2024 (5) TMI 978 - AT - Insolvency and Bankruptcy

Liquidator's fees must be calculated on 211 days not 174 days excluding only stayed periods not application adjudication periods

Stakeholders Consultation Committee of Punjab Basmati Rice Ltd. Versus Mr. Sanjay Kumar Aggarwal, Liquidator of M/s Punjab Basmati Rice Ltd

NCLAT held that the liquidator's fees should be calculated based on 211 days of liquidation process, not 174 days as determined by the lower court. The ... Calculation of fees eligible to the liquidator - time period consumed by the Liquidator in the liquidation process, after considering the eligible exclusions granted by the Adjudicating Authority - exclusion of period of stay granted - HELD THAT:- The dispute, during the oral arguments narrowed down to the period of 37 days, being the period from 03.10.2021 to 08.11.2021. The facts relating to this period are that IAs bearing Nos. 471 of 2021 and IA 550 of 2021 were filed by the Ex-Management of the Corporate Debtor before the Adjudicating Authority wherein a stay on e-auction of properties was granted by the Adjudicating Authority on 09.11.2021. The Adjudicating Authority erred in granting exclusion the period consumed in adjudication of subject IAs, instead of period consumed while auction was under stay. If this period of 37 days from 03.10.2021 to 08.11.2021 is not excluded and is added to the liquidation period of 174 days determined by the Adjudicating Authority, it can be said that the liquidation process period was 211 days. The period consumed in the liquidation process in this case is accordingly determined as 211 days. The Stakeholder’s Consultation Committee is directed to compute and pay the Liquidator’s fees accordingly. Appeal disposed off. Issues Involved:1. Validity of the liquidator's fee calculation.2. Exclusion periods in the liquidation process.Summary:1. Validity of Liquidator's Fee Calculation:The appeal was filed by the Stakeholder Consultation Committee of M/s Punjab Basmati Rice Ltd., under liquidation, against the NCLT, Chandigarh's order dated 01.09.2023. The NCLT had allowed the liquidator's application IA No. 1551 of 2023 and dismissed the Committee's application IA-1245 of 2023. The liquidator's fees are governed by Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The liquidator claimed the total period taken in liquidation was 157 days, while the Stakeholders Consultation Committee calculated it as 213 days. The NCLT determined it as 174 days, making the liquidator eligible for a higher percentage of fees as the liquidation process was completed within six months.2. Exclusion Periods in the Liquidation Process:The liquidator and the Stakeholder Consultation Committee had different calculations for the liquidation process period. The NCLT excluded periods due to COVID-19 lockdowns and adjudication delays. The appellant contested the exclusion from 03.10.2021 to 08.11.2021, arguing that the liquidator sought exclusion from 09.11.2021, the date when the stay was granted. The NCLT's order dated 02.02.2023 excluded the period consumed in adjudication of IA No. 471/2021 and IA No. 550/2021. The IBBI circular dated 28.09.2023 clarified that exclusions for fee calculations must be judicially sanctioned. The NCLT's exclusion of 37 days from 03.10.2021 to 08.11.2021 was deemed erroneous. The liquidation process period was recalculated as 211 days. The Stakeholder Consultation Committee was directed to compute and pay the liquidator's fees accordingly.