TaxTMI 
TaxTMI 
2022 (8) TMI 931
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmitted that the Appellant is aggrieved by the order passed by the Learned Adjudicating Authority, the present appeal is filed on the ground that the Adjudicating Authority held that the fees payable to the Appellant/Liquidator will become payable only upon occurrence of the events of respective receipts and disbursals at specified rates payable and not otherwise. The Adjudicating Authority directed the Appellant to desist from claiming the amounts towards liquidator fees as immediately payable. The impugned order is in contravention of Section 53 of the IBC read with Regulation 4(3), 42 and 44 of the I&B Code (Liquidation Process) Regulations, 2016 and also in contravention of the scheme for compromise and arrangement. 4. The Counsel for the Appellant submitted that under Regulation 42 of the I&B Code (Liquidation Process) Regulations, 2016, once the scheme for compromise and arrangement approved and the liquidator is directed to handover the management to the scheme proponent, the liquidator's fees is due and the same is payable in terms of Section 53 of the Act within 30 days. After approval of the scheme for compromise and arrangement, the role of the liquidator is over a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r dated 05.05.2020 passed in MA. No. 1140/2020 observing that the payment of liquidator's fees shall be only upon occurrence of a disbursal and receipt and not otherwise. 9. The Learned Counsel submitted that the Hon'ble Adjudicating Authority vide order dated 05.05.2020 determined and decided the liquidator's fees in terms of unamended Regulation 4 of the I&B Code (Liquidation Process) Regulations, 2016. It is contended that once the Corporate Debtor is out from liquidation process and management of the Corporate Debtor goes into the hands of scheme proponents, the approved fees of the liquidator be paid on priority in terms of Section 53 within 30 days from the change of hands since the role of the liquidator is over. 10. It is submitted that the Learned Adjudicating Authority erred in holding that the liquidator's fee is only payable on receipt and disbursal and not otherwise. The Adjudicating Authority failed to appreciate that the Respondents have not complied with the compulsory requirement of complying with the provisions contained under Section 29A of the I&B Code. 11. In view of the reasons as stated above, the Learned Counsel prayed this Bench to set aside the im....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Code, however, the Adjudicating Authority gave an opportunity to the Appellant and directed him to file a report with respect to in-eligibility of the Respondents under Section 29A of the Code. The Learned Authority clearly noted in its order that at the time of liquidation the account of the Corporate Debtor was not a Non-Performing Asset as the amounts owed to the secured financial creditors were fully settled by the Respondents in December 2018 to the tune of Rs.39.75 crores out of total debt of Rs.39.75 crores. 17. The Appellant never even contested the issue of ineligibility of the Respondents before the Adjudicating Authority. Further the Appellant himself filed CA 1026/2019 for approval of the scheme before the NCLT. As per the recent amendment made under Regulation 2B of the Liquidation Regulation as inserted by notification dated 06.10.2019, any person ineligible for the reasons mentioned under Section 29A of the Code shall not be able to submit a scheme of compromise or arrangement. The said issue of applicability as well as ineligibility of the Respondents was discussed in detail before the Learned NCLT and the Learned NCLT held that the eligibility of the Res....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "a. Books of Accounts including the bank account opened for liquidation; b. Income tax records up to the period 2019-20; c. Audited Balance sheets for 2017-18, 2018-19 and 2019-20; d. Tax audit reports, GST returns (filed copies), PF returns; e. ROC returns for 2017-18, 2018-19 and 2019-20, inter alia. f. Removal of charge from ROC for the assets secured. g. Files and the correspondences of the legal cases going on and attended by Liquidator." 21. It is submitted that the above-mentioned records till date have not been handed over by the Appellant which clearly depicts that the Appellant disregards the facts that the Corporate Debtor is in the process of resuscitation and the Appellant is only concerned about his fees. 22. It is submitted that the Appellant is guilty of misrepresenting the facts in the appeal. The Appellant in the memo of parties still mentions that he is a Liquidator of the Corporate Debtor, whereas by virtue of operation of the orders dated 10.01.2020, 05.05.2020, 15.05.2020 passed by the NCLT, it is clear that on approval of the said scheme, the scheme proponents took over the management of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted that the conduct of the Appellant was in fact strongly deprecated by the Learned NCLT while passing the impugned order to repeated and consistent endeavour to abuse his power and to derail the implementation of the scheme in order to suit his personal agenda which is most unbecoming of a Liquidator under the provisions of the Code. 27. It is submitted that the Appellant filed the present Appeal misrepresenting and by concealing the facts only in order to unjustly enrich himself. In view of the facts as stated above the appeal deserves to be dismissed with cost. Analysis / Appraisal: 28. Heard the Learned Counsel appeared for the respective parties, perused the pleadings, documents filed in support of their case. After analysing the pleadings, the issue felt for consideration is whether the Appellant has made out any prima facie case seeking the reliefs as prayed in the Appeal and whether the order passed by the Adjudicating Authority need any interference. 