TaxTMI 
TaxTMI 
2025 (3) TMI 512
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....of India, hereinafter referred to as "Respondent No. 2" praying for a direction upon the Respondents to make a payment of Rs. 1,87,76,133/- jointly towards the additional Liquidation Cost including the Liquidator's Fees in adherence to the provisions of Regulation 21A read with Regulation 2(ea) and 4(2)(b) of the IBBI (Liquidation Process) regulations, 2016. BRIEF BACKGROUND 4. Tata Capital Ltd. (erstwhile Tata Capital Financial Services Ltd.) preferred a company petition under Section 433, 434 and 439 of the Companies Act, 1956, against the corporate debtor before the Hon'ble High Court at Calcutta, which was admitted for winding up on 12.10.2012 and subsequently, vide Orders dated 21.06.2016 and 28.11.2016, the company was directed to be wound up and the Official Liquidator was directed to take over the possession of the corporate debtor company. Later, the Hon'ble High Court at Calcutta transferred the winding up proceedings to this Adjudicating Authority vide Order dated 17.05.2022, and subsequently, the applicant was appointed as the Liquidator. 5. That, on 15.01.2024, the applicant liquidator made public announcement in Form B and pursuant to the public a....
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....the compliance of Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016, and the rationality on the liquidator's fees including the additional costs and informed the applicant that the present issue is to be discussed with their higher/ competent authorities and also legal clearance for seeking guidance/ approval for the payment of the liquidation fees will be obtained. 9. Per contra, Ms. Muskan Saha, Ld. Counsel appearing on behalf of the Respondent No. 1 bank states that the entire sale process was conducted by the respondent banks only and the liquidator had no role to play, hence, the liquidator does not deserve fees. In support, she draw our attention to Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, which stipulates that the liquidator shall be entitled to a fee as a percentage of the amount realised net of other liquidation costs, and of the amount distributed, for the balance period of liquidation, as specified in the chart provided in the Regulation and she also take us to the Clarification of Regulation 4(2)(b) which clarifies that where a liquidator realises any amount, but does not distribute the same, he shall be entitled to....
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....t, distributed on Admitted Claim %: 4 Advertisement Expenses throughout the period of Liquidation Statutory Public Announcements etc 50,000 13,106 36,894 5 Expenses relating to Sale of Assets e.g., E-Auction etc. 40,000 10,485 29,515 6 Expenses relating to E-Voting etc. 40,000 10,485 29,515 7 Professional fees of Legal Advisors, Registered Valuer & Receipt & Payment Auditor (reassessed due on unexpected litigations not considered previously) 15,00,000 3,93,181 11,06,819 8 Professional fees and out of pocket expenses paid to the professionals 60,000 15,727 44,273 9 Fund to meet contingency 4,25,180 1,11,448 3,13,732 Sub-Total (B): 21,15,180 5,54,432 15,60,748 Total Estimated Liquidation Cost (A+B): 2,41,01,225 2,14,71,839 26,29,386 13. Further, at page 126 of the application, a chart on determination of Liquidator's fees depicts the following: Maheshwary Ispat Ltd. - In Liquidation 8^th SCC meeting on 25.10.2024 at 03:00 PM at AH-276, Salt Lake City, Sector-11, Kolkata 700091, through VC Note 1: Determinatio....
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....iquidation Cost of INR 215 Lacs INR 5295 Lacs - However Liquidator's Fees considered on Distribution of INR 5290 Lacs on conservative basis 14. It is evident therefrom that for sale of Panagarh Unit, the Liquidator has charged Rs. 1,95,32,587/-, whereas it is alleged that the entire sale has been conducted by the Banks only and thus, in realisation and distribution, the Liquidator had no role to play. 15. It is evident therefrom that the banks have already paid its contribution towards liquidation costs barring sale of Panagarh Unit. 16. At this juncture, it will be apt to reproduce Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, that envisages provisions of apportionment of fees on account of realisation and distribution. Regulation 4(2)(b) reads as under: "Liquidator's fee. xxx xxx xxx (2) In cases other than those covered under sub-regulation (1) [and (1A)], the liquidator shall be entitled to a fee- xxx xxx xxx (b) as a percentage of the amount realised net of other liquidation costs, and of the amount distributed, for the balance period of liquidation, as under: xxx xxx xxx Clarificatio....
