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TMI Blog2022 (10) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2018-19 and 2019-20 have been initiated after the order for liquidation. The Assessment Order of A.Y. 2018-19 year dated 13.05.2021 and notice under Section 274 read with Section 271 AAC(1) of the Income Tax Act, 1961 dated 13.05.2021 for A.Y. 2018-19 and the show cause notice under Section 274 read with Section 270A of Income Tax Act, 1961 dated 29.09.2021 for A.Y. 2019-20 and notice under Section 274 read with Section 271 AAC(1) of the Income Tax Act, 1961 dated 29.09.2021 for A.Y. 2019-20 have been initiated in the teeth of provisions of Section 33(5) of IBC and hence is violative of the Code - Application allowed. Claim for fee for the tenure he served as Liquidator - direction to Liquidator/respondent to accept the claim of the applicant for the services provided by him as Liquidator for the period 08.08.2018 to 31.10.2019 - direction to present Liquidator not to claim any fee pursuant to the sale of Corporate Debtor s assets before proper adjudication - HELD THAT:- No case has been made out by the Ex-Liquidator in the present case regarding any realization or distribution beyond the sale of one asset i.e. Toyota Car, and released an amount of Rs.2,60,000/-. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he corporate debtor from the systems handed over to him after taking charge of the corporate debtor. Application allowed. - IA No. 317/2021, 535/2021, 893/2020, 18/2021 and 574/2021 in CP (IB) No.67/Chd/Pb/2017 ( Admitted ) - - - Dated:- 28-9-2022 - Allahabad Bank Versus M/s Supreme Tex Mart Limited Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited Versus Deputy Commissioner of Income Tax, Punjab Bhupesh Gupta, Erstwhile Liquidator of M/s Supreme Tex Mart Limited Versus Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited Aditya Goel, Proprietor of M/s Aditya Goel Associates Versus Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited, Bhupesh Gupta, Ex-Liquidator State Bank of India Versus Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited, Bhupesh Gupta, Ex-Liquidator HON BLE MR. HARNAM SINGH THAKUR, MEMBER (JUDICIAL) And HON BLE MR. SUBRATA KUMAR DASH, MEMBER (TECHNICAL) For the Applicant/Liquidator in IA Nos.535/2021 317/2021 : 1. Mr. Atul V Sood, Advocate Mr. Nahush Jain, Advocate For the respondent in IA No.535/2021 317/2021 : 1. Mr. Rajesh Katoch, Senior Advocate For the applicant/E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.Y. 2018-19. The respondent passed an assessment order dated 13.05.2021 for the Assessment Year 2018-19 by adding an income of Rs. 33,24,40,712/- of the corporate debtor. In pursuant to said order, the respondent has also issued show cause notices dated 13.05.2021 under Section 274 read with Section 270A of the Income Tax, 1961. Subsequently, for Assessment Year 2019-20, notice under Section 274 read with Section 271AAC(1) of Income Tax Act, 1961 dated 29.09.2021 was also issued 6. It is stated by the applicant that the aforesaid demands and initiation of penalty proceedings by the Respondent-Income Tax Department is violative of the Code. The respondent cannot initiate any proceedings without the approval of this Bench after passing of the liquidation order. Section 33(5) of the Code expressly prohibits the institution of any legal proceedings against the Corporate Debtor on the passing of the liquidation order. It is further stated that the respondent has no right under the Code to initiate fresh assessment/demand/recovery proceedings against the corporate debtor and cannot claim any amount outside the waterfall mechanism as prescribed under Section 53 of the Code. 7. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor company is undergoing Liquidation under the provisions of Insolvency and Bankruptcy code, 2016 and therefore the law propounded by the Hon ble Allahabad High Court is not applicable to the present Corporate Debtor. The said interpretation of Section 446 of the Companies Act, 1956, by the Hon ble Allahabad High Court was made in terms of Section 178 of the Income Tax Act, 1961, as existed at that time. However, Section 178 of the Income Tax Act, 1961, was amended pursuant to the enactment of the Insolvency Bankruptcy Code, 2016. Moreover, Section 238 of IBC, 2016 provides for an overriding effect of the Code over all existing laws and the aforesaid amendment in Section 178(6) of the Income Tax Act, 1961, was carried out to give effect to the overriding nature of IBC Code 2016 over other prevailing laws, especially the Income Tax Act, 1961, pertaining to the Companies undergoing Liquidation. 10. We have heard the learned counsel for the liquidator and the respondent and perused the records carefully. 