29. The Appeal is directed against the order of the Adjudicating Authority dated 20.07.2020 whereby the Adjudicating Authority disposed of the application filed by the Appellant and settled the issue of fee pay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd the Promoters proposed a scheme to settle all class of creditors. 33. The scheme proponents filed the scheme of compromise and arrangement under Section 230 of the Companies Act, 2013. Thereafter, the Liquidator filed an application being CA 1026/2019 before the Adjudicating Authority seeking relief that the scheme of compromise and arrangement approved by the equity shareholders and creditors of the company in liquidation be approved so as to bind the equity shareholders and creditors. The Adjudicating Authority passed a detailed order on 10.01.2020 regarding sanctioning the scheme and the eligibility of the Respondents under Section 29A of the Code. 34. The Appellant filed an application being MA No. 1140 of 2019 in CA No. 1026/2019 under Section 60(5) of the Code praying the Tribunal to approve and payment of the fee of the Appellant. The Adjudicating Authority passed a detailed order on 05.05.2020. 35. The contention of the Appellant is that he is entitled to his fees calculated on the basis of both realization of liquidation estate and its assets on the transaction of sale as a going concern and as well as fees for distribution of proceeds to be calculated as per t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... other liquidation costs, and of the amount distributed. 4. The liquidator shall be entitled to receive half of the fee payable on realization under sub-regulation (3) only after such realized amount is distributed." 39. A combined reading of Regulation 2 (ea) read with Regulation 4 of IBBI (Liquidation Process) Regulation, 2016 shows that the fees of the Liquidator can be decided by the CoC before a liquidation order is passed by the Tribunal in terms of Section 33 of IBC, 2016 and in its absence sub-regulation (3) of Regulation 4 of the liquidation process Regulations shall come into play wherein it is provided that the liquidator shall be entitled to a fee both on a percentage of the amount realize net of other liquidation costs, and of the amount distributed as per the percentages given in the table provided under sub-regulation (3) of Regulation 4 itself. The parties are in concord that at the time of passing resolution under Section 33(2) of the IBC, 2016 seeking for liquidation of the Corporate Debtor, the Liquidator's fee being part of the Liquidation cost in terms of Section 5(16) read with Regulation 2(ea) and Regulation 4(2) had not been fixed by the CoC and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f, applying Regulation 4 of Liquidation Process Regulations, 2016 as it stood prior to amendment made w.e.f. 25.07.2019, we find that the calculation as given by the Liquidator in the typed set filed along with the application which tabulation has also been extracted in para 22 supra is sustainable and in the absence of Committee of Creditors fixing the fees of the Liquidator or the Liquidation costs, is required to be hence allowed." 44. The Adjudicating Authority at para 34 observed that in case of any infraction on the part of the Respondents in implementing the scheme as sanctioned, with regard to Liquidator's fee in accordance with tabulation as given in para 22 of the order dated 05.05.2020 shall be brought to the notice of the Adjudicating Authority. 45. After the order of the Adjudicating Authority dated 05.05.2020 several applications have been filed by the parties. The Appellant filed an application seeking payment of his fees. On the other hand, the Respondents filed application seeking direction to the Appellant to handover the assets of the company and also to adjudicate the dispute in relation to the liquidation cost. The Adjudicating Authority vide order dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sets of the Corporate Debtor with an intention to arm twist the Respondent for achieving illegal gains. It is also submitted that still the Appellant had not handed over the following books as stated in para 32 of the counter affidavit filed by the Respondents. "a. Books of Accounts including the bank account opened for liquidation; b. Income tax records up to the period 2019-20; c. Audited Balance sheets for 2017-18, 2018-19 and 2019-20; d. Tax audit reports, GST returns (filed copies), PF returns; e. ROC returns for 2017-18, 2018-19 and 2019-20, inter alia. f. Removal of charge from ROC for the assets secured. g. Files and the correspondences of the legal cases going on and attended by Liquidator." 49. The Respondents in the short note of legal submissions dated 14.07.2022 at para 22, page 5 it is state as under: "In view of the order dated 20.07.2020 passed by the Learned NCLT, in view of the above, Amma Lines vide its letter dated 27.07.2020 duly sent the cheques bearing Nos.666414 and 666515 for a total amount of Rs.98,69,502/- to the Appellant towards undisputed portion in the Liquidation costs and tow....