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TMI Blog2025 (3) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that the entire action to sell the Panagarh Unit was conducted solely by the Respondent Banks sans any involvement of the liquidator. Further, that the realisation and distribution of the sale Panagarh Unit 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. [2025 (2) TMI 270 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHI] may not apply to the present facts, where it was held that 'In brief, with respect to the Secured Financial Creditor, the situation is clearly enumerated in Regulation 21-A(2)(a), which is applicable in this case. The Liquidator's fee is also prescribed under Regulation 4. Regulations 4(1) and 4(1A) provides primacy to CoC and consultation Committee. The Respondent's claim that the Liquidator is entitled for a fee under Regulation 4(2)(b) only when he has actually realised or distributed any amount is not tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta, 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 claims in Form D and expressed their intention to not relinquish their security interest for its Panagarh factory which is held by the respondents on first charge pari-passu basis. On 14.03.2024, the applicant liquidator took the physical possession of the Panagarh factory from the Official Liquidator. ARGUMENTS ADVANCED BY THE PARTIES 6. Mr. Shaunak Mitra, Ld. Counsel appearing on behalf of the Applicant Liquidator submitted that in compliance of Regulations 37(1) of the IBBI (Liquidation Process) Regulations, 2016, the respondent banks provided their proposed rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes 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 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 only. The present liquidator having neither realised nor distributed is entitled to NIL fees. 10. We have noted the rival contentions of the Ld. Counsels for both sides and perused the materials on record. OUR REVELATIONS 11. It is evident from the Copy of the Document for Handover of Possession of Panagarh Factory to Secured lenders (Indian Bank & State Bank of India) executed on 30.04.2024, annexed at page 95 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 07.03.2024) REALIZATION of INR 130 Lacs DISTRIBUTION of INR 100 Lacs Total Amount (INR) Fee Slab Date INR Lacs % Fees (INR) Date INR Lacs % Fees (INR) Upto INR 9 Cr 29.6.24 100.00 5% 5,00,000 10.7.24 100.00 2.5% 2,50,000 X Next INR 9 CR 29.6.24 30.00 3.75% 1,12,500 130.00 6,12,500 100.00 2,50,000 8,62,500 Add: Clerk-age @5% on above (as decided during the 1st SCC meeting) 43,125 Total Liquidator Fees 9,05,625 Add: GST @18% on above 1,63,013 Total Amount pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and not otherwise. 17. The said clauses may not apply here in absence of neither any realisation nor any distribution done by the Liquidator. It appears that the entire action to sell the Panagarh Unit was conducted solely by the Respondent Banks sans any involvement of the liquidator and the realisation and distribution of the sale has also been done by the Respondent Banks only. Hence, the amount apportioned by the Liquidator as his fees towards the sale of Panagarh Unit may not be payable. 18. During the course of argument, Mr. Mitra, Ld. Counsel for the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, in the facts of the case, the Respondent / Liquidator is taking care of the realisation of the assets through the Secured Financial Creditor and, for that reason, he has to coordinate for all the activities and it is his overall responsibility to take care of the realisation. In such a situation, as argued by the Appellant, the clarification provided under Sub-Regulation 2(b) may not be helpful for the Appellant." (Emphasis supplied) In conclusion, at para 37 of judgment the Hon'ble NCLAT has laid down as under: "Conclusions and Order: 37. In brief, wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 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 section 53, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date; and (b) the excess of the realised value of the asset, which is subject to security interest, over the amount of his claims admitted, to the liquidator within one hundred and eighty days from the liquidation commencement date: Provided that where the amount payable under this sub-regulation is not certain by the date the amount is payable under this sub-regulation, the secured creditor shall pay the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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 Regulation 21A(2)(a) of the IBBI (Liquidation Process) Regulations, 2016 envisages, is a mandatory provision which makes it imperative for the secured creditor to pay towards the CIRP Costs, even if the secured creditor has proceeded to realise its security interest in accordance with law. 25. We have noted the breakup of liquidation cost as apparent from page 125 of the application that the total estimate of liquidation cost for the Respondent Banks as fixed by the Liquidator is of Rs. 2,14,71,839/- which includes the Liquidator's fees on Sale of Panagarh Unit con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 Ispat Pvt. Ltd. During the sale of Panagarh Unit, the Respondent banks sold 30.56 acres of land out of total area of 35.60 acres however, the Respondent Banks had mistakenly handed over the entire Panagarh Unit of 35.60 acres to M/s. Manbhum Ispat Pvt. Ltd. (H 1 bidder) without demarking and taking possession of the balance 5.04 acres. This Bench notes that it was the Liquidator who diligently pursued an application being I.A. (IB) No. 200/KB/2024 to seek appropriate orders and directions upon the H 1 bidder M/s. Manbhum Ispat so that the balance 5.04 acres which w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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