TMI Blog2024 (4) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the liquidation order, do not envisage payment of any fees or remuneration to the liquidator on a monthly basis, if such fee is not fixed by the CoC under Regulation 39D of IBBI (CIRP) Regulations, 2016. Considering the regulations as they existed at the time when liquidation order was issued in this case, and that no fees was fixed by the CoC, it is opined that fees to be paid to the Liquidator in this case shall be as per the percentage prescribed in Regulation 4(2)(b) of IBBI (Liquidation Process) Regulations, 2016 on realization and distribution of proceeds from auction of assets. There are no reason to interfere in the order of the Adjudicating Authority. Appeal dismissed. - [ Justice Rakesh Kumar Jain ] Member ( Judicial ) And [ Ajai Das Mehrotra ] Member ( Technical ) For the Appellant : Ms. Shweta Dubey Mr. Kanishka Prasad , Advocates For the Respondents : Mr. Kunal Tondon and Ms. Bhavna Vijay , Advocates JUDGMENT ( Hybrid Mode ) [ Per : Ajai Das Mehrotra , Member ( Technical ) ] 1. The present appeal has been filed by the appellant who is the liquidator of M/s SRS Limited, against the impugned order dated 18.04.2023 of National Company Law Tribunal, Chandiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the CIRP has been initiated by order dated 21.08.2018, and the liquidation has been commenced by order dated 15.10.2019. The applicant is appointed as the Liquidator of SRS Ltd. (Corporate Debtor). After the commencement of the liquidation, the Liquidator invited claims, and after verification of the claims from various stakeholders, he formulated the Stakeholders' Consultation Committee (SCC). A public advertisement has been issued on 13.12.2019 inviting Expressions of Interest for the scheme of compromise or arrangement under Section 230 of the Companies Act, 2013. Thereafter, the liquidator received three schemes within the period of 90 days. It is further submitted that the sale of the corporate debtor as a going concern could not take place as the assets of the corporate debtor have been attached by ED by order dated 08.01.2020. The Income Tax Department has also provisionally attached the assets, i.e. all the Cinema assets by order dated 20.12.2018, which was further extended on 21.06.2019, 06.01.2020 and 15.07.2020. The Income Tax Attachment Order was finally vacated on 12.01.2021. The liquidator has released advertisement for the sale of cinema at 12 locations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted their views that the fees be paid as per Reg 4 (2) (b) of the IBBI Liquidation Process Regulation, 2016 and will submit further details on justification through email latest by 16 September 2022. Ms. Anubha Mathur, Senior Manager, BOI and Ms. Meenindra S.R, Chief Manager, Union Bank of India stated that they are in discussion with higher authorities will convey decision through email latest by the 16th September 2022. Subsequently, Bank of India vide mail dated 16.09.2022 stated that We are of the opinion that fee payment may be made in terms of regulation 4 (2)(b) of the IBBI (Liquidation Process) Regulations, 2016 as a percentage of Liquidation Proceeds. Mr. Kuppanna M Dakulagi, Manager (Credit), Punjab National Bank stated and also reiterated through email and the extract of mail send by PB is reproduced here In the absence of any explicit provision for ring the liquidator fees by the SC we as a part of SCC can't decide over the issue. As such we will be able to pay in terms of Regulation 4 (2b) of the IBBI (Liquidation Process) regulations 2016 Mr Abhinav Garg, representative of Deposit Holders stated that they do not have any comments and Secured Financial Creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they have taken into account the work done by the liquidator and also the quantum of work which remains to be completed by the liquidator. While acknowledging the uncertainties of the duration of the liquidation process, we see no reason to disagree with the considered view of the member of SCC on payment of remuneration to the liquidator as per Regulation 4 (2) (b) of the IBBI Liquidation Process Regulation, 2016. In the result, the prayer for fixing a particular amount as the remuneration of the liquidator for the liquidation period is not acceded to. 10. In view of the aforesaid discussion, IA Nos.307/2021 and 1260/2022 are dismissed and disposed of accordingly. 2. In its oral and written submissions, the learned counsel for the liquidator submitted that the liquidator was unable to sell the assets of corporate debtor due to attachment of the assets by the Enforcement Directorate (ED). The Regulation 4(2)(b) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereinafter called Liquidation Process Regulations ) prescribed fees for the liquidator on the basis of percentage of realisation and distribution and that since no sale could take plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d para when the dispute is one which does not arise solely from or relate to the insolvency of the corporate debtor. The nexus with the insolvency of the corporate debtor must exist. ( emphasis supplied ) 19. Though the CIRP was set aside later, the claim of the appellant as registered valuer related to the period when he was discharging his functions as a registered valuer appointed as an incident of the CIRP NCLT would have been justified in exercising its jurisdiction under Section 60(5)(c) of the IBC and, in exercise of our jurisdiction under Article 142 of the Constitution, we accordingly order and direct that in a situation