TaxTMI 
TaxTMI 
2023 (12) TMI 444
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....s Appeal. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) Liquidation process of the Corporate Debtor - M/s Barcle Enterprises Limited commenced by an order dated 24.01.2022. The Appellant was appointed as a Liquidator of the Corporate Debtor in terms of Section 33, sub-section (2) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code"). (ii) The Respondent - Radhasiriya Properties Pvt. Ltd. sent an intimation to the Liquidator, expressing its interest in submitting a scheme of compromise and arrangement. On 15.03.2022, Respondent No.1 submitted its scheme to the Liquidator. After certain correspondence, the Liquidator accepted the scheme on 12.05.2022 and I.A. (IB) No.495/KB/2022 was filed by the Liquidator before the Adjudicating Authority seeking a direction to the Liquidator to conduct a meeting of the Creditors under Regulation 2B of the IBBI (Liquidation Process) Regulation, 2016 (hereinafter referred to as the "Liquidation Regulations, 2016") read with Section 230(1) of the Companies Act, 2013. (iii) The Liquidator sent different emails to the Proponent of the Scheme demanding vario....
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....ty after hearing the Counsel for the Respondent as well as the Liquidator, passed the impugned order allowing the Application filed by the Respondent. The Adjudicating Authority in the impugned order held that Liquidator is not entitled to receive any fee. It was held by the Adjudicating Authority that since the Scheme was rejected, the liquidation cost including liquidation fee was wrongly claimed by the Liquidator from the Scheme Proponent, i.e., Respondent. The Adjudicating Authority, consequently directed the Liquidator to refund the entire amount of Rs.23,88,280/-. Aggrieved by which order this Appeal has been filed. 3. We have heard Shri Anoop Prakash Awasthi, learned Counsel appearing for the Appellant and Ms. Swati Dalmia, learned Counsel appearing for the Respondent. 4. The learned Counsel appearing for the Appellant challenging the impugned order submits that the Appellant charged fee for the period from 15.03.2022 to 17.02.2023 as per the provisions of Regulation 4(2)(a) read with Proviso to Regulation 2B(3) of the Liquidation Regulations, 2016. It is contended that Regulation 2B has been prepared to balance the equity to encourage only the serious proposals of ....
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....ted by the Respondent. The present Appeal deserves to be dismissed with costs. 6. We have considered the submission of learned Counsel for the parties and have perused the records. 7. The facts and sequence of events between the parties have been noted by the Adjudicating Authority in its impugned order, which needs no repetition. It is admitted fact between the parties that the Respondent, who has proposed the scheme of compromise and arrangement dated 15.03.2022 was required by the Liquidator to pay various amounts from time to time and total amount paid by the Respondent was an amount of Rs.23,88,280/-, for refund of which amount an I.A. (IB) No.975/KB/2023 was filed, which was allowed by the Adjudicating Authority. The Liquidator has filed the reply to the I.A. (IB) No.975/KB/2023, where it has given the details of amount, which according to the Liquidator, the Respondent was liable to pay. It is useful to extract paragraph 14 of the reply, which contain all details regarding liquidation fee and the expenses as was claimed by the Liquidator. Paragraph 14 of the reply of the Liquidator is as follows: Particulars Amount (Rs.) Liquidator's fee for 13 months (Jan 202....
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....Liquidator fee for the conduct of the liquidation proceedings has to be paid from the value of the liquidation estate assets. The IBBI (Liquidation Process) Regulation, 2016 deals with all aspects of the liquidation process, including payment of fee and costs. Regulation 2(1)(ea) defines the 'liquidation cost', which is to the following effect: "2(1)(ea) "liquidation cost" under clause (16) of section 5 means- (i) fee payable to the liquidator under regulation 4; (ii) remuneration payable by the liquidator under subregulation (1) of regulation 7; (iii) costs incurred by the liquidator under subregulation (2) of regulation 24; (iv) costs incurred by the liquidator for preserving and protecting the assets, properties, effects and actionable claims, including secured assets, of the corporate debtor; (v) costs incurred by the liquidator in carrying on the business of the corporate debtor as a going concern; (vi) interest on interim finance for a period of twelve months or for the period from the liquidation commencement date till repayment of interim finance, whichever is lower; (vii) the amount repayable to contri....
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.... "230(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing three fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator and the contributories of the company." 13. Regulation 4 of Liquidation Regulations, 2016, deals with 'Liquidator's fee'. Regulation 4, sub-section (2), which is relevant for the present case, is as follows: "4(2) In cases other than those covered under subregulation (1), the liquidator shall be entitled to a fee- (a) at the same rate as the resolution professional was entitled to during the corporate insolvency resolution process, for the period of compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013); and (b) as a percentage of the amount realised ....
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....ntitled to receive the cost incurred by the Liquidator in reference to comprise and arrangement from the Corporate Debtor and from the Proponent of the Scheme. In case the compromise is sanctioned, the cost shall be borne by the Corporate Debtor and in case compromise is not sanctioned the cost shall be borne by the parties, who proposed compromise or arrangement. The statutory provision is, thus, clear that Liquidator can only claim cost incurred from the parties who proposed the compromise or arrangement. 17. We have also noticed Regulation 4 of the Liquidation Regulations, 2016, which deals with Liquidator's fee. The Regulation 2B, only refers to cost incurred by the Liquidator. Regulation 2B, does not include fee. Regulation 4 of Liquidation Regulations, 2016 deals with fee. Thus, the Rule making Authority is fully aware of the difference between the cost and fee. Regulation 2B does not indicate that any fee by Liquidator can be charged from the Scheme Proponent. The Liquidator is entitled to his fee as per the statutory provision of Section 34, sub-section (8) and (9) as noted above read with Regulation 4 of Liquidation Regulations, 2016. No fee can be charged from the Sche....
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.... period of 90 days for completion of compromise or arrangement is a different question, which need no answer in the present Appeal. 19. We, thus, are fully satisfied that the Adjudicating Authority committed no error in directing the Liquidator to refund fee, which was wrongly realized from the Respondent. The Appellant himself has brought on record various emails and reminders sent by the Liquidator to Respondent where Liquidator has asked Respondent No.1 to make various payments and the payments were made. According to the Liquidator himself these were the payments towards fee of the Liquidator. We may refer to email dated 02.08.2021 sent by the Liquidator to the Respondent wherein in paragraphs 3, 4 and 5, following has been stated: 3. In Para 9.4 of the scheme submitted by you, you have indicated the final shareholding pattern of the Corporate Debtor after implementation of the scheme. However, you have not indicated the treatment of the existing shares of the Corporate Debtor, i.e. whether the existing shares will be transferred to you, or will they be extinguished and you shall be issued new shares. Request you to clarify the same in the same undertaking as requir....