Ratification Of IRP Fees By CoC Can Be Implied From Meeting Minutes And Conduct: NCLAT Chennai

The bench held that the formal ratification is not mandatory if the CoC's conduct and meeting records are approved.

Background of the Case

The operational creditor filed an application u/s 9 of the IBC seeking initiation of the Corporate Insolvency Process (CIRP) of the corporate debtor. The adjudicating authority accepted the application and ordered the CIRP of the corporate debtor, and Mr. Kantipudi Venkata Raju was appointed as the Interim Resolution Professional (IRP).

The IRP claimed an amount of Rs. 9,05,058 as professional fees and the expenses incurred by him during his tenure. The sole financial creditor, Canara Bank, challenged the claim of IRP by saying that the IRP's remuneration has not been formally ratified by the Committee of Creditors (CoC). It argued that the said ratification is the mandate of Regulation 33(3) of the IBBI Regulations, 2016.

Contention of the Parties

The Canara Bank argued that the adjudicating authority had erred by directing IRP's payment without formal ratification by the CoC. It argued that the determination of the fees payable to IRP has to be done in accordance with the sub-regulation (4) of Regulation 33 of the IBBI Regulation 2016. It contended that the said requirement has not been satisfied.

The appellant argued that the decision to pay has had to be prior in time, which is to be subsequently ratified, and only then it would be deemed to have been approved to be made as an entitlement to the IRP for conducting the process.

Per contra, the respondent argued that his appointment and fees were discussed and accepted in the first CoC meeting. Later on, in the second CoC meeting, the minutes of the first meeting were produced for ratification and approved. The respondent also submitted that the conduct and resolutions of the CoC clearly indicated approval of the fees.

Observations of the NCLAT

The NCLAT dismissed the appeal, upholding the decision of the adjudicating authority.

The tribunal observed that the term “ratify” under Regulation 33(3) implies a formal or informal approval of the decision already taken, and such ratification can be expressed or implied. The bench noted that the argument of the appellant that the expenses were ratified is factually incorrect and contradicted by meeting records.

Justice Sharad Kumar Sharma and Jatindranath Swain-“the observations which has made by the Tribunal for remitting the amount of Rs.9,05,058/- in respect of fee and expenses incurred by the IRP during his tenure is absolutely justified if it is read in context of the finding, which has been recorded in the minutes of the 2nd CoC meeting as it was held on 13.07.2022, which has approved the minutes of the meeting of the 1st CoC meeting which was held on 09.06.2022.”

Case Title: Canara Bank v. Kantipudi Venkata Raju & Anr.

Case Number: IA No. 580/2025 in Company Appeal (AT) (CH) (Ins) No. 165/2023

For Appellant: Mr. M.L. Ganesh, Advocate

For Respondent: Mr. Sriram Venkatavaradan, Advocate for Respondent No.1

Bench: Justice Sharad Kumar Sharma (Member – Judicial) and Jatindranath Swain (Member – Technical)

Judgment Date: 08/07/2025

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