2022 (11) TMI 161 - AT - Insolvency and Bankruptcy

Exclusion of a period of approximately 15 months from 30.11.2018 to 24.2.2020 while calculating the fee of the Liquidator under Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - section 61 of the Insolvency and Bankruptcy Code - HELD THAT - The Resolution Professional was following the procedure as set out in the Liquidation Process Regulations with regard to the disposal of secured assets, including the HSIIDC Bawal Property in which SIDBI has expressed its intent to realise its security interest. It also becomes clear that due to misinterpretation and lack of proper understanding of the procedure, SIDBI was unable to follow the requirements as was being communicated to him by the liquidator and, hence the liquidator had to approach the Adjudicating Authority thrice in the course of liquidation to seek necessary directions qua the Appellant. It is also found that such difficulties being faced by the liquidator were being brought to the knowledge of the Stakeholders Consultation Committee and necessary directions for further actions were being obtained by the liquidator. 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 IBC are absolutely necessary even if the secured creditor proceeds to realise its security interest. The liquidator has carried out his responsibility with due diligence and without any prejudice to Appellant or any other stakeholder, and therefore, cannot be held responsible for delay that has taken place in pursuing the liquidation of the corporate debtor - the Adjudicating Authority has not committed any error in excluding period from 30.11.2018 to 24.2.2020 from the liquidation process for calculation of liquidator s fees slab under Regulation 4 of the Liquidation Process Regulations - Appeal dismissed.

Summary

Issues Involved:
1. Exclusion of a 15-month period in calculating the liquidator's fee.
2. Delay in the liquidation process and its attribution.
3. Compliance with Liquidation Process Regulations and IBC provisions.

Issue-wise Detailed Analysis:

1. Exclusion of a 15-month period in calculating the liquidator's fee:
The Appellant, SIDBI, contested the exclusion of a 15-month period (from 30.11.2018 to 24.2.2020) from the calculation of the liquidator's fee under Regulation 4 of the Liquidation Process Regulations. SIDBI argued that the delay in the liquidation process was due to the liquidator's actions and inactions, and hence, this period should not be excluded. The liquidator, however, maintained that the exclusion was justified due to SIDBI's non-cooperation and misinterpretation of the regulations.

2. Delay in the liquidation process and its attribution:
SIDBI claimed that the liquidator delayed the process by not handing over the possession of the HSIIDC Bawal property and by seeking unnecessary undertakings. The liquidator countered that SIDBI failed to comply with the requirements under the Liquidation Process Regulations, including providing the necessary undertaking and paying the liquidation costs. The liquidator had to approach the Adjudicating Authority multiple times to seek directions for SIDBI to comply with the regulations, which contributed to the delay.

3. Compliance with Liquidation Process Regulations and IBC provisions:
The liquidator followed the procedures outlined in the Liquidation Process Regulations, including seeking an undertaking from SIDBI and informing them of the need to pay liquidation costs. SIDBI's failure to understand and comply with these regulations led to delays. The Appellate Tribunal noted that the liquidator acted diligently and in accordance with the law, and SIDBI's non-compliance was a significant factor in the delay.

Conclusion:
The Appellate Tribunal found that the liquidator had acted diligently and in accordance with the Liquidation Process Regulations and IBC provisions. The delay was attributed to SIDBI's non-cooperation and misinterpretation of the regulations. Therefore, the exclusion of the 15-month period from the calculation of the liquidator's fee was justified. The appeal was dismissed, and the Adjudicating Authority's order was upheld. There was no order as to costs.