9911796707
TMI Blog2025 (3) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 2" praying for a direction upon the Respondents to make a payment of Rs. 1,87,76,133/- jointly towards the additional Liquidation Cost including the Liquidator's Fees in adherence to the provisions of Regulation 21A read with Regulation 2(ea) and 4(2)(b) of the IBBI (Liquidation Process) regulations, 2016. BRIEF BACKGROUND 4. Tata Capital Ltd. (erstwhile Tata Capital Financial Services Ltd.) preferred a company petition under Section 433, 434 and 439 of the Companies Act, 1956, against the corporate debtor before the Hon'ble High Court at Calcutta, which was admitted for winding up on 12.10.2012 and subsequently, vide Orders dated 21.06.2016 and 28.11.2016, the company was directed to be wound up and the Official Liquidator was directed to take over the possession of the corporate debtor company. Later, the Hon'ble High Court at Calcutta transferred the winding up proceedings to this Adjudicating Authority vide Order dated 17.05.2022, and subsequently, the applicant was appointed as the Liquidator. 5. That, on 15.01.2024, the applicant liquidator made public announcement in Form B and pursuant to the public announcement, the respondents submitted their clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Process) Regulations, 2016, and the rationality on the liquidator's fees including the additional costs and informed the applicant that the present issue is to be discussed with their higher/ competent authorities and also legal clearance for seeking guidance/ approval for the payment of the liquidation fees will be obtained. 9. Per contra, Ms. Muskan Saha, Ld. Counsel appearing on behalf of the Respondent No. 1 bank states that the entire sale process was conducted by the respondent banks only and the liquidator had no role to play, hence, the liquidator does not deserve fees. In support, she draw our attention to Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, which stipulates that the liquidator shall be entitled to a fee as a percentage of the amount realised net of other liquidation costs, and of the amount distributed, for the balance period of liquidation, as specified in the chart provided in the Regulation and she also take us to the Clarification of Regulation 4(2)(b) which clarifies that where a liquidator realises any amount, but does not distribute the same, he shall be entitled to a fee corresponding to the amount realised by him, and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nouncements etc 50,000 13,106 36,894 5 Expenses relating to Sale of Assets e.g., E-Auction etc. 40,000 10,485 29,515 6 Expenses relating to E-Voting etc. 40,000 10,485 29,515 7 Professional fees of Legal Advisors, Registered Valuer & Receipt & Payment Auditor (reassessed due on unexpected litigations not considered previously) 15,00,000 3,93,181 11,06,819 8 Professional fees and out of pocket expenses paid to the professionals 60,000 15,727 44,273 9 Fund to meet contingency 4,25,180 1,11,448 3,13,732 Sub-Total (B): 21,15,180 5,54,432 15,60,748 Total Estimated Liquidation Cost (A+B): 2,41,01,225 2,14,71,839 26,29,386 13. Further, at page 126 of the application, a chart on determination of Liquidator's fees depicts the following: Maheshwary Ispat Ltd. - In Liquidation 8th SCC meeting on 25.10.2024 at 03:00 PM at AH-276, Salt Lake City, Sector-11, Kolkata 700091, through VC Note 1: Determination of Liquidator's Fees on Sale of Office Premises at City Centre 1, Kolkata which has been sold at INR 130 Lacs (Basis of determination of Liquidator's Fees was decided and approved in SCC during the 1st SCC meeting held on 07.03.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on towards liquidation costs barring sale of Panagarh Unit. 16. At this juncture, it will be apt to reproduce Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, that envisages provisions of apportionment of fees on account of realisation and distribution. Regulation 4(2)(b) reads as under: "Liquidator's fee. xxx xxx xxx (2) In cases other than those covered under sub-regulation (1) [and (1A)], the liquidator shall be entitled to a fee- xxx xxx xxx (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: xxx xxx xxx Clarification: For the purposes of clause (b), it is hereby clarified that where a liquidator realises any amount, but does not distribute the same, he shall be entitled to a fee corresponding to the amount realised by him. Where a liquidator distributes any amount, which is not realised by him, he shall be entitled to a fee corresponding to the amount distributed by him. " A bare perusal thereof explicates that a liquidator is entitled to fees