2024 (3) TMI 1234 - AT - Insolvency and Bankruptcy

Entitlement to the percentage of fee in respect of the sales effected by appellant (liquidator) - The appellant, who served as the liquidator for over a year, contends that his fee should be based on the total amount realized from asset sales during the liquidation period. The main contention revolves around the interpretation of Regulation 4 of the IBBI (Liquidation Process) Regulation, 2016, and a circular issued by the IBBI clarifying the term amount realized. - HELD THAT - There is an error in the approach of the Tribunal while rejecting the application filed by the appellant which deserves to be reconsidered in terms of the order being passed herein. The issue in the present case is that the appellant effected various sales during the period he remained the liquidator of the Corporate Debtor which has been set up by the appellant in the claim application filed before the present Liquidator in which it is shown that total amount of sale is Rs. 78,47,31,778/- and the appellant is accordingly entitled to the percentage of fee in respect of the sales effected in the first six months, next 6 months, next one year and thereafter etc. However, this aspect of the matter has not been taken into consideration either by the present Liquidator or by the Ld. Tribunal whereas it is very much clear not only from Regulation 4 (3) (unamended provision) that the amount realized is to be considered but also from Circular dated 28.09.2023 by which the term amount realized has been further clarified. The impugned order is hereby set aside whereby the application filed by the appellant has been dismissed. The matter is remanded back to the Learned Tribunal which restoring the application - Appeal allowed by way of remand.

Issues involved:
The judgment involves the dismissal of an application under Section 60 (5) (c) of the Insolvency & Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, regarding the entitlement of a Liquidator to a fee for the realization of assets of a Corporate Debtor.

Summary:
The appellant, who worked as the Liquidator of the Corporate Debtor, filed an application seeking fee payment for asset realization. The application was dismissed, leading to the current appeal. The appellant claimed entitlement to a fee based on Regulation 4 of the Regulations, emphasizing the term "amount realized." The appellant sold various assets during the liquidation period, but the application was rejected based on a narrow interpretation of the fee entitlement. The appellant argued that the Tribunal erred in not considering all sales made during the liquidation period.

Upon review, the Tribunal found an error in the previous decision, noting that the appellant's various sales during the liquidation period should be considered for fee calculation. The Tribunal referred to the unamended Regulation 4 (3) and a circular clarifying the term "amount realized." The Tribunal set aside the impugned order, remanding the matter back to the Tribunal for reconsideration. The appellant was directed to provide a breakdown of sales made during the liquidation period for proper fee calculation.

In conclusion, the appeal succeeded, and the Tribunal ordered a reevaluation of the appellant's fee entitlement based on all sales made during the liquidation period, in accordance with the relevant regulations and clarifications.

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