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TMI Blog2024 (4) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed following relevant reliefs in the present appeal :- (a) Pass an order allowing the present appeal and setting aside the Impugned Order dated 18.04.2023 passed by National Company Law Tribunal, Chandigarh Bench in IA No. 307/2021 & IA No. 1260/2022 in CP (IB) No. 201/Chd/2018; (b) Fix the remuneration of the Appellant at Rs. 4 lakh + OPE+GST monthly from 29.01.2020 up to 31.05.2022 and Rs. 2 lakh + OPE+ GST per month from 01.06.2022 till the closure of the Liquidation Process, to be distributed between Liquidator and his team from IPE in the ratio of 25:75 or such other fees as this Hon'ble Tribunal may deem appropriate; and (c) Pass any other order(s) or direction as this Hon'ble Tribunal may deem fit and proper in facts and circumstances of the present case. The facts of this case as enumerated in the order dated 18.04.2023 of the Adjudicating Authority, along with the decision are reproduced below for ready reference:- "IA No. 307/2021 & 1260/2022 1. IA No. 307/2021 & 1260/2022 are taken up together being interconnected and interlinked. 2. IA No. 307/2021 is being filed by Mr Ashok Kumar Gulla, Liquidator of Mis SRS Limited (herein referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator has sold the cinema, and the sale proceeds have been used to meet the pending Insolvency Resolution Process Cost and Liquidation Cost towards pending rent, cam, security, salaries, etc. After meeting these costs, the liquidator has also distributed Rs. 2 crores to the stakeholders. 5. It is mentioned that the applicant has been carrying on the duties of the corporate debtor as per the Code and in accordance with Regulation 4 (2)(b) of the Liquidation Process, the applicant is entitled to the fees as a percentage on the proceeds released from the sale of the corporate debtor. The applicant has made various efforts to seek a vacation of attachment from the ED. The applicant has also approached various PMLA Tribunals, Appellate Tribunals, and Punjab & Haryana High Court on several occasions, and the applicant is also addressing the queries of two thousand deposit holders and other Creditors with the help of his team. The applicant and his team have been carrying out all the activities to manage the affairs of the Corporate Debtor that, includes dealing with various stakeholders, developers, vendors, and deposit holders; attending various legal cases filed against or for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The representatives from Statutory Authority and Operational Creditor also did not offered any view in the matter and were of the view that Secured Financial Creditor decide the matter. 3. The Liquidator in response to the queries from Mr. Rakesh Verma, AGM, SBI stated that last meeting of CoC was held on 10th May 2019 (i.e. 13** meeting) wherein approval of the Resolution Plan submitted by Resolution Applicant was put up for approval through voting from 14th May 2019 to 16th May 2019 (till 8 PM) and the same was rejected. Hence, Resolution Professional had filed application under section 33 (1) of the IBC, 2016 on 17th May 2019, seeking approval for liquidation Process from Hon'ble NCLT Chandigarh, before the expiry of CIRP period which ended on 18th May 2019. No approval for fee of Liquidator as per Regulation 39 D of IBBI (Insolvency Resolution Process for Corporate Process) Regulation, 2016 was sought from members of CoC as such Regulation was introduced subsequently through amendment on 25th July 2019. The CD was admitted into liquidation vide order dated 15' October 2019 from Hon'ble NCLT, Chandigarh. 4. The Liquidator further informed in response to the obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e due to attachment by the ED, the liquidator is not getting fees to perform his services. It was submitted that in this case the liquidation of the corporate debtor commenced on 15.10.2019 and the assets of the corporate debtor were attached by the Enforcement Directorate on 08.01.2020 and that liquidator has not been paid any fees since 29.01.2020. It was submitted that liquidator had diligently persued with the relevant authorities regarding lifting of attachment and has also been carrying out various functions on behalf of the corporate debtor during the liquidation process. On 28.07.2022, the learned Adjudicating Authority had directed the liquidator to raise the issue of remuneration before the Stakeholders Consultation Committee (SCC) Members and accordingly, in the 18th, 19th, and 20th SCC Meetings the issue was raised, wherein the members of the SCC took the stand that fees shall be paid as per Regulation 4(2)(b) of the 'Liquidation Process Regulation'. It was submitted that the Adjudicating Authority had acknowledged the uncertainties of the duration of the liquidation process but had failed to direct the SCC to remunerate the liquidator for his services. It was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter to be assessed by the adjudicating authority. 3. The counsel for the liquidator submitted that Regulation 39D of IBBI (Resolution Process for Corporate Persons) Regulations, 2016 was not in existence when the application for liquidation was filed on 17.05.2019, because of which the CoC was not requested to fix the fees of the liquidator. The learned counsel for the liquidator further submitted that under Regulation 31A(1)(c) of the Liquidation Process Regulations, the SCC has power to fix the fees of Liquidator. It was requested that the Appellate Tribunal may direct the SCC Members to determine the fees on monthly basis. 