2020 (11) TMI 586 - AT - Insolvency and Bankruptcy

Remuneration of Liquidator - Applicability of Regulation 4(2) and (3) of the Liquidation Process Regulations, 2016 or Regulation 39D? - HELD THAT - The Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh was of the view that Regulation 39D provides for fixation of the fees separately by the Committee of Creditors for the three periods given in Section 39D and the fees in the instant case was not governed by Section 39D as the order of liquidation came to be passed under Section 33(1) (a) of the I B Code . Be that as it may, the order of liquidation has been passed and the Corporate Debtor is undergoing liquidation process. It is immaterial which provision of the I B Code squarely governs the passage of order of liquidation. The fact remains that the Committee of Creditors has taken a decision in regard to the liquidation costs, expenses and the remuneration payable to the liquidator which in the light of the recommendation of the Committee of Creditors with the requisite percentage brings it within the ambit of Regulation 39D. Therefore, it is not permissible to take resort to any other provision which would be attracted only if the action of the Committee of Creditors would fall beyond the purview of Regulation 39D. The remuneration of liquidator falling within the realm of the Committee of Creditors in terms of Regulation 39D, we find that the impugned order cannot be sustained. The impugned order is accordingly set aside to the limited extent of remuneration of the liquidator and it is directed that the liquidator s remuneration will be governed in accordance with the recommendation of the Committee of Creditors - Appeal disposed off.

Summary

Issues:
Remuneration of liquidator under Regulation 4(2) and (3) of Liquidation Process Regulations, 2016 instead of Regulation 39D.

Analysis:
The Appellant, a liquidator in a company undergoing liquidation, challenged the order directing the remuneration of the liquidator to be payable as per Regulation 4(2) and (3) of the Liquidation Process Regulations, 2016, instead of under Regulation 39D. The Committee of Creditors had approved the remuneration of the Appellant at a fixed monthly amount or proportion to the value of the liquidation estate assets. The Adjudicating Authority held that the fees in this case were not governed by Section 39D as the order of liquidation was passed under a different section of the Insolvency and Bankruptcy Code. However, the Tribunal emphasized that the Committee of Creditors' decision on liquidation costs and remuneration, in line with the recommendation and percentage specified, falls within the ambit of Regulation 39D. Therefore, the impugned order was set aside, and it was directed that the liquidator's remuneration would be governed by the Committee of Creditors' recommendation.

This judgment clarifies the distinction between the provisions of the Insolvency and Bankruptcy Code governing liquidation orders and the authority of the Committee of Creditors in determining the remuneration of the liquidator. It highlights that the Committee's decision on liquidation costs and remuneration, as long as it aligns with the specified regulations and recommendations, should be upheld. The Tribunal emphasized that the remuneration of the liquidator falls within the purview of the Committee of Creditors under Regulation 39D, and any other provision would only apply if the Committee's action exceeded the scope of Regulation 39D. Ultimately, the Tribunal set aside the impugned order and directed that the liquidator's remuneration be in accordance with the Committee of Creditors' decision, providing clarity on the applicable regulations in determining the liquidator's remuneration during the liquidation process.