NCLT Chennai-1(2025.02.19) in Mr. Anil Kumar Ojha, Vs. CA. S. Palaniappan & Ors.. [IA(IBC)/2192 (CHE)2023 in CP/IB/1264/2018], held that;
Since in this case, the Liquidator carried on the liquidation process in terms of the order of the Tribunal, so they were paid the professional fees and expenses which they are entitled to but subject to adjustment against the fee payable under Regulation 4(2).
Thus, in view of the above said Judgment of the Hon’ble NCLAT which was affirmed by the Hon’ble Supreme Court, the Shareholder / promoter does not have any locus to challenge the decision taken by the SCC as to provisionally fixing the fee of the Liquidator which is subject to adjustment against the fee payable under Regulation 4(2).
we are of the view that no extraordinary favour has been done by the SCC by giving the remuneration to the Respondent No. 1 and 3. The amount which has been paid towards the professional fees to the Respondent No. 1 & 3 is subject to adjustment as per the Code and the Regulations.
Excerpts of the order;
This application has been filed under Section 60(5), 34(8) & 34(9) of the Insolvency and Bankruptcy Code, 2016 r/w Regulation 4 & 31A of the IBBI (Liquidation Process) Regulations, 2016by Shri. Anil Kumar Ojha, Suspended / Promoter and Managing Director of SLO Industries Limited, the Corporate Debtor herein against the erstwhile Liquidator Shri. S. Palaniappan (Respondent No.1), Union Bank of India (Respondent No.2) and Ms. Revathi S Raghunathan, the current Liquidator (Respondent No.3) seeking the reliefs that
(a) the relevant portion of Resolution No.2 of the SCC meeting held on 16.10.2023 pertaining to the fee of Respondent No.1 be set aside being in violation of the Code and the Regulations Since was passed to regularize the illegal payments made by Respondent No.2 to Respondent No.1;
(b) to declare that the amounts paid by Respondent No.2 to Respondent No.1 whether directly or through the liquidation estate in the guise of fee be not considered as fee as per the Code and Regulation and the part of the liquidation expenses;
(c) to restrain Respondent No. 2 & 3 from fixing the fee of Respondent No.3 in violation of the Code and the Regulations prevalent as on date of the liquidation order dated 21.01.2022; and
(d) to refer the matter to IBBI for prosecuting Respondent No.1 under Section 70(2) read with Section 236 of the Code.
# 2. Briefly the facts are that on an application CP/1264/2018 filed under Section 7 of IBC, 2016, the Corporate Debtor was admitted into CIRP vide an order dated 04.11.2019. Mr. C. Ramasubramaniam was appointed as the IRP who was subsequently confirmed as RP. Since no viable Resolution Plan came, the CoC resolved for the liquidation of the Corporate Debtor. Accordingly, the liquidation of the CD was ordered vide dated 21.01.2022 and Mr. S. Palaniappan/ Respondent No. 1 was appointed as the Liquidator. In the matter of M/s. SLO Industries Limited
# 3. It is stated that, Union Bank of India, the Secured Financial Creditor having voting share of 89.175% had proposed change of the Liquidator. Accordingly, SCC passed the following resolution :
# 4. It is stated that after the approval of the Resolution, the issue relating to remuneration to the existing / outgoing Liquidator was deliberated upon by the SCC. The excerpts of the meeting are reproduced as under:
“Remuneration to the existing liquidator.
The current Liquidator is presently receiving a fee of Rs.2 lacs per month plus applicable tax as approved by the SCC in the First SCC meeting. This remuneration is funded by the SFC, UBI and has been paid to the account of the Liquidator till March 2023. As the SFC is replacing the Liquidator under the above Regulation, the liquidator requested that his monthly fee, which forms part of Liquidation Cost, be paid till his replacement. Further, it was also placed before the SCC that the outgoing liquidator be permitted to get reimbursement of litigation and connected costs and expenses, if any, incurred in future, after his replacement, representing the CD in the capacity of the erstwhile Liquidator.
Mr.Anil Kumar Ojha, suspended board of director, raised an objection for payment of fee to the current liquidator as he alleged that the same has not been approved. The Liquidator then shared (on screen) the first SCC meeting notice, minutes and the relevant approval for Liquidator's fees, which confirmed that the fees were indeed approved by the SCC. The Liquidator shared these documents to all the SCC members present and highlighted the approval portion. The Liquidator also informed Mr.Anil Kumar Ojha that as he has taken up this issue before the Hon'ble NCLT, matter is under sub-judice. Moreover, it is not relevant to raise it in this forum. Despite this, however, Mr. Anil Kumar Ojha kept on arguing with the Liquidator and obstructing the smooth conduct of the SCC meeting.
