TaxTMI 
TaxTMI 
2024 (5) TMI 978
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.... The brief facts of this case are that an application under Section 10 of Insolvency and Bankruptcy Code, 2016 was filed by the Corporate Person, M/s Punjab Basmati Rice Limited, for initiation of Corporate Insolvency Resolution Process (CIRP) which was admitted by NCLT, Chandigarh vide order dated 18.02.2019. In absence of any viable resolution plan, the liquidation order was passed on 18.12.2019. The liquidator initially attempted sale of assets through auction. Subsequently, the liquidation estate was sold as such by way of open auction held on 01.04.2023 for a sum of Rs.26.77 Crores against the reserve price of Rs.25.00 Crores. 3. The issue in the impugned order, and the present appeal, is regarding the fees eligible to the liquidator. The fees of the liquidator is governed by Regulation 4 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 which is reproduced below for ready reference : - 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 Corpora....
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.... of the said amendment Regulations.] As can be seen from Regulation 4 referred above, the liquidator's fees is contingent upon the time taken to realise/ distribute the amounts amongst stakeholders. In the present case, the liquidation order was passed on 18.12.2019 and the distribution was completed on 02.05.2023. These dates are not disputed by either side. The dispute in this appeal is regarding the time period taken by the Liquidator in realizing and distributing assets, considering various exclusions and stay granted by the Adjudicating Authority. 4. In its submission before the Adjudicating Authority, the liquidator had given the following working days and stated that the total period taken in liquidation was 157 days. Sr. No. Calculation of the liquidation process period of the corporate debtor No. days 1. Liquidation order passed on 18.12.2019 2. Time period of days calculated from 18.12.2019 to 14.03.2020 for the purpose of process of liquidation process the CD. 86 days 3. The exclusion of Liquidation Process period out of the total liquidation process period of the corporate debtor granted by this Hon'ble Adjudicating Auth....
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....; 2. Time period taken into account from 18.12.2019 to 14.03.2020 for the purpose of process of liquidation process period (Dec-12, Jan-31, Feb-29, March-14= 88 days) 86 days 3. Time period excluded since 15.03.2020 to 02.10.2021 from the total liquidation process period as per order dated 01.11.2021 passed by Hon'ble NCLT (AA). Copy of order 01.11.2021 attached Annexure A-1 0 4. Time period for liquidation extended upto 31.03.2023. Period between 09.11.201 to 30.03.2022 excluded because of stay granted. Time spent for liquidation 03.10.2021 to 08.11.2021. (Copy of order attached Annexure A----). Effect taken in order 02.02.2023. 37 days 5. Time period excluded vide order dated 02.02.2023, 09.11.2021 to 02.02.2023 excluded from the total liquidation process period as per order dated 02.02.2023 passed by Hon'ble NCLT (AA) Copy of order 02.02.2023 attached Annexure A The Order has to be read as a whole 0 6. Time period taken into account from 03.02.2023 to 01.04.2023 for the purpose of sale of assets and 13.04.2023 for the process of realisation of proceeds of the assets properties of the CD. (Feb-26, March-31, April01 days= 58 ....
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....of exclusions allowed by this Adjudicating Authority in the orders dated 01.11.2021, 30.03.2022, and 02.02.2023 be also excluded for the computation of the liquidation period for the purpose of calculating the liquidator's fee slab under Regulation 4 of the Liquidation Process) Regulations 2016. 14. The applicant-liquidator and the respondents have given different computations for computing the time spent on the liquidation process for computing the liquidation process period. The same has been perused closely. The correct in our view, is under: * Total No. days of exclusion as per the order of this Adjudicating Authority. Date of order Period 01 .11.2021 15.03.2020 to 02.10.2021 30.03.2022 09.11.2021 to 31.03.2022 02.02.2023 31.08.2021 to 02.02.2023* * The application bearing IA No. 471/2021 was filed on 31.08.2021 and disposed of by the order of this Adjudicating Authority on 02.02.2023. In our order dated 02.02.2023 it is directed as under : "due to the fact that e-auction has been deferred by order dated 09.11.2021 passed in IA No. 550/2021, it is directed to exclude the period consumed in the adjudication....
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....hen the stay was granted. The learned counsel for the appellant explained that period up to 02.10.2021 was already excluded by the Adjudicating Authority vide order dated 01.11.2021 and they are mainly challenging the exclusion from 03.10.2021 till 08.11.2021. 9. Learned Counsel for the respondent drew our attention to order dated 02.02.2023 of the Adjudicating Authority wherein the Adjudicating Authority has recorded that the e-auction was deferred through order dated 09.11.2021 passed in IA No. 550 of 2021 and it was directed to exclude the period consumed in the adjudication of IA No. 471 of 2021 and IA No. 550 of 2021 from the computation of period of Liquidation Process. It was submitted that even the period 03.10.2021 to 08.11.2021 is also covered by the exclusion granted by the Adjudicating Authority. The learned Adjudicating Authority had followed its order dated 02.02.2023 while computing the period of liquidation in the impugned order dated 01.09.2023. 10. The issue of calculation of fees of liquidator has been clarified recently by IBBI vide their circular no. IBBI/LIQ/61/2023 dated 28.09.2023, wherein in para 2.5 the IBBI has clarified as under:- "2.5 Per....
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.... periods were finally excluded by order dated 02.02.2023, and had attained finality as no appeal was filed against them, whereas the impugned order was passed on 01.09.2023. It was submitted that the appellant cannot now challenge the order dated 02.02.2023, after the period of appeal (including the condonation period) is already over. Since the exclusions are specifically granted by the AA and even the period of liquidation is calculated by the AA, in view of latest clarification dated 28.09.2023 of IBBI, there is no error in computation of fees payable to the respondent liquidator. 14. The learned counsel also submitted that the exclusion granted in order dated 02.02.2023 is in IA No. 620/2021 and not in IA No.196/2021, though the prayers were similarly worded. 15. We have gone through the documents and pleadings submitted by both the sides as well as the oral arguments made before us. The limited issue for decision in this appeal is the time period consumed by the Liquidator in the liquidation process, after considering the eligible exclusions granted by the Adjudicating Authority. The dispute, during the oral arguments narrowed down to the period of 37 days, being the per....
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.... 26. In view of the detailed order passed in IA No. 471/2021 and 1383/2022, the prayer with regard to the issuance of fresh e-notice is already allowed subject to the conduct of the SCC Meeting which will decide the reserve price and date of auction However, due to the fact that eauction has been deferred by Order dated 09.11.2021 passed in IA No. 550/2021, it is directed to exclude the period consumed in the adjudication of IA No. 471/2021 and IA 550/2021 for the Computation of period of Liquidation Process. The liquidator is further directed to complete the liquidation process within the stipulated time frame after excluding the period consumed in the adjudication of Applications. The present application is allowed with the aforesaid direction and disposed of accordingly. 18. We note that there is a discrepancy in the two orders of the Adjudicating Authority quoted above. While disposing IA No. 196 of 2022 on 30.03.2022 the Adjudicating Authority has excluded the period of stay granted vide order dated 09.11.2021 till 30.03.2022, whereas while disposing IA No. 620 of 2021, while deciding the same issue, the Adjudicating Authority has directed, "to exclude the period consum....