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TMI Blog2022 (8) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor, this Tribunal directs the Appellant to handover the books of accounts to the Respondents, within a period of one week from the date of receipt of copy of this judgment, if not already handed over. This Tribunal comes to a resultant conclusion that the Appellant has not made out any case either on law or on facts. Further, this Tribunal holds that the Appeal is frivolous and vexatious and the same is dismissed. - TA No. 89 of 2021 (Company Appeal (AT)(Ins) No. 791 of 2020) - - - Dated:- 2-8-2022 - [ Justice M. Venugopal ] Member ( Judicial ) And [ Kanthi Narahari ] Member ( Technical ) For the Appellant : Mr. Nitesh Jain and Mr. Dhiren S Shah, Advocates For the Respondent : Mr. Sumant Batra, Sr. Advocate for R-1 and R2 JUDGMENT ( Virtual Mode ) KANTHI NARAHARI , MEMBER ( TECHNICAL ) Preamble: The Present Appeal is filed against the Impugned Order dated 20.07.2020 passed by the Adjudicating Authority (National Company Law Tribunal, Chennai Bench, Chennai) in I.A. No.399/2020 in MA/1140/2019 in CA/1026/2019 whereby the Adjudicating Authority disposed of all the Applications. Brief Facts: Appellant s Submissions: 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved the scheme. The Appellant filed its report before the Adjudicating Authority to consider and pass appropriate orders and directions. 7. On 05.05.2020 the Hon ble Adjudicating Authority disposed of the application being No. MA 1140/2020 and passed the order and one of the directions is the fees of the liquidator to the extent of Rs.91,69,769/-. However, in relation to liquidation cost other than fees, the same is required to be defrayed by scheme proponents based on actual expenses incurred by the Liquidator and upon the liquidator furnishing sufficient proof along with vouchers. The Appellant sent e-mails dated 20.05.2020 and 27.05.2020 to the Respondents to adhere to order dated 05.05.2020 with respect to the payments of liquidation cost including the liquidator s fees within 30 days from the date of the order dated 05.05.2020. The Appellant also submitted the documents before the statutory auditors for certification and verification. 8. The Appellant filed above I.A. No. 399/2020 in M.A. No. 1140/2019 in CA No. 1026/2019 under Section 60(5) of the Code seeking payment of the liquidation cost including liquidator s fees from the Respondents. The Learned Adjudicating A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt/Liquidator filed his report dated 24.01.2020 before the Authority. 14. While so, the Appellant filed MA 1140/2019 in CA 1026/2019 before the Learned Adjudicating Authority inter alia seeking determination of the fees payable to the Appellant. While sanctioning the scheme, the Adjudicating Authority vide its order dated 05.05.2020 disposed of the said MA 1140/2019, made specific observation at para 10, 34 and 35 of the order. 15. The Appellant filed IA. 399/2020 before the Adjudicating Authority seeking payment of the fees with immediate effect. The Learned Adjudicating Authority vide its order dated 20.07.2020 (impugned order) disposed of the Application and held that in respect of the fees payable to the Liquidator, as already dealt with vide order dated 05.05.2020, the fees will become payable only upon the occurrence of the events of respective receipts and disbursal at the specified percentage payable and not otherwise and in the circumstances we direct the Liquidator to desist from claiming the amounts towards the Liquidator fees as immediately payable . 16. It is submitted that while approving the scheme vide its order dated 10.01.2020 the Hon ble Adjudicating Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved the scheme of the Respondents vide order dated 10.01.2020. The Learned NCLT specifically recorded in the order dated 05.05.2020 passed in MA 1140/2019 that the liquidation process have been revoked and the scheme was directed to be implemented. Therefore, the appeal is misconceived and the Appellant being officer of Court neither has any vested right nor any locus standi to challenge the scheme filed by himself before the NCLT and the Learned NCLT approved the scheme as approved by a majority of 98% of creditors. 20. The Appellant illegally and unauthorisedly, due to reasons best known to him delayed in handing over of the Corporate Debtor to these Respondents on one pretext or other for 10 months. After much delay a partial handover was done by the Appellant to these Respondents wherein only dredgers of the Corporate Debtor were handed over by the Appellant. Because of the delay in handing over, the Respondents incurred an expense of Rs.2 crores in repairing the dredgers. The Appellant has been in-charge of managing the Affairs of Corporate Debtor since the very initiation of CIRP of the Corporate Debtor and thus all the contemporaneous records of the Corporate Debtor as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 seeking leave of the Learned NCLT to convene a meeting of creditors and shareholders for consideration of the scheme proposed by the Respondents. The scheme was duly presented by the Appellant himself and the NCLT vide its order dated 10.01.2020 approved the said scheme. As per Clause 4.5 of the Scheme, it was provided that the liquidator s fee will be decided and approved by the IBBI. In order to get more clarity with respect to his fees again preferred an application being MA No. 1140/2019 seeking fixation or approval of the fee of the liquidator. The said MA No.1140/2019 allowed vide order dated 05.05.2020 and fixed the fees payable to the Appellant and the Learned NCLT relied on the calculations submitted by the Appellant on the basis of the estimated fees payable if the said distribution was happening under Section 53 of the Code. However, the Learned Adjudicating Authority vide impugned order dated 20.07.2020 reaffirmed its directions passed vide orders dated 10.01.2020 and 05.05.2020, hence the present appeal is barred by the principles of estoppel. 