The SFC, UBI, who holds 89.175% of the voting share in the SCC, clarified and reconfirmed that payment of the Liquidator's fees was made to the account of the Liquidator only after getting due approval in the SCC meeting as well as after obtaining necessary internal approvals from the competent authorities within the Bank.
The SFC, UBI also confirmed to the SCC members that vide email dated 11.10.2023, the SFC-UBI has confirmed the Liquidator's fees as below;
"Regarding Remuneration to the Outgoing Liquidator- Mr S Palaniappam:- Our competent authorities have approved a monthly fee of Rs 2.00 Lakhs plus applicable tax to the outgoing liquidator from the date of appointment till September 2023. After approval, this fee has already been funded to the account of the Liquidator till March 2023 which forms part of liquidator cost for which necessary TDS deducted from our end. Further, Monthly fees of the Liquidator from April 2023 to September 2023 will be transferred to the Liquidation account for transfer to the Liquidator after deduction of the TDS at your end which also forms part of Liquidation Cost".
Further, the Liquidator informed the members of the SCC that only after obtaining the necessary approvals from the SCC and also from the competent authorities of the SFC-UBI, payments to the account of the Liquidator was made by the SFC. Further, he confirmed that the said payments were made in a transparent manner through the banking channel against GST invoices raised by the Liquidator and that all the GST dues were duly paid to the Government. Further, he also confirmed that TDS was deducted by the SFC and the Liquidator has duly included this income in his IT returns.
# 5. It is stated that the SCC after deliberations approved the change of Liquidator and the remuneration to the Liquidator as under:
"RESOLVED THAT, the fee to the outgoing liquidator would continue to be paid at Rs. 2,00,000/- per month plus GST plus reimbursement of out-of-pocket expenses till his replacement officially takes charge (i.e., till the date of order approving the change of Liquidator is received from the Hon'ble NCLT). The monthly fee already paid to the Liquidator directly by the SFC to the personal account of the Liquidator as well as to the Liquidation account and the fee payable to him till his replacement, will be treated as fixed fee to the outgoing Liquidator and will be treated as part of liquidation cost. The outgoing liquidator is permitted to get reimbursement and indemnification of the litigation and connected costs and expenses incurred in future, if any, after his replacement, while representing the CD in the capacity of the erstwhile liquidator. Going forward, the incoming liquidator has to implead herself in all the cases pending/ongoing in the various legal forums in view of the present replacement of the liquidator by the SFC."
# 6. It is stated that the Liquidator / Respondent No. 1 had claimed that his fee of Rs.2,00,000/- was approved in the 1st SCC held on 30.03.2022 in which appointment of professionals and their remunerations under Regulation 7 were also approved. The Liquidator also circulated the list of all the seven professionals which is as under:
# 7. It is stated that the above seven professionals were confirmed and ratified by Respondent No.2. . . . .
# 8. It is alleged that nowhere in the 1st SCC meeting, the remuneration of Rs.2,00,000/- to be paid to the Liquidator/Respondent No.1 was approved which is also evident from the Quarterly Progress Reports for the period from January, 2022 to September, 2023.The summary of excerpts about the Liquidator fee is as under :
Response: Regarding Liquidator fee:
“As there was no decision taken by the COC under regulation 39D of the IBBI (Insolvency Resolution Process for Corporate Persons) regulations, 2016, the fee to the liquidator is covered under Regulation 4(2)-(a) at the same rate as the resolution professional was entitled to during the corporate insolvency resolution process, for the period of compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013); and (b) as a percentage of the amount realized net of other liquidation costs, and of the amount distributed, for the balance period of liquidation. As the properties are under attachment by the ED, the Liquidator has requested to fund a minimum cash flow of Rs. 2 Lakhs per month plus applicable tax by the Financial Creditor which shall be adjusted against the fee under Regulation 4(2) as above. '
# 9. It is stated that from the progress reports, it can be seen that though the Liquidator had requested to the Secured Financial Creditor (SFC) to fund the fees in advance to be adjusted against the fee payable under Regulation 4(2) but it was purely a private arrangement between the Liquidator and the Secured Financial Creditor as the said payments were made directly by the Secured Financial Creditor to the personal account of the Liquidator instead of routing it from the Liquidation Account.
