Outgoing Liquidator Entitled To Minimum Fee Of Rs. 2 Lakh As Per IBBI Regulations: NCLT Kochi
The National Company Law Tribunal (NCLT), Kochi bench comprising Shri. Vinay Goyal (Judicial Member) and Smt. Madhu Sinha (Technical Member) has held that if the liquidator is replaced, he is entitled to a minimum fee of Rs. 2 lakh as per Schedule II of of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for the tenure he has...
The National Company Law Tribunal (NCLT), Kochi bench comprising Shri. Vinay Goyal (Judicial Member) and Smt. Madhu Sinha (Technical Member) has held that if the liquidator is replaced, he is entitled to a minimum fee of Rs. 2 lakh as per Schedule II of of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for the tenure he has worked.
Brief Facts:
On 25.01.2023, the NCLT admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against M/s. Asten Realtors Private Limited (Corporate Debtor). The Tribunal approved two project-wise resolution plans during the CIRP period.
On 19.11.2024, the Tribunal passed an order for liquidation and appointed the Applicant as the Liquidator. The Applicant made a public announcement inviting claims on 23.11.2024. The applicant prepared a list of stakeholders based on the claims received and constituted the Stakeholders' Consultation Committee (SCC) on 18.01.2025. The Respondents together held a 92.99% Voting share in the SCC.
Since the Committee of Creditors did not fix the remuneration of the Applicant, the Applicant proposed a monthly remuneration of Rs. 2 Lakhs per month. The SCC rejected the same with a 93.37% vote. The SCC with a vote of 94.30% resolved to replace the Liquidator with Mr. Sreenivasan P. R.
The Applicant filed the application under Regulation 31(A)(11) of the IBBI (Liquidation Process), 2016, seeking to inter alia replace the present Liquidator, K.C. Padmakumar and appoint Sreenivasan P R as the Liquidator as resolved by the SCC, and fix a fee of Rs. 2 Lakh per month as the fee of the liquidator to be replaced for the period he has worked, which is equivalent to the minimum fee prescribed by the IBBI for the CIRP.
Observations:
The Tribunal noted that as per Regulation 4 (2)(a) of the IBBI (Liquidation Process) Regulations, 2016, the liquidator shall be entitled to a fee at the same rate as the resolution professional was entitled to during the CIRP, for the period of compromise or arrangement under section 230 of the Companies Act, 2013.
The Tribunal observed that the remuneration of the Liquidator was not fixed. Therefore, he was entitled to get his fees as per Regulation 34 B (2) of the IBBI (Insolvency Resolution Process for Corporate Persons), which states that the fee of the interim resolution professional or the resolution professional, appointed on or after 1st October 2022, shall not be less than the fee specified in clause 1 for the period specified in clause 2 of Schedule II. As per Schedule II of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Liquidator is eligible to receive Rs. 2 lakhs per month.
The Tribunal noted Regulation 7(1) of the IBBI (Liquidation Process) Regulations, 2016, which states: “A liquidator may appoint professionals to assist him in the discharge of his duties, obligations and functions for a reasonable remuneration and such remuneration shall form part of the liquidation cost.”
The Tribunal held that SCC rejected the fee proposed by the Professionals with a 93.37% vote without due application of mind.
The Tribunal appointed Sreenivasan P.R. as the Liquidator. It fixed the remuneration of the outgoing Liquidator at Rs. 2 lakh per month for the period he has served, in line with the Schedule fee prescribed by the IBBI for the CIRP. The Tribunal also approved professional fees for the Chartered Accountant and for secretarial assistance.
Case Title: Mr. Padmakumar K. C., Liquidator of M/s. Asten Realtors Private Limited vs. Piramal Capital and Housing Finance Limited & Anr.
For the Applicant: Mr. Vinod P.V., Adv.
Date of Order: 21.03.2025
