim, Advocates, represented the Appellant.
Mr. Sagar Bansal, Mr. Dhruv Parwal, Ms. Sudha Navandar, Advocates, appeared for the Respondents.
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