# 10. It is stated that Respondent No. 1 & 2 falsely informed the SCC that fee of the Liquidator at Rs.2,00,000/- per month was approved by the SCC in its meeting on 30.03.2022 whereas there was neither any proposal nor any resolution to this effect.It is stated that following are the provisions of the Code and Regulations in respect of the Liquidator Fee.
# 11. It is stated that on a conjoint reading of the provisions of the Code and the Regulations, it emerges that the Liquidator shall charge such fee for the conduct of the liquidation proceedings in such proportion to the value of the Liquidation estate as specified by the Board under Section 34(8) and such fee shall be paid from the proceeds of the Liquidation Estate under Section 53 and Section 34(9) and it shall be in accordance with the decision taken by the CoC under Regulation 39D and Regulation 4(1). Where no fee has been fixed under subregulation 4(1), the consultation committee may fix the fee of the Liquidator in its 1st meeting (Regulation 4(1A) and in cases other than those covered under sub-regulation (1) and (1A), the Liquidator shall be entitled to a fee as a percentage of the amount realized net of other liquidation cost and of the amount distributed for the balance period of liquidation as per Regulation 4(2) of Liquidation Process Regulations.
# 12. It is stated that the Respondent No. 1 in connivance with the Secured Financial Creditor deliberately lowered the priority of supply of goods and services who supplied the goods and provided the services during CIRP period, by classifying their claims as Operational Creditors instead of CIRP cost. It is alleged that the payment made by the Secured Financial Creditor to Respondent No.1 as advance Liquidator Fee is in gross violation of Section 34(9) of the Code.
# 13. It is stated that the Liquidator is guilty of offence under Section 70(2) of IBC r/w Section 7 and 20 of the Prevention of the Corruption Act. Reference is made of the cases as under:
a. Hon’ble Supreme Court In P. Sarangapani (Dead) Through LR PakaSaroja Vs. State of Andhra Pradesh [Criminal Appeal No. 2173 of 2011, Neutral Citation 2023 INSC 844];
b. Hon’ble High Court Jharkhand (05.04.2023) In Sanjay Kumar Agarwal Vs. Central Bureau of Investigation, Anti Corruption Bureau, Dhanbad (Cr. M.P. No. 1048 of 2021];
c. Hon’ble Supreme Court (2022.06.16) in Krishna Rai Vs. Benares Hindu University’ [Civil Appeal Nos. 45784580 of 2022]
# 14. It is stated that in the present case, the fee of the Liquidator was neither approved by the CoC under Regulation 39 nor by the SCC in its 1st meeting under Regulation 4(1A) and the Liquidator received the amount directly from the SecuredFinancialCreditor into his personal account lowering the priority in classifying the claims of those who supplied the goods during CIRP as Operational Creditors instead of CIRP cost and therefore, Respondent No.1 and 2 are guilty of the offence punishable under Section 120B r/w Section 418 of I.P.C.
# 15. The case of “Ashok Kumar Gulia vs. State Bank of India and others”has been referred where the Hon’ble NCLAT vide order dated 10.04.2024 held as under:
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 Persons) Regulations 2016, Regulation 39D was inserted by IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2022 w.e.f. 16.09.2022. . . . . . .
13. In the subsequent amendments to the ‘Liquidation Process Regulations’, Stakeholders Consultation Committee has been provided a role in fixation of fees of liquidator. While deciding the issue of liquidation fees, we have to restrict ourselves to examination of Liquidation Process Regulations as they stood on the date when the liquidation order was issued in this case. The liquidation order was issued on 15.10.2019. The Regulation 4, as it existed on the date of passing of order of liquidation is reproduced below for reference:
14. From perusal of the regulations as they existed on the date of liquidation order, it appears that the fees of the liquidator was to be either the fees decided by the CoC under Regulation 39D of IBBI (CIRP) Regulations, 2016 or a percentage of fee on the amount that is realised/ distributed during the liquidation process. The Regulations, as it existed at the time on 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.
15. 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, we are of the opinion 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. We find no reason to interfere in the order of the Adjudicating Authority. The appeal is dismissed. All pending IAs, if any, are closed. No order as to cost.”