11. In the present case at hand, the Corporate Debtor was ordered to be liquidated by order dated 08.08.2018 and the Income Tax Department passed the assessment order on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 1961. In the context of liquidation of an assessee company under the provisions of the Code, the Income- tax Department, not being a secured creditor, must necessarily take recourse to distribution of the liquidation assets as per Section 53 of the Code. Section 53(1) provides the order of priority for such distribution and any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State in respect of the whole or any part of the period of two years preceding the liquidation commencement date comes fifth in the order of priority under clause (e) thereof. Significantly, Article 266 of the Constitution provides that all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and meals advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled the Consolidated Fund of India , and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 by Mr. Bhupesh Gupta, Ex-Liquidator, Supreme Tex Mart Ltd. (herein referred as Applicant ), against Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited (herein referred as Respondent ). 16. The applicant has prayed to lay down a criterion based on which applicant may claim his fee for the tenure he served as Liquidator; and or (b) pass an order directing the Liquidator/respondent to accept the claim of the applicant for the services provided by him as Liquidator for the period 08.08.2018 to 31.10.2019. (c) direct the present Liquidator not to claim any fee pursuant to the sale of Corporate Debtor s assets before proper adjudication and ascertainment of the claim of the applicant towards his fee for the tenure he served as Liquidator. 17. The brief facts of the case as stated in the application, are that the applicant was relieved as a Liquidator, and Mr. Ravinder Kumar Goel-respondent has been appointed as Liquidator by order dated 01.11.2019. The applicant has provided professional services as a liquidator for 1 year and 84 days i.e. from 08.08.2018 to 31.10.2019. The IBBI has issued show cause notice to the applicant, which was disposed of by order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, factually during the tenure of the applicant, only one asset being a Toyota Car was sold and an amount of Rs.2.60 Lakhs was released from the same and the applicant is entitled to be paid as per the amount released from the assets of the corporate debtor during his period of acting as liquidator. It is further added that the answering respondent-liquidator sent an email dated 19.11.2020 requesting the applicant to deposit an amount of Rs.31.09 Lakhs in pursuance of IBBI order dated 21.04.2020, and the same has not been deposited till date. It is stated that the liquidator has withdrawn the aforesaid amount out of the liquidation estates without any authorisation or without approval from the CoC. No sale of any fixed assets by the erstwhile liquidator was made except the sale of one Toyota Car, as mentioned above. 21. The applicant has filed its rejoinder by diary No.01810/2 dated 11.02.2022. wherein it is submitted that the fees of the applicant/erstwhile liquidators could not be ascertained as per the table of the fees under Regulation 4 of the Liquidation Regulation. At the time of the passing of the liquidation order dated 08.08.2018, the corporate debtor was direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, 2016 clearly states that in cases where the liquidation fees has not been decided by the CoC, then the liquidator is entitled to a fee as per the table provided in the abovementioned provision. Despite such clear and unambiguous position of the law, the IP continued to charge the same fees during liquidation process which he was charging while acting as an RP. 24. As the matter at hand pertains to a period prior to the amendment introduced vide Notification No. IBBI/2019-20/GN/REG047 dated 25.07.2019 (w.e.f. 25.07.2019) to Regulation 2 and 4 of IBBI (Liquidation Process) Regulation, 2016. The relevant Section 5(16) and Regulations existing at the relevant time and applicable to this case are extracted hereunder: The liquidation Cost is defined under Section 5 (16) is as follows:- (16) liquidation cost means any cost incurred by the liquidator during the period of liquidation subject to such regulations, as may be specified by the Board. In pursuance of the aforesaid provision, the relevant Regulation 2 (1) of IBBI (Liquidation Process) Regulation, 2016 (Prior to amendment) is as follows:- Regulation 2 sub-regulation (1) (ea) defines liquidation cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 0.51 On further sum realized 0.25 0.19 0.13 0.10 Amount Distributed to stakeholders On the first 1 crore 2.50 1.88 1.25 0.94 On the next 9 crore 1.88 1.40 0.94 0.71 On the next 40 crore 1.25 0.94 0.63 0.47 On the next 50 crore 0.63 0.48 0.34 0.25 On further sum realized 0.13 0.10 0.06 0.05 (4) The liquidator shall be entitled to receive half of the fee payable on realization under sub-regulation (3) only after such realized amount is distributed 25. In this regard, we have placed reliance on the decision of Hon ble NCLAT in the case of Mr. Dhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rayer of the applicant is rejected and the present application is dismissed and disposed of accordingly. IA No. 18 / 2021 The present application was filed under Section 60(5) of the IBC, 2016 by Aditya Goel, Proprietor of M/s Aditya Goel Associates (herein referred as Applicant ) against Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited (herein referred as Respondent No.1 ); and Mr. Bhupesh Gupta, Ex-Liquidator of M/s Supreme Tex Mart Limited (herein referred as Respondent No.2 ). 