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TMI Blog2022 (11) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... proximately 15 months from 30.11.2018 to 24.2.2020 while calculating the fee of the Liquidator under Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (in short 'Liquidation Process Regulations'). 3. In brief, the case of Appellant is that consequent to the passing of the Liquidation Order dated 12.10.2018 in IB No. 433/(ND)/2016 in the matter of M/s Regal Metals and Ferro Alloys versus SPM Auto Private Limited, claims were invited by the Liquidator and the Appellant submitted his claim on 20.11.2018, and thereafter on 30.11.2018 he communicated to the liquidator his intention to realize the security interest in the property viz. a parcel of land admeasuring 3933.84 sq. meters bearing Industrial Property No. 25 situated at Sector-3, Growth Centre Bawal, HSIIDC, Rewari, Haryana (in short "HSIIDC Bawal property") along with submission of Form D as required. The Appellant has further stated that after almost three months, the liquidator did a public announcement by publication in newspapers on 15.2.2019 to put the HSIIDC Bawal Property and two other properties for auction. The Appellant has stated that instead of contacting the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant to enable him to sell the property, the liquidator published an auction notice in the newspaper for auctioning of the asset on 15.2.2019 whereupon the Appellant requested the Respondent to cancel the e-auction vide his letter dated 25.2.2019 whereafter he communicated the price at which he (Appellant) wanted to dispose of the said Bawal property. He has further submitted that the liquidator first asked for an undertaking from the appellant and later filed an application before the Adjudicating Authority bearing CA No. 618 of 2019 seeking directions to the Respondent to submit an undertaking to the liquidator and also requiring the Appellant to intimate the time by which he will be able to sell the said property to enable the Respondent to bring closure to the liquidation process. He has argued that there was no reason for the liquidator to ask for an undertaking from SIDBI and clarification on this issue was given by the Adjudicating Authority vide order dated 5.8.2019, but the liquidator still did not hand over the said property to SIDBI for realization of its security interest. 8. The Learned Counsel for Appellant has argued that thus there was a delay in completing the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority an order came to be passed on 5.8.2019 that in view of the reply of the Appellant, no specific undertaking is necessary. He has stated that thereafter the liquidator sought a meeting with the Appellant to finalize certain issues to maintain transparency and governance standards in accordance with Liquidation Process Regulations, mainly regarding finding a buyer who may be willing to pay a price more than the reserve price. The Learned Counsel for Appellant has submitted that despite several reminders no such cooperation was forthcoming from the Appellant and he was again constrained to file an application bearing CA No. 135 of 2019 seeking directions with respect to the undertaking sought by him and also a commitment about the time period by which the said property would be sold by SIDBI. He has submitted that in respect of the liquidation cost and fees, for which the Appellant had to pay his share details showing the fees and costs regarding the liquidator's fee and liquidation process's costs was submitted to the Appellant on 5.3.2020 as directed by the Adjudicating Authority. 10. The Learned Counsel for Respondent has submitted that in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Adjudicating Authority has correctly excluded the period of about 15 months in deciding the correct slab for payment of liquidator's fees. 12. We note that the Appellant sent a letter dated 20.11.2018 as intimation to the liquidator of its intention to release its security interest in HSIIDC Bawal Property after passing of liquidation order and further sent a letter dated 30.11.2018 along with Form D, as is required in the Liquidation Process Regulations. In reply to this communication, the liquidator sent an e-mail dated 2077.2019 to SIDBI (attached at pp. 62-63 of the reply of the liquidator) to explain, the process for realization of security interest as laid down in the Liquidation Process Regulations and seeking an undertaking from the Appellant. In the e-mail, the liquidator stated the requirement of Regulation 37(1) of Liquidation Process Regulations whereby SIDBI had to inform to the liquidator the highest price at which it intends to realize its security interest in the said HSIIDC Bawal Property. The liquidator further informed SIDBI by this e-mail that as per regulation 37 (2) "The liquidator shall inform the secured creditor within twenty one days of receipt of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured 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 amount, as estimated by the liquidator: Provided further that any difference between the amount payable under this sub-regulation and the amount paid under the first proviso shall be made good by the secured creditor or the liquidator, as the case may be, as soon as the amount payable under this sub-regulation is certain and so informed by the liquidator. (3) Where a secured creditor fails to comply with sub-regulation (2), the asset, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator) whereby the liquidator sought directions of the Adjudicating Authority to SIDBI to respond to the e-mail of liquidator dated 27.8.2019 (attached at page 110 of the reply of liquidator) which was for the Appellant to deposit the proportionate share of SIDBI towards CIRP cost and liquidation cost of Rs.19,22,922.40 in the corporate debtor's account. It is clear that the liquidator, on facing resistance from SIDBI, had to approach the Adjudicating Authority for issuance of necessary directions to SIDBI through IA 618/2019 and CA 135/2019 to carry the process of liquidation of corporate debtor forward, as was required of him under the law and which had to be completed in the stipulated time frame. 19. On the basis of detailed discussion in the aforementioned paragraphs, it becomes abundantly clear that the Resolution Professional was following the procedure as set out in the Liquidation Process Regulations with regard to the disposal of secured assets, including the HSIIDC Bawal Property in which SIDBI has expressed its intent to realise its security interest. It also becomes clear that due to misinterpretation and lack of proper understanding of the procedure, SIDBI was unab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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