# 16. It is stated that the Hon'ble NCLAT in its order, has affirmed that SCC is empowered to fix the Liquidator fee only with effect from 16.09.2022 and not before and in the present case, the liquidation was ordered on 21.01.2022. Therefore, the fee of the Liquidator is to be
decided under Regulation 39(D) as percentage of the amount to be realized / distributed during the liquidation process. It is stated that the regulations as existed on the date of liquidation order dated 21.01.2022 do not envisage payment of any fees or remuneration to the Liquidator on a monthly basis in case such fee is not fixed by the CoC under Regulation 39D of IBBI (CIRP Regulations, 2016). Further, the fee has to be paid from the proceeds of the liquidation estate from the bank account and not directly by one party / Secured Financial
Creditor to the Liquidator.
# 17. It is alleged that the two main benefits amongst others were extended by Respondent No.1 as a quid pro quo in exchange of the unlawful pecuniary gains received by him which are as under:
# 18. It is stated that it was after the Applicant brought this fact to the notice of Respondent No.1 and 2, Respondent No.2 stopped paying directly to the Respondent No.1 but it continued paying the amount to the Liquidation Estate which is completely illegal and in violation of the provisions of the Code. It is stated that the amount paid by Respondent No.2 to Respondent No.1 should not be considered as fee and should not form part of the liquidation expenses rather it amounts to accepting illegal gratification by Respondent NO.1 from Respondent No.2.
# 19. It is stated that after the Respondent No.1 resigned and handed over charge to Respondent No.3, she in the 3rd SCC held on 24.01.2024 tried to fix and get her fee approved which is also in violation of the provision of law as clarified by the Hon'ble NCLAT in its order dated 10.04.2024 since the fee of Respondent No.3 cannot be fixed by the SCC and is payable only from the proceeds of the liquidation estate asper Section 53 and therefore Respondent No.2 and 3 be restrained from fixing / confirming any amount to be paid as fee to Respondent No.3 in any SCC meeting.
# 20. On getting notice of the application, Respondent No.1 filed the reply wherein he denied the allegations and stated that the Applicant is neither a member of SCC nor does he have locus to file the application. He has defrauded the banking system and various creditors of a significant amount through fraudulent activities which can be seen in the attachment order of the ED. It is stated that owing to the CoC’s failure to nominate a Liquidator, he undertook the
assignment pursuant to the order of the Tribunal dated 21.01.2022. He encountered numerous challenges during the process. He has filed a comprehensive report containing 467 pages on 01.02.2024 detailing the work done by him including the challenges faced. Additionally, he spent Rs.13 Lakhs on liquidation activities without any reimbursement from the Secured Financial Creditor. It is stated that the erstwhile RP and the support services received a monthly fee of Rs.3.5 Lakhs and the current Liquidator has also been receiving Rs.3.5 Lakhs per month. However, he only received Rs.2.0 Lakhs per month during the period of 22 months.
# 21. It is stated that in the first SCC meeting held on 30.03.2022, SCC unanimously approved the liquidation cost estimate covering the Liquidator fee of Rs.2.0 Lakhs per month plus applicable tax. This decision was confirmed in the 2nd SCC which was held on 10.10.2023 where he proposed change due to his health issues. It is stated that the Secured Financial Creditor proposed a new liquidator via mail dated 11.10.2023 forwarding the consent form and AFA on 12.10.2023 and after deliberations, SCC approved his replacement and appointed Respondent No.3 as the new Liquidator.
# 22. It is stated that as per Regulation 31A, the Applicant is not the member of the SCC and does not possess any voting rights concerning the Liquidator fee. It is stated that the application is also barred by resjudicata as the same issue was raised vide an application IA/1837/2023 which was dismissed on 12.10.2023 with an observation that the Applicant could file a complaint before IBBI, which he has subsequently done. Besides, the Applicant filed the complaint with CBI and IBBI on which, IBBI issued an investigation notice dated 18.10.2023 to him which he responded vide letter dated 25.10.2023.
