TaxTMI 
TaxTMI 
2024 (4) TMI 538
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....P (IB) No. 201/CHD/2018. The appellant has claimed following relevant reliefs in the present appeal :- (a) Pass an order allowing the present appeal and setting aside the Impugned Order dated 18.04.2023 passed by National Company Law Tribunal, Chandigarh Bench in IA No. 307/2021 & IA No. 1260/2022 in CP (IB) No. 201/Chd/2018; (b) Fix the remuneration of the Appellant at Rs. 4 lakh + OPE+GST monthly from 29.01.2020 up to 31.05.2022 and Rs. 2 lakh + OPE+ GST per month from 01.06.2022 till the closure of the Liquidation Process, to be distributed between Liquidator and his team from IPE in the ratio of 25:75 or such other fees as this Hon'ble Tribunal may deem appropriate; and (c) Pass any other order(s) or direction as this Hon'ble Tribunal may deem fit and proper in facts and circumstances of the present case. The facts of this case as enumerated in the order dated 18.04.2023 of the Adjudicating Authority, along with the decision are reproduced below for ready reference:- "IA No. 307/2021 & 1260/2022 1. IA No. 307/2021 & 1260/2022 are taken up together being interconnected and interlinked. 2. IA No. 307/2021 is being f....
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....ale of cinema at 12 locations between 15.01.2021 to 30.09.2021 through e-auction. The liquidator has sold the cinema, and the sale proceeds have been used to meet the pending Insolvency Resolution Process Cost and Liquidation Cost towards pending rent, cam, security, salaries, etc. After meeting these costs, the liquidator has also distributed Rs. 2 crores to the stakeholders. 5. It is mentioned that the applicant has been carrying on the duties of the corporate debtor as per the Code and in accordance with Regulation 4 (2)(b) of the Liquidation Process, the applicant is entitled to the fees as a percentage on the proceeds released from the sale of the corporate debtor. The applicant has made various efforts to seek a vacation of attachment from the ED. The applicant has also approached various PMLA Tribunals, Appellate Tribunals, and Punjab & Haryana High Court on several occasions, and the applicant is also addressing the queries of two thousand deposit holders and other Creditors with the help of his team. The applicant and his team have been carrying out all the activities to manage the affairs of the Corporate Debtor that, includes dealing with various stakeholders, d....
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....Mr Abhinav Garg, representative of Deposit Holders stated that they do not have any comments and Secured Financial Creditors decide in the matter. The representatives from Statutory Authority and Operational Creditor also did not offered any view in the matter and were of the view that Secured Financial Creditor decide the matter. 3. The Liquidator in response to the queries from Mr. Rakesh Verma, AGM, SBI stated that last meeting of CoC was held on 10th May 2019 (i.e. 13** meeting) wherein approval of the Resolution Plan submitted by Resolution Applicant was put up for approval through voting from 14th May 2019 to 16th May 2019 (till 8 PM) and the same was rejected. Hence, Resolution Professional had filed application under section 33 (1) of the IBC, 2016 on 17th May 2019, seeking approval for liquidation Process from Hon'ble NCLT Chandigarh, before the expiry of CIRP period which ended on 18th May 2019. No approval for fee of Liquidator as per Regulation 39 D of IBBI (Insolvency Resolution Process for Corporate Process) Regulation, 2016 was sought from members of CoC as such Regulation was introduced subsequently through amendment on 25th July 2019. The CD was admitt....
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....r called 'Liquidation Process Regulations') prescribed fees for the liquidator on the basis of percentage of realisation and distribution and that since no sale could take place due to attachment by the ED, the liquidator is not getting fees to perform his services. It was submitted that in this case the liquidation of the corporate debtor commenced on 15.10.2019 and the assets of the corporate debtor were attached by the Enforcement Directorate on 08.01.2020 and that liquidator has not been paid any fees since 29.01.2020. It was submitted that liquidator had diligently persued with the relevant authorities regarding lifting of attachment and has also been carrying out various functions on behalf of the corporate debtor during the liquidation process. On 28.07.2022, the learned Adjudicating Authority had directed the liquidator to raise the issue of remuneration before the Stakeholders Consultation Committee (SCC) Members and accordingly, in the 18th, 19th, and 20th SCC Meetings the issue was raised, wherein the members of the SCC took the stand that fees shall be paid as per Regulation 4(2)(b) of the 'Liquidation Process Regulation'. It was submitted that the Adjudicating Authorit....
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....onals appointed by the RP. Whether any work has been done as claimed and, if so, the nature of the work done by the valuer is something which need not detain this Court since it is purely a factual matter to be assessed by the adjudicating authority. 3. The counsel for the liquidator submitted that Regulation 39D of IBBI (Resolution Process for Corporate Persons) Regulations, 2016 was not in existence when the application for liquidation was filed on 17.05.2019, because of which the CoC was not requested to fix the fees of the liquidator. The learned counsel for the liquidator further submitted that under Regulation 31A(1)(c) of the Liquidation Process Regulations, the SCC has power to fix the fees of Liquidator. It was requested that the Appellate Tribunal may direct the SCC Members to determine the fees on monthly basis. 4. In its oral and written submissions, the learned counsel on behalf of the respondent no.1 averred that the learned Adjudicating Authority has rightly dismissed the applications filed by the debtor after considering the views of the Stakeholders' Consultation Committee (SCC) on the issue of payment of remuneration to the liquidator that it is payable only....