towards realisation and distribution only when he has "realised" or "distributed" any amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-A. 33. The Appellant has tried to place reliance upon the clarification issued by IBBI as noted at page 109 of appeal paper book in the form FAQ. "Question 9. Suppose the Liquidator did not sell any assets of the corporate debtor but has merely distributed the assets (including cash or bank balance) available with the corporate debtor. Is the Liquidator still eligible for fee based on the amount realised as well as the amount distributed separately as per the table provided under regulation 4(2)(b) of the Liquidation Regulations? Answer. Since there was no realisation of assets by the Liquidator, he / she is not eligible for the fee based on the amount realised, i.e., first part of the table provided under regulation 4(2)(b) of the Liquidation Regulations. However, since the Liquidator has made distribution to the stakeholders, he/she is eligible for the fee based on the distribution as per second part of the said table." The Hon'ble NCLAT has thereafter observed that: "This clarification may not be applicable in this case as this refers to a situation wherein the Liquidator did not sell assets of the Corporate Debtor but has merely distributed the assets. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit has also been done by the Respondent Banks only, hence, the Liquidator had no role to play in this sale process. Hence, in terms of Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, the amount apportioned by the Liquidator as his fees towards sale of Panagarh Unit will not be payable. As such, the ratio held in Shikshak Sahakari Bank Ltd. (supra) may not apply to the present facts. 21. Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 reads as under: Presumption of security interest. - (1) A secured creditor shall inform the liquidator of its decision to relinquish its security interest to the liquidation estate or realise its security interest, as the case may be, in Form C or Form D of Schedule II: Provided that, where a secured creditor does not intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall be presumed to be part of the liquidation estate. [(2) Where a secured creditor proceeds to realise its security interest, it shall pay - (a) as much towards the amount payable under clause (a) and sub-clause (i) of clause (b) of sub-section (1) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority has only directed the Applicant to follow the regulations as noted in paragraph 13." (Emphasis supplied) 23. In Small Industries Development Bank of India (SIDBI) v. Shri Vijender Sharma in Company Appeal (AT) (Insolvency) No. 1027 of 2021, reported in (2022) ibclaw.in 879 NCLAT, the Hon'ble NCLAT has held that: " 21. 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." (Emphasis supplied) 24. Thus, in view of the judgments supra and upon perusal of Regulation 21A, we would infer that in terms of Regulation 21A(2)(a) of the IBBI (Liquidation Process) Regulations, 2016, where a secured creditor proceeds to realise its security interest, it shall pay as much towards the amount payable under Section 53(1)(a) -for CIRP and Liquidation Costs and under Section 53(1)(b)(i) - for workmen's dues, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date. The provision of fees as Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. SBI officials stated that since the sale under SARFAESI has been jointly done by both the Banks without any direct involvement of the Liquidator, in their view Liquidator is not entitled for any fee. However, nominal fee may be considered as the assets were under possession of the Liquidator for some time and costs incurred by him during that period (Security expenses etc.) may also be considered for payment, subject to production of documentary evidences for such expenses/ claims. "8. Also, Shri Ajit Kumar Jha informed that as per Section 53 of the IBC, which outlines the order of priority for distributing the proceeds from the sale of liquidation assets wherein the insolvency resolution process costs and the liquidation costs paid in full ranks first." 29. It is discernible that the possession of Panagarh factory was handed over by the Liquidator to the Respondent Banks on 30.04.2024, and on 24.10.2024, Indian Bank informed the Applicant Liquidator that the said Panagarh factory had been sold to the H1 bidder M/s. Manbhum Ispat Pvt. Ltd. for a sale consideration amount of Rs. 55.10 Crore and consequently, the Sale Certificate and possession was handed over to M/s. Manbhum I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