# 23. It is stated that Regulation 4 is applicable to the Respondent. Regulation 4 states that fee payable to the Liquidator is to be decided by the CoC or the Consultation Committee in its first meeting which was duly followed. Further Regulation 31A(11) allows for the replacement of the Liquidator by a majority vote and ensures that the outgoing is suitably remunerated for the work performed until his replacement. It is stated that SCC decision for replacement and approval of fee was approved by the Tribunal vide order dated 28.11.2023. It is stated that an application alleging offence under penal provisions as stated, ought to be filed before the Special Court established under Section 236 of the Code and this Tribunal does not have jurisdiction to deal with the matter. Reference is made of the cases:
(i) Vijay Pal Garg and Ors.vs. Pooja Bahry MANU/NL/0069/2020 and Vivek Prakash v Dinesh Kr Gupta, liquidator of Jarvis Infratech Pvt. Ltd. MANU/NL/0585/2022.
(ii) Insolvency and Bankruptcy Board of India vs. Satyanarayanan Bankatlal Malu & Ors., Criminal Appeal No. 3851 of 2023.
# 24. It is stated that he has received the fee in the manner known to law and there is nothing illegal.It was paid through valid and proper banking channels after deduction of tax. It is stated that the case of Ashok Kumar Gulia supra is distinguishable on facts. In that case, the Liquidator fee was not approved by the SCC but in the present case, SCC had approved his fee. It is stated that the review of applications and the counter filed by him including PUFE applications against the Applicant involve Rs.4025.0 Crores and the background record of Corporate Debtor shows that the Applicant has been employing a strategy of fault finding with malicious intent. It is stated that the Applicant swindled huge money from the system (Claims Rs.768.0 Crores), however, there are assets worth Rs.30.0 crores with the Corporate Debtor which have also been attached by the Enforcement Directorate. The PUFE applications involve an amount of Rs.4025.0 Crores. It is stated that the Applicant has been declared as fraud as per the statement of ED/CBI/Forensic Auditors. He has been noncooperative from the day one of the CIRP. He placed on record the excerpts of the ED complaint dated 17.03.2022 against the Applicant and others before the Sessions Court at Chennai in his report dated 31.03.2024 submitted to the tribunal. He also submitted the details as under:
# 25. It is stated that the Applicant borrowed huge money from the banking system and failed to repay, diverted the funds of the Company to acquire assets in the name of the related parties and has ssfiled cases against the Secured Financial Creditor by way of counterclaim, against the RP/Liquidator, CoC, SCC etc.
# 26. The Applicant filed the rejoinder wherein he denied the averments made by R1 in his reply and reiterated what he has stated in the application. It is stated as under:
# 27. It is stated that Respondent No.1 & 3 in order to legalize the illegal amount, have tried to colour the amount as fee of Respondent No.1 & 3 though the Liquidation regulations do not permit payment of any monthly fee. The fee of the Liquidator cannot be decided by the SCC. No amount of justification can absolve Respondent No.1 &2 fro their illegal actions of receiving and giving Rs.2 Lakhs per month respectively for their quid pro quo.It is stated that the application is not barred by resjudicata. It is stated that the Applicant never requested IBBI to register any complaint, in fact, IBBI has not registered any complaint. In this respect, he has filed a clarificatory memo vide S.R. No. 389 dated 24.01.2024.
# 28. We have heard the Applicant Mr. Anil Kumar Ojha, Party-in- Person, Shri. Varun Srinivasan, Ld. Counsel for Respondent No.1 and Shri. Pawan Jhabakh, Ld. Counsel for Respondent No.3. The Parties also filed written synopsis of arguments.
# 29. The CIRP in the present case was initiated on an application filed by the Corporation Bank, now Union Bank of India under Section 7 of IBC, 2016 vide an order dated 04.11.2019. The Tribunal appointed Mr. C. Ramasubramanian as the IRP whose name was proposed by the Corporation Bank. No fee of the IRP was fixed by the Tribunal for conducting the process. IRP was later confirmed as RP in the 3rdCoC meeting held on 27.12.2019. On an application filed by the RP vide IA/538/2021, where the CoC in the 19th meeting held on 29.05.2021 resolved for liquidation of the Corporate Debtor, this Tribunal ordered for the liquidation of the Corporate Debtor vide dated 21,01.2022. No name of the Liquidator was proposed by the CoC in the meeting so this Tribunal vide the above order, appointed CA S. Palaniappan, Respondent No.1 as the Liquidator from the list provided by the IBBI. No fee of the Liquidator was fixed by the Tribunal to carry out the liquidation process. The meeting of the 1st SCC was held on 30.03.2022 where it discussed the agendas / item No.3, 4 & 5 i.e., appointment of professionals and their remuneration under Regulation 7.The same are reproduced as under:
# 30. In the meeting, there is no resolution as to the approving of the Liquidator fee. The Liquidator filed the progress reports from time to time including the details of fee and the remuneration as discussed in the preceding paras. Although a notice was sent by the Liquidator vide dated 26.03.2022 to the SCC enclosing the agenda which provided for the liquidation fee /cost but the said agenda was never approved by the SCC in the first meeting.
