Adjudicating Authority lacks jurisdiction to unilaterally fix or reduce Resolution Professional fees approved by Committee of Creditors.

The Appellant, the erstwhile Resolution Professional (RP) of the Corporate Debtor (CD), conducted a CIRP where the CoC eventually voted (100% share) for withdrawal under Section 12A of the IBC.

An initial withdrawal application (M.A. 1339/2019) was rejected by the NCLT in 2021 but later remanded by the NCLAT and finally allowed on 23.01.2024.

Handover occurred on 30.01.2024.

While the CoC originally fixed the RP’s fee at ₹2,00,000 per month.

The Adjudicating Authority (AA), in an earlier order dated 11.08.2023, reduced it to ₹50,000 per month for the period July 2020 to March 2023.

In the Impugned Order dated 25.07.2024 for the remaining period (April 2023 to Jan 2024), the AA further reduced the fee to ₹10,000 per month, citing a lack of significant tasks.

The Appellant challenged this reduction.

Whether a Resolution Professional is entitled to professional fees for the period between filing a Section 12A application and the final approval/handover by the Adjudicating Authority.

Whether the Adjudicating Authority has the jurisdiction to unilaterally fix or reduce the fees of a Resolution Professional without the recommendation of the Committee of Creditors (CoC).

The court primarily applied Section 12A of the IBC regarding the withdrawal of applications.

Regulation 30A of the CIRP Regulations, specifically sub-regulation (7), which mandates the applicant to deposit actual expenses incurred until the date of approval by the AA.

Regulation 33 and 34 of the CIRP Regulations, which vest the power to fix RP fees and expenses in the CoC’s commercial wisdom, limiting the AA’s intervention to cases where the applicant fails to propose an IRP fee at the initiation stage.

Regulation 34B and Schedule II regarding minimum fixed fees.

The NCLAT reasoned that Regulation 30A(7) clearly extends the liability for CIRP expenses, including RP fees, up to the date the AA approves the withdrawal, not merely up to the filing date.

The Tribunal clarified that under Regulations 33 and 34, the CoC holds the exclusive prerogative to fix RP fees based on its commercial wisdom.

The AA lacks statutory jurisdiction to "evaluate" tasks and unilaterally reduce pre-approved fees.

Although the CD was not a "going concern," the RP remained duty-bound to maintain the assets and fulfill statutory compliances until the handover.

The Tribunal noted that while the previous reduction to ₹50,000 had attained finality as it wasn't challenged, the AA’s further reduction to ₹10,000 was legally unsustainable as the RP cannot simply "walk away" after filing a 12A application and must be compensated for the mandatory interim period.

It ruled that the Adjudicating Authority erred in unilaterally reducing the fee from ₹50,000 to ₹10,000, as such fee-fixing is the legitimate function of the CoC.

The Impugned Order dated 25.07.2024 was set aside, and the matter was remanded to the Adjudicating Authority for a fresh decision in accordance with law.

Parties were directed to appear before the AA on 23.03.2026.