4. In its oral and written submissions, the learned counsel on behalf of the respondent no.1 averred that the learned Adjudicating Authority has rightly dismissed the applications filed by the debtor after considering the views of the Stakeholders' Consultation Committee (SCC) on the issue of payment of remuneration to the liquidator that it is payable only as per Regulation 4(2)(b) of 'Liquidation Process Regulation'. It was submitted that the liquidator has been paid from the proceeds of the sale conducted so far in terms of Regulation 4(2)(b) of the 'Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent no.1 submitted that the present appeal deserves to be dismissed on the grounds of maintainability, on the ground that liquidator is not entitled to any fees beyond the fees prescribed under Regulation 4(2)(b) of the IBBI (Liquidation Process Regulation), 2016 and on the ground that no work has been done by the liquidator for release of the attached properties. On the issue of maintainability, the respondent no.1 has submitted as under:- "The appellant had preferred an application bearing IA No. 307/2022 before the Ld. Adjudicating Authority under section 60(5) of the IB Code, 2016 seeking additional payment in the form of monthly remuneration. However, it is most pertinent to mention that the issue of monthly remuneration of the liquidator does not fall within the ambit of section 60(5) of the IB Code, as section 60(5) of the IB Code clearly states that the National Company Law Tribunal shall have jurisdiction to entertain or dispose of '(a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the liquidator is not entitled to any remuneration beyond Regulation 4(2)(b) of Liquidation Process Regulation, 2016 as the fees of the liquidator is either decided by the CoC as per Regulation 39D of CIRP Regulations or in the first SCC Meeting after the liquidation is initiated as per Sub-Regulation 1(A) of Regulation 4 of Liquidation Process Regulations. However, in the present matter neither the fee of the liquidator was fixed by the CoC nor by the SCC Members in the first SCC meeting and as such fee of the liquidator is payable in terms of Regulation 4(2)(b) of the 'Liquidation Process' Regulations. 6.5 It was further submitted that as per Regulation 4(2)(b) liquidator is entitled to fees as percentage of amount realised for each sale of the property and the percentage varies with time consumed. It was further submitted that IBBI had recently issued Circular No. IBBI/LIQ/61/2023 dated 28.09.2023 wherein it has been clarified that the liquidator can seek exclusion of various time periods where stay is granted by court on a particular property or for any other action which hindered the liquidation process. It was submitted that the clarification entitles the liquidator to see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9. After the amendment, w.e.f. 25.07.2019 the said Regulation 4 reads as under:- 4. Liquidator's fee.- (1) The fee payable to the liquidator shall be in accordance with the decision taken by the committee of creditors under regulation 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (2) In cases other than those covered under sub-regulation (1), the liquidator shall be entitled to a fee - (a) at the same rate as the resolution professional was entitled to during the corporate insolvency resolution process, for the period of compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013); and (b) as a percentage of the amount realised net of other liquidation costs, and of the amount distributed, for the balance period of liquidation, as under : Amount of Realisation / Distribution (In rupees) Percentage of fee on the amount realized / distributed in the first six months in the next six months T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Liquidator shall advise him on "fees of the liquidator" as per Clause (c) of sub-regulation (1). Thus, Stakeholders Consultation Committee has been empowered to advise the liquidator regarding fees of the liquidator w.e.f 16.09.2022. In IBBI (Resolution Process for Corporate Persons) Regulations 2016, Regulation 39D was inserted by IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2022 w.e.f. 16.09.2022. The said Regulation 39D reads as under:- Fee of the liquidator: 39D. While approving a resolution plan under section 30 or deciding to liquidate the corporate debtor under section 33, the committee may, in consultation with the resolution professional, fix the fee payable to the liquidator, if an order for liquidation is passed under section 33 , for - (a) the period, if any, used for compromise or arrangement under section 230 of the Companies Act, 2013; (b) the period, if any, used for sale under clauses (e) and (f) of regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016; and (c) the balance period of liquidation. 13. In the subsequent amendments to the 'Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable in relation to the liquidation processes already commenced before the coming into force of the said amendment Regulation.] Sub-regulation (1) of Liquidation Process Regulation as it existed on the date of liquidation order, prescribed that fee payable to the liquidator shall be in accordance with the decision taken by the Committee of Creditors (CoC) under Regulation 39D of IBBI (CIRP) Regulations, 2016. Subregulation (2) on the other hand, gave entitlement to the liquidator to be paid fee as a percentage of amount realised and distributed and covered only cases where fees was not decided by the CoC. In the instant case no fee was decided by the CoC and therefore Sub-Regulation (2), as it existed then, shall be applicable. 14. From perusal of the regulations as they existed on the date of liquidation order, it appears that the fees of the liquidator was to be either the fees decided by the CoC under Regulation 39D of IBBI (CIRP) Regulations, 2016 or a percentage of fee on the amount that is realised/ distributed during the liquidation process. The Regulations, as it existed at the time on the date of the liquidation order, do not envisage payment of any fees or remu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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