NCLAT rules liquidator gets percentage-based fees only after asset realization, not monthly remuneration under Regulation 39D

The NCLAT dismissed an appeal regarding liquidator remuneration fixation. The tribunal held that under existing IBBI regulations at the time of liquidation order, liquidator fees must be either fixed by Committee of Creditors under Regulation 39D or calculated as percentage of realized/distributed amounts during liquidation process. Since no fees were fixed by CoC and assets were under attachment preventing auction, the liquidator would only receive percentage-based fees upon actual realization and distribution of proceeds from asset auction, not monthly remuneration.

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Issues Involved:
1. Fixation of Liquidator's Remuneration
2. Jurisdiction of NCLT/NCLAT
3. Applicability of Liquidation Process Regulations

Summary:

1. Fixation of Liquidator's Remuneration:
The appellant, liquidator of M/s SRS Limited, filed an appeal against the NCLT Chandigarh's order dated 18.04.2023, seeking fixation of his remuneration. The liquidator requested remuneration at Rs. 4 lakh + GST monthly from 29.01.2020 to 31.05.2022 and Rs. 2 lakh + GST per month from 01.06.2022 till the closure of the liquidation process. The liquidator argued that due to the attachment of assets by the Directorate of Enforcement (ED) and the Income Tax Department, he was unable to sell the corporate debtor's assets and hence could not earn fees as per Regulation 4(2)(b) of the Liquidation Process Regulations. Despite his efforts to lift the attachment and manage the corporate debtor's affairs, the Stakeholders Consultation Committee (SCC) decided that fees would be paid as per Regulation 4(2)(b).

2. Jurisdiction of NCLT/NCLAT:
The liquidator cited Section 60(5)(c) of IBC 2016 and the Supreme Court's decision in Alok Kaushik v. Bhuvaneshwari Ramanathan, asserting that NCLT has jurisdiction to adjudicate disputes related to insolvency resolution or liquidation proceedings. The respondent argued that the issue of monthly remuneration does not fall within the ambit of Section 60(5) and that the liquidator's fee should be determined by the SCC as per Regulation 4(2)(b).

3. Applicability of Liquidation Process Regulations:
The Tribunal examined the relevant regulations and amendments. It was noted that prior to the amendment on 25.07.2019, Regulation 4(2) allowed the liquidator to be paid a percentage of the amount realized and distributed. The Tribunal found that the fees of the liquidator should be as per the percentage prescribed in Regulation 4(2)(b) on realization and distribution of proceeds from the auction of assets, as no fees were fixed by the CoC under Regulation 39D of IBBI (CIRP) Regulations, 2016.

Conclusion:
The Tribunal upheld the decision of the Adjudicating Authority, dismissing the liquidator's applications for monthly remuneration. The appeal was dismissed, and it was concluded that the liquidator's fees should be determined as per Regulation 4(2)(b) of the Liquidation Process Regulations, 2016.

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