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.... fees of the Liquidator available was under Regulation 4(2)(b) of the Liquidation Process Regulations. Thus, it is wrong to say that the Appellant cannot approbate and reprobate." 6.1 In its written submissions the Respondent no.1 submitted that the present appeal deserves to be dismissed on the grounds of maintainability, on the ground that liquidator is not entitled to any fees beyond the fees prescribed under Regulation 4(2)(b) of the IBBI (Liquidation Process Regulation), 2016 and on the ground that no work has been done by the liquidator for release of the attached properties. On the issue of maintainability, the respondent no.1 has submitted as under:- "The appellant had preferred an application bearing IA No. 307/2022 before the Ld. Adjudicating Authority under section 60(5) of the IB Code, 2016 seeking additional payment in the form of monthly remuneration. However, it is most pertinent to mention that the issue of monthly remuneration of the liquidator does not fall within the ambit of section 60(5) of the IB Code, as section 60(5) of the IB Code clearly states that the National Company Law Tribunal shall have jurisdiction to entertain or dispose of '(a) any ap....
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.... the domain/ power of SCC members, who in their commercial wisdom have passed the resolution for payment of fee to the Liquidator as per Regulation 4(2)(b) of the liquidation process. 6.4 It was further submitted by respondent no.1 that the liquidator is not entitled to any remuneration beyond Regulation 4(2)(b) of Liquidation Process Regulation, 2016 as the fees of the liquidator is either decided by the CoC as per Regulation 39D of CIRP Regulations or in the first SCC Meeting after the liquidation is initiated as per Sub-Regulation 1(A) of Regulation 4 of Liquidation Process Regulations. However, in the present matter neither the fee of the liquidator was fixed by the CoC nor by the SCC Members in the first SCC meeting and as such fee of the liquidator is payable in terms of Regulation 4(2)(b) of the 'Liquidation Process' Regulations. 6.5 It was further submitted that as per Regulation 4(2)(b) liquidator is entitled to fees as percentage of amount realised for each sale of the property and the percentage varies with time consumed. It was further submitted that IBBI had recently issued Circular No. IBBI/LIQ/61/2023 dated 28.09.2023 wherein it has been clarified that the liqu....
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.... 1.88 1.25 0.94 On the next 50 crore 1.25 0.94 0.68 0.51 On further sums realized 0.25 0.19 0.13 0.10 Amount Distributed to Stakeholders On the first 1 crore 2.50 1.88 1.25 0.94 On the next 9 crore 1.88 1.40 0.94 0.71 On the next 40 crore 1.25 0.94 0.63 0.47 On the next 50 crore 0.63 0.48 0.34 0.25 On further sums distributed 0.13 0.10 0.06 0.05 (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. 9. After the amendment, w.e.f. 25.07.2019 the said Regulation 4 reads as under:- 4. Liquidator's fee.- (1) The fee payable to the liquidator shall be in accordance with the decision taken by the committee of creditors under regulation 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (2) In cases other than those covered under su....
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....nt realised by him. Where a liquidator distributes any amount, which is not realised by him, he shall be entitled to a fee corresponding to the amount distributed by him. 11. Vide IBBI (Liquidation Process) (Second Amendment) Regulations, 2022, Sub-Regulation 1(A) was inserted, w.e.f. 16.09.2022, which reads as under:- 1(A) Where no fee has been fixed under sub-regulation (1), the consultation committee may fix the fee of the liquidator in its first meeting. Also, sub-regulation- 2 was amended to add the words [and 1(A)] after the words sub-regulation-1 to give effect to the said amendment. 12. Regulation 31(A) of 'Liquidation Process Regulations' was revised and substituted by IBBI (Liquidation Process) (Second Amendment) Regulations, 2022 w.e.f. 16.09.2022. The substituted Regulation 31A provides that the Stakeholders Consultation Committee constituted by the Liquidator shall advise him on "fees of the liquidator" as per Clause (c) of sub-regulation (1). Thus, Stakeholders Consultation Committee has been empowered to advise the liquidator regarding fees of the liquidator w.e.f 16.09.2022. In IBBI (Resolution Process for Corporate Persons) Regulations 2016, Regul....
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.... Thereafter Amount of Realisation (exclusive of liquidation costs) On the first 1 crore 5.00 3.75 1.88 On the next 9 crore 3.75 2.80 1.41 On the next 40 crore 2.50 1.88 0.94 On the next 50 crore 1.25 0.94 0.51 On further sums realized 0.25 0.19 0.10 Amount Distributed to Stakeholders On the first 1 crore 2.50 1.88 0.94 On the next 9 crore 1.88 1.40 0.71 On the next 40 crore 1.25 0.94 0.47 On the next 50 crore 0.63 0.48 0.25 On further sums distributed 0.13 0.10 0.05 (3) Where the fee is payable under clause (b) of sub-regulation (2), the liquidator shall be entitled to receive half of the fee payable on realisation only after such realised amount is distributed. Clarification: Regulation 4 of these regulations, as it stood before the commencement of the Insolvency and Bankruptcy Board o....