such as the present case, the adjudicating authority is sufficiently empowered under Section 60(5)(c) of the IBC to make a determination of the amount which is payable to an expert valuer as an intrinsic part of the CIRP costs. Regulation 34 of the IRP Regulations defines insolvency resolution process cost to include the fees of other professionals appointed by the RP. Whether any work has been done as claimed and, if so, the nature of the work done by the valuer is something which need not detain this Court since it is purely a factual matter to be assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of IBBI (Liquidation Process) Regulations, 2016 which contemplates that in the event, members of CoC do not approve the fee payable to the liquidator, the fee payable is based on net realization and distribution. Therefore, the Appellant- Liquidator now cannot approach this Hon ble Tribunal to change the methodology for determination of fee, having made no efforts/ attempts for determination of its professional fee, as per its convenience. 5. In the rejoinder to the said reply, the liquidator submitted as under:- It is submitted that the facts and circumstances of the present case are peculiar in a way that when the Application for Liquidation of the Corporate Debtor under Section 33 of the Code was filed, till that time, there was no mechanism to fix the fees of the liquidator by the CoC members as provided in the Regulation 39D of CIRP Regulations by way of an amendment w.e.f. 25.07.2019. The only mechanism under the law for the fees of the Liquidator available was under Regulation 4(2)(b) of the Liquidation Process Regulations. Thus, it is wrong to say that the Appellant cannot approbate and reprobate. 6.1 In its written submissions the Respondent no.1 submitted that the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mending or altering the statutory provisions. In that situation the Judges should not proclaim that they are playing the role of a law-maker merely for an exhibition of judicial valour. They have to remember that there is a line, though thin, which separates adjudication from legislation. That line should not be crossed or erased. This can be vouchsafed by an alert recognition of the necessity not to cross it an instinctive, as well as trained reluctance to do so . (See : Frankfurter : Some Reflections on the Reading of Statutes in Essays on Jurisprudence , Columbia Law Review, p. 51.) 6.3 It was submitted by Respondent No.1 that this Tribunal does not have the jurisdiction to adjudicate the present appeal and that in absence of any power granted under the IB Code, 2016, the present petition cannot be entertained. It was submitted that fee payable to the liquidator for his services falls within the domain/ power of SCC members, who in their commercial wisdom have passed the resolution for payment of fee to the Liquidator as per Regulation 4(2)(b) of the liquidation process. 6.4 It was further submitted by respondent no.1 that the liquidator is not entitled to any remuneration beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as has been decided by the committee of creditors before a liquidation order is passed under section 33(1)(a) or 33(2) (3) In all cases other than those covered under sub-regulation (2), the liquidator shall be entitled to a fee as a percentage of the amount realized net of other liquidation costs, and of the amount distributed, 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 In the next one year Thereafter Amount of Realisation (exclusive of liquidation costs) On the first 1 crore 5.00 3.75 2.50 1.88 On the next 9 crore 3.75 2.80 1.88 1.41 On the next 40 crore 2.50 1.88 1.25 0.94 On the next 50 crore 1.25 0.94 0.68 0.51 On further sums 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 sums distributed 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. 9. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. 11. Vide IBBI (Liquidation Process) (Second Amendment) Regulations, 2022, Sub-Regulation 1(A) was inserted, w.e.f. 16.09.2022, which reads as under:- 1(A) Where no fee has been fixed under sub-regulation (1), the consultation committee may fix the fee of the liquidator in its first meeting. Also, sub-regulation- 2 was amended to add the words [and 1(A)] after the words sub-regulation-1 to give effect to the said amendment. 12. Regulation 31(A) of Liquidation Process Regulations was revised and substituted by IBBI (Liquidation Process) (Second Amendment) Regulations, 2022 w.e.f. 16.09.2022. The substituted Regulation 31A provides that the Stakeholders Consultation Committee constituted by 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 Person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he next 9 crore 3.75 2.80 1.41 On the next 40 crore 2.50 1.88 0.94 On the next 50 crore 1.25 0.94 0.51 On further sums realized 0.25 0.19 0.10 Amount Distributed to Stakeholders On the first 1 crore 2.50 1.88 0.94 On the next 9 crore 1.88 1.40 0.71 On the next 40 crore 1.25 0.94 0.47 On the next 50 crore 0.63 0.48 0.25 On further sums distributed 0.13 0.10 0.05 (3) Where the fee is payable under clause (b) of sub-regulation (2), the liquidator shall be entitled to receive half of the fee payable on realisation only after such realised amount is distributed. Clarification: Regulation 4 of these regulations, as it stood before the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 shall continue to be 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. Subregulat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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