Liquidator Entitled To Fee Under Regulation 4(2) Of Liquidation Regulations, If Not Fixed By CoC: NCLT Guwahati

The National Company Law Tribunal (NCLT), Guwahati Bench of Mr. Rammurti Kushawaha (Judicial Member) and Mr. Yogendra Kumar Singh (Technical Member) has held that in the absence of the Liquidator's fees being fixed by the Committee of Creditors (CoC) at the time of recommending liquidation under Section 33 of the IBC, and subsequently by the Stakeholders Consultation Committee (SCC) under Regulation 4(1A) of the Liquidation Regulations, 2016, the Liquidator is entitled to fees as per Regulation 4(2) of the Liquidation Regulations and not by way of fixed monthly remuneration. The present application has been filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking direction to provide the Applicant a reasonable remuneration of Rs. 2.5 Lacs per month from the date of his appointment as a Liquidator till the completion of the Liquidation Process. The Applicant submitted that Regulation 4(2) of the Liquidation Regulations provides that if the Liquidator fee is not fixed under Regulation 39D of the CIRP Regulations, 2016 or Regulation 4(1A) of the Liquidation Regulations, the liquidator is entitled to fees at the same rate as the Resolution Professional during Insolvency Process for the period of compromise or arrangement under section 230 of the Companies Act and percentage of the amount realised and the amount distributed for the remaining liquidation period as prescribed. Per contra, the Respondent submitted that since no fee was fixed by the CoC or the SCC, the Applicant is only entitled to receive the fee as a percentage of the amount realized as per the table provided in applicable Regulation. Accordingly, at this stage, the Applicant's claim for monthly remuneration is untenable and liable to be rejected. It was further contended that as per regulation 4 of Liquidation Regulations, the Applicant is entitled for a fee depending on the amount realised net of other Liquidation costs and as per Section 34 (9) read with Section 53 (3) of the IBC, the fee of the Applicant is paid from the proceeds of the liquidation estate only. It is not the liability of the Financial Creditors to pay monthly remuneration to the Applicant out of their own pocket. It was further submitted that there is no such compromise or arrangement in the present case, hence the question of invoking Regulation 4(2)(a) of the Liquidation Regulations in the present case does not arise. It becomes clear when Regulation 4(2)(a) of Liquidation Regulations is read with Regulation 39D (a) of CIRP Regulations. The Tribunal noted that the record shows that the Applicant's request for monthly remuneration was placed before the SCC and JLM multiple times but the request was not approved. While the role of the SCC is advisory, the concurrence of the Financial Creditors carries a significant weight in financial matters. The fee of the Liquidator must be determined as per the process outlined in the prescribed Regulations and any deviation from the process must be expressly approved by a Resolution passed by the CoC or stakeholders which is clearly lacking in the present case. It further observed that in the absence of stakeholders approval and as per Regulation 4 of the Liquidation Regulations, the Tribunal is not empowered to override the prescribed framework and direct adoption of a fixed-fee structure. It concluded that since in the present case the fees of the liquidator was neither fixed by the CoC under Regulation 39D nor by the SCC under Regulation 4(1A), the Liquidator is entitled to get fees as per Regulations 4(2) that is percentage of the amount realised (net of other liquidation costs) and the amount distributed. Accordingly, the prayer for a fixed monthly remuneration with both retrospective and prospective effect was rejected. Case Title:Kannan Tiruvengadam, liquidator of the JAS Infrastructure and Power Limited -Versus- Assets Care & Reconstruction Enterprise Limited and Ors. Case Number:IA (IBC)/155/GB/2024 In CP(IB)/23/GB/2022 In CP(IB)/1290/KB/2018 Judgment Date: 04/07/2025 Click Here To Read/Download The Order

Liquidator Entitled To Fee Under Regulation 4(2) Of Liquidation Regulations, If Not Fixed By CoC: NCLT Guwahati

Mohd Malik Chauhan

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