# 31. A perusal of minutes of the CoC held on 30.11.2019, 07.12.2019 and 27.12.2019, reveals that the IRP had placed the matter before the CoC about his remuneration as Rs.2,00,000/- plus 18% GST stating that at the time of giving consent, he had mentioned the same. The CoC in the meeting held on 07.12.2019 after discussion, ratified the IRP remuneration and approved the remuneration of the IRP at Rs.2,00,000/- plus 18% GST stating that it will be paid by the Corporate Debtor considering that it is a going-concern. In the meeting held on 27.12.2019, the CoC also resolved that IRP will continue as the RP to conduct the entire CIRP on a remuneration of Rs.2,00,000/- per month plus 18% GST. It also approved an amount of Rs.1,50,000/- per month plus 18% GST towards the support services against the bill to be raised to the Corporate Debtor being a going-concern.
# 32. The resolutions in the above CoC show that the remuneration of the IRP / RP was fixed at Rs.2,00,000/- per month plus GST18% from the date of initiation of CIRP till the entire CIRP process.
# 33. As to the classification of claims of the vendors / service providers who had supplied materials / provided services to the Corporate Debtor during the CIRP period as Operational Creditors, we find that the Corporate Debtor was a going concern at the time the CIRP was initiated. The IRP/RP run the company as a going concern and during that process, the Operational Creditors supplied the materials and provided the services. Since these claims regarding supply of goods and services rendered by the Operational Creditors relate to the CIRP period, the same should have been taken as the CIRP cost. This issue was also considered by the Tribunal and vide order dated 13.06.2023, it was held that their claims will be the part of the CIRP cost.
# 34. Now coming to the remuneration / fee payable to the 1st Respondent / the Liquidator who was appointed after the liquidation order, the Liquidator on the direction of the Tribunal, has submitted a detailed report about the work done by him during the period he remained as a Liquidator until he was replaced by the new Liquidator/Respondent No.3.
# 35. Admittedly, in the order for liquidation dated 21.01.2022, this Tribunal had not fixed the fee to be paid to the Liquidator nor there was any resolution of the CoC fixing the fee of the Liquidator but this issue was discussed in the 1st SCC held on 30.03.2022. In that meeting, the Liquidator had attached a schedule and sought ratification of the appointment of the professionals, however, no decision was taken in the meeting. The Liquidator submitted the progress reports from time to time giving the details of the fee or remuneration received by him with a description of activities carried out by him stating that the fee of the Liquidator is covered under Regulation 4(2)(a) at the same rate as the RP was entitled to during the CIRP for a period of compromise or arrangement under Section 230 of the Companies Act, 2013 and (b) as a percentage of the amount realized net of other liquidation costs, and of the amount distributed, for the balance period of liquidation. He mentioned that the Financial Creditor had agreed to the same and he was paid Rs.2,00,000/- per month plus applicable tax since the date of his appointment which amount would be adjusted against the amount payable under Regulation 4(2). From the progress reports and the submissions, it is clear that whatever fee is payable/paid, it has to be adjusted against the fee payable under Regulation 4(2) of IBBI Liquidation Regulations. This was also provided under Regulation 39D. In the 2nd SCC also, the Secured Creditor had agreed to pay Rs.2,00,000/- per month plus applicable tax since the date of the appointment of the Liquidator till March, 2023. In that meeting, Respondent No.1 proposed a change of the Liquidator which was approved and it was resolved that the erstwhile Liquidator/Respondent No.1 be replaced with new Liquidator/Respondent No.3 on the same remuneration as Rs.2,00,000/- plus applicable taxes which shall be adjusted against the fee under Regulation 4(2) of IBBI Liquidation Regulations.