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....chanism). Further, Regulation 21A (3) of Liquidation Process Regulations, 2016, provides that where a Secured Creditor fails to comply with Sub-Regulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate. (Emphasis supplied) At paras 32 and 33 of Shikshak Sahakari Bank Ltd. (supra), the Hon'ble NCLAT has been pleased to record that: "32. The Adjudicating Authority vide its Order dated 15.09.2023 had specifically directed the Appellant to pay the dues of the Liquidator, which is justified as per Regulation 21-A. 33. The Appellant has tried to place reliance upon the clarification issued by IBBI as noted at page 109 of appeal paper book in the form FAQ. "Question 9. Suppose the Liquidator did not sell any assets of the corporate debtor but has merely distributed the assets (including cash or bank balance) available with the corporate debtor. Is the Liquidator still eligible for fee based on the amount realised as well as the amount distributed separately as per the table provided under regulation 4(2)(b) of the Liquidation Regulations? Answer. Since there was no realisation of assets by th....
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....espondent / Liquidator is taking care of the realisation of the assets through the Secured Financial Creditor and, for that reason, he has to coordinate for all the activities and it is his overall responsibility to take care of the realisation. In such a situation, as argued by the Appellant, the clarification provided under Sub-Regulation 2(b) may not be helpful for the Appellant." 20. In the present case it is submitted that the entire action to sell the Panagarh Unit was conducted solely by the Respondent Banks sans any involvement of the liquidator. Further, that the realisation and distribution of the sale Panagarh Unit has also been done by the Respondent Banks only, hence, the Liquidator had no role to play in this sale process. Hence, in terms of Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, the amount apportioned by the Liquidator as his fees towards sale of Panagarh Unit will not be payable. As such, the ratio held in Shikshak Sahakari Bank Ltd. (supra) may not apply to the present facts. 21. Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 reads as under: Presumption of security interest. - (1) A secured credito....
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....ollowing: "6. [...] In so far as the payment of Liquidator's Fee in paragraph 13 as noted above, Adjudicating Authority has disposed of the application with the direction to make payment of Liquidator's Fee and ensure compliance of Regulations 2(ea), 2A, 21A, 37 of the Liquidation Regulations and Section 52/53 of the Code. The order passed by the Adjudicating Authority does not warrant any interference. What was directed was as per Liquidation Regulation 21A as extracted in Paragraph 10 of the Judgment from which it is clear, even if the secured creditor proceeds to realise its security interest it is liable to pay fee as contemplated under Regulation 21A(2)(a). The Adjudicating Authority has only directed the Applicant to follow the regulations as noted in paragraph 13." (Emphasis supplied) 23. In Small Industries Development Bank of India (SIDBI) v. Shri Vijender Sharma in Company Appeal (AT) (Insolvency) No. 1027 of 2021, reported in (2022) ibclaw.in 879 NCLAT, the Hon'ble NCLAT has held that: " 21. It thus becomes quite clear that compliance of regulations 2(ea), 2-A, 21-A and 37 of the Liquidation Process Regulations and Section 52/53 of the....
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....et undertaking to pay the entire amount demanded by the Liquidator. 28. Be that as it may, we find from the records that the liquidator has diligently and in good faith observed the procedure and ensured compliance of the provisions of the Code as well as protected interest of all the stakeholders, and the Banks have in their Joint Lenders Meeting held on 21.11.2024 have recorded the following: "7. Shri Ajit Kumar Jha informed that Liquidation fees calculated consists of amount realized from Realization proceeds and Distribution proceeds. The amount calculated towards realization may be shared, however the amount calculated for Distribution proceeds may be taken up for consideration and/ or concession with Liquidator. SBI officials stated that since the sale under SARFAESI has been jointly done by both the Banks without any direct involvement of the Liquidator, in their view Liquidator is not entitled for any fee. However, nominal fee may be considered as the assets were under possession of the Liquidator for some time and costs incurred by him during that period (Security expenses etc.) may also be considered for payment, subject to production of documentary evidences ....