November 25, 2019

Delhi HC Directs Bhushan Power & Steel’s CoC To Deposit Fee Paid During Corporate Insolvency Resolution Process

[ By Bobby Anthony ]


The Delhi High Court has directed the Committee of Creditors (CoC) of Bhushan Power & Steel to deposit the amount which was paid to its legal counsel during the company's corporate insolvency resolution process with the court's registry.

The court has directed that approximately Rs 12 crore should be deposited with the court registry on or before December 14.

The order was passed after hearing a petition by Mahender Khandelwal, the resolution professional for Bhushan Power and Steel, which challenged an order by the Insolvency and Bankruptcy Board of India (IBBI).

Besides imposing a penalty of Rs 29 lakh on Khandelwal for several violations of the IBC, the IBBI’s Disciplinary Committee had also directed Khandelwal to ensure reimbursement of the legal fee paid to the lawyers of Bhushan Power and Steel from its Committee of Creditors.

The Delhi High Court noted that Khandelwal had made the deposit of Rs 29 lakh with the court's registry without prejudice to his right.

In view of the deposit of the penalty amount and the direction to the CoC to deposit the legal fee, the Delhi High Court today stayed that IBBI order insofar as it barred Khandelwal from accepting any new assignment or continuing with the existing ones.

The counsel for the CoC also informed the Delhi High Court the CoC is in the process of filing a challenge to the IBBI order as well as the relevant circular.

In his petition, Khandelwal had submitted before the Delhi High Court that the IBBI order was wholly arbitrary, iniquitous, and unsustainable, and was passed without the application of mind.

Khandelwal challenged the IBBI’s finding about a “conspiracy” between the CoC. He argued that the mere fact that the professional fee payable to lawyers was wrongly cited could not lead to a conclusion that there was some “conspiracy” between the CoC and himself to cause wrongful loss to Bhushan Power & Steel.

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