# 36. Admittedly, in the present case, the liquidation order was passed on 21.01.2022 and the amendment came into effect thereafter i.e. 16.09.2022 but there is no record to indicate that the SCC had fixed the fee of the Liquidator. There was a resolution to the effect that the Liquidator be paid at Rs.2,00,000/- per month plus applicable taxes which shall be adjusted against the fee payable under Regulation 4(2). The Respondent No.3 has also submitted a detailed report about the work done by her. It was reported that the properties of the Corporate Debtor are under attachment by the ED.
# 37. Since in this case, the Liquidator carried on the liquidation process in terms of the order of the Tribunal, so they were paid the professional fees and expenses which they are entitled to but subject to adjustment against the fee payable under Regulation 4(2).
# 38. As to the locus standi of the Applicant, In the case of “Ramesh Kesvan vs. CA Jasin Jose, Company Appeal (AT) (CH)Ins) No. 422 of 2023”, the Hon'ble NCLAT has held that the promoter/shareholder of the Corporate Debtor has no locus to challenge the plan after its approval. Once the affairs of the Corporate Debtor were handed over to the IRP, any action taken by the shareholder, even if majority shareholder would not be maintainable.
28. Keeping in view, the scope and intent of the Legislature, and that the ‘I & B Code, 2016’ is a distinct shift from ‘Debtor in Possession’ to ‘Creditor in Control’ Insolvency System, where the Shareholders have a limited role and are only confined to cooperate with the Resolution Professional as specified under Section 19 of the Code, are entitled to receive the Liquidation value of its equity, if any, in accordance with Section 53 of the Code, we are of the considered opinion that a ‘Shareholder’ has ‘no locus standi’ to challenge the Resolution Plan.”
11. On an Appeal before the Hon’ble Supreme Court in CA No. 5516 / 2023, the Hon’ble Supreme Court vide Order dated 06.11.2023 dismissed the Appeal and hence, the issue whether a shareholder has locus to challenge the Resolution Plan has attained finality.
# 39. Thus, in view of the above said Judgment of the Hon’ble NCLAT which was affirmed by the Hon’ble Supreme Court, the Shareholder / promoter does not have any locus to challenge the decision taken by the SCC as to provisionally fixing the fee of the Liquidator which is subject to adjustment against the fee payable under Regulation 4(2).
# 40. Further, in the instant case, the Applicant was one of the shareholders in the company. As per the IBBI (Liquidation Process) Regulations, all the directors and the shareholders were discharged from the company. In the case of “JM Financial Asset Construction Company LtdVs. M/s. Well Do Holding and Exports Pvt. Ltd. & Ors. In Comp. AT Ns No. 134 of 2019”, it was held that the shareholder is not an aggrieved person.
# 41. Though Respondent No.2/State Bank of India has denied having paid the fee to the Liquidator directly but for the sake of arguments even if it is assumed that Respondent No.2 has paid the fee directly to the Liquidator as referred above instead of bringing it in the liquidation estate of the Corporate Debtor but the same has been accounted for in the liquidation account. This can be merely an irregularity and cannot be said to illegality to initiate action against the erstwhile Liquidator / Bank & Respondent No.2.
# 42. Considering the totality of facts in the above circumstances, we do not find any reason to set aside the relevant portion of Resolution No.2 of SCC held on 16.10.2023 pertaining to the fee of the Respondent No.1/erstwhile Liquidator. Since as per the resolutions, the fee / amount paid to the erstwhile Liquidator / Respondent No. 1/ and the new Liquidator Respondent No.3 as resolved in the SCC is subject to adjustment under Regulation 4(2) of the Liquidation Regulations and that the Corporate Debtor has properties which at present are under attachment by the ED and the amounts from those properties have to come in the liquidation estate of the Corporate Debtor against which, the Liquidators are entitled to fee as a percentage of the amount realized net of other liquidation cost and of the amount distributed for the balance period of liquidation, we are of the view that no extraordinary favour has been done by the SCC by giving the remuneration to the Respondent No. 1 and 3. The amount which has been paid towards the professional fees to the Respondent No. 1 & 3 is subject to adjustment as per the Code and the Regulations.
# 43. As regards the contentions of the Respondents that the application is barred by resjudicata since the issue has already been decided by this Tribunal vide order dated 18.10.2023 in IA/2192/2023, we find that the said order was not on merits. Further, this application has been taken up for hearing on the order of the Hon'ble NCLAT dated 12.12.2024 whereby this Tribunal has been directed to decide the application expeditiously.
# 44. In the light of what has been stated above, the application being sans merit is dismissed with no orders as to costs.
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