29. The applicant has prayed for directing the Ex-Liquidator to release the payment amounting to Rs.7,02,776/- which is related to the professional services provided by the present applicant to the Corporate Debtor during the Liquidation period. 30. The brief facts of the case, as stated in the application, are that the erstwhile Liquidator has appointed the applicant on a retainership basis for professional services rendered by him. The staff of the applicant has been performing all the work as assigned by the liquidator from time to time through e-mails which are attached as Annexure A-2 of the application. The applicant already raised several invoices amounting to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount will be paid after completion of the pending work, but since the applicant did not complete that work, at last, the liquidator had to appoint another professional to complete that very work, hence the applicant is not entitled to claim any amount now. 32. We have heard the learned counsel for the applicant and respondent and pursued the record carefully. 33. In the present application, the applicant has prayed to release the payment of Rs. 7,02,776/- in lieu of professional services provided by them to the corporate debtor during the liquidation period. It is seen that there was no written contract between the applicant and the corporate debtor with regard to providing the services to the corporate debtor. The erstwhile Liquidator has appointed the applicant for his professional services and the present Liquidator has not assigned any new work to the applicant after taking over the charge of the corporate debtor. It is seen from the e-mail communications (attached as Page No. 39-42 of the application) that the present Liquidator asked the applicant to handover the complete records required for the effective operation of the corporate debtor by e-mail dated 05.12.2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails and the present application is dismissed and disposed of accordingly. IA No.574/2021 The present application is filed under Section 60(5) of the IBC, 2016 and read with Rule 11 of the NCLT Rules by the State Bank of India (herein referred as Applicant ), against Ravinder Kumar Goel, Liquidator of M/s Supreme Tex Mart Limited (herein referred as Respondent No.1 ) and Bhupesh Gupta, Ex-Liquidator of Supreme Tex Mart Limited (herein referred as Respondent No.2 ). 37. The applicant has prayed that appropriate directions may kindly be issued to respondents to appoint a competent person to get the CIRP costs audit conducted of the corporate debtor for the period 29.09.2017 to 31.10.2019. It is further prayed that appropriate directions may kindly be issued to respondents to place on record the CIRP costs which have been duly rectified by the CoC along with relevant evidence in this regard. 38. The brief facts as stated in the application are that the liquidation order of the corporate debtor was passed on 08.08.2018 and this Adjudicating Authority appointed Mr Bhupesh Kumar Gupta as the liquidator who was later replaced by Mr Ravinder Kumar Goel w.e.f. 01.11.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation was conducted by the new liquidator and it is noted that the fair market value of the plant and machinery had also reduced from Rs.56.41 Crores to Rs.17.46 Crores in one year. As per Section 53 of IBC read with Regulation 42 of IBBI (Liquidation Regulations) 2016, the CIRP cost will be paid first and it is not possible to distribute the sale proceeds released from the sale of the liquidation estate of the corporate debtor. It is stated that because of various acts of omission committed by the erstwhile liquidator during his tenure as Resolution Professional and liquidator i.e. from 29.09.2017 to 31.10.2019, the CIRP cost is hugely inflated and an audit of CIRP cost is needed to be conducted. 40. The respondent No.1 i.e. present liquidator has filed the reply vide diary No.01361/2 dated 25.02.2022, wherein, the respondent has supported the facts narrated by the applicant. It has also been stated that the erstwhile liquidator has provided a list of creditors who supplied goods during liquidation amounting to Rs.14,10,11,331/- and the total amount payable of Rs.22,59,82,411/- as CIRP cost in addition to the unpaid electricity expense amounting to Rs.2.50 crores (approx) T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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