25. It is submitted that the CIRP cost was duly paid by the Respondents as per the directions of the Learned NCLT in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 with an observation and direction as under: Learned Counsel appearing on behalf of the Appellant submits that a sum of Rs.14 cores was due and out of which a settlement for Rs.10.38 crores has been made. Earlier, also two financial creditors paid total amount of Rs.37 crores to Asset Reconstruction Company (India) Limited and Rs. 2.5 crores to L T Finance, who have given no dues certificate. However, on completion of the resolution process we cannot allow any settlement with the Promoters and the creditors. This Tribunal however, directed the Liquidator to proceed with in terms of the decision made in Y. Shivram Prasad Vs. S. Dhanapal Ors. in CA (AT) (Ins.) No. 224/2018. 32. In view of the judgment of this Tribunal, the Respondent submitted a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013 on 01.06.2019 in the light of the judgment in the matter of Y. Shivram Prasad. The liquidator moved an Application MA No. 793/2019 before the Adjudicating Authority seeking leave to convene a meeting of the creditors and shareholders for considering scheme proposed by the Promoters. The Adjudicating Authority allowed the said I.A. on 02.08.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor. The Respondents filed scheme before the Adjudicating Authority in view of 11th Schedule to IBC, 2016 read with Section 23 of the Companies Act, 2013. The IBBI (Liquidation Process) Regulation, 2016, Regulation 2 sub-regulation (1) (ea) defines liquidation cost under Clause (16) of Section 5 means: (a) Fee payable to the liquidator under Regulation 4 (b) Remuneration payable by the liquidator under Regulation 7. (c) Cost incurred by the liquidator under sub -regulation 2 of Regulation 24 and (d) Interest on interim finance for a period of 12 months or for the period from the liquidation commencement date till repayment of interim finance, whichever is lower. liquidator s fee Sub-regulation (1) of Regulation 4 defines as under: The fee payable to the liquidator shall form part of the liquidation cost. 2. The liquidator shall be entitled to such fee and in such manner as has been decided by the committee of creditors before a liquidation order is passed under Sections 33 (1) (a) or 33 (2). 3. In all cases other than those covered under sub-regulation (2), the liquidator shall be entitled to a fee as a percentage of the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as a transaction of the sale falling within the ambit of Regulation 32 of Liquidation Process Regulation, 2016. The amended Regulation 4 of the Liquidation Process Regulation, 2016 draws a distinction in this connection in the event of a scheme proposed and as well as in his absence as repeatedly brought forth in the earlier portion no such distinction or for that matter no specific mention has been made in relation to a scheme and in relation to the fees payable to the Liquidator under the concerned Regulations pre-amended. The IBBI issued a clarification to the Regulation 4 as it was amended on and from 25.07.2019 as under: Clarification: Regulation 4 of these Regulations, as it stood before the commencement of the IBBI (Liquidation Process) Regulation, 2016 shall continue to be applicable in relation to the Liquidation Process already commenced before the coming into force of the said amendment Regulations. 43. In view of the above clarification, the Adjudicating Authority at para 31 of the order dated 05.05.2020 observed as under: 31. Thus, in view of the clarifications and also taking into consideration the scheme per se as propounded by the Scheme proponent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of the scheme as early as 10.01.2020. It is clearly held that the Appellant being the implementing agency which is required to manage the affairs of the company in liquidation and not the Liquidator. 47. The Adjudicating Authority clearly observed that the Appellants/Liquidator s fee is not payable immediately as demanded by the Liquidator and is required to be excluded from the statement as annexed along with Auditor s certificate. The Adjudicating Authority further directed the Appellant/Liquidator to make arrangement to handover the reins of the management of the Corporate Debtor including the possession of assets of the Corporate Debtor, if not already done within a period of 10 days from the date of order i.e. 20.07.2020. It is also observed that no fees shall be chargeable by the Liquidator for the same and if not handed over as above, the risk and responsibility and costs shall be to the personal account of the Liquidator without any recourse to the funds or assets available with that of the Corporate Debtor. 48. The Learned Counsel for the Respondents contend that in spite of the directions passed by the Adjudicating Authority the Appellant has not handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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