Case Law Details
CA Jai Narayan Gupta Vs Radhasiriya Properties Pvt. Ltd. (NCLAT Delhi)
No fee could be charged by Liquidator under scheme of section 230 of Companies Act, 2013 read with Regulation 2B of Liquidation Regulations, 2016
Conclusion: No fee could be charged from the Scheme Proponent, who had submitted the Scheme under Section 230 of the Companies Act, 2013 read with Regulation 2B of Liquidation Regulations, 2016. Liquidator was entitled to fee under Section 34 of the Insolvency and Bankruptcy Code, 2016 (IBC) and Regulation 4 of the Liquidation Regulations, 2016, therefore, Adjudicating Authority had rightly directed the Liquidator to refund of the amount of expenses as claimed by him in the liquidation process and if the amount of all expenses claimed by the Liquidator were deducted, still the Liquidator was liable to refund the amount of Rs.22,77, 108/-, as per his own calculation.
Held: Appellant-Liquidator charged fee for the period from 15.03.2022 to 17.02.2023 as per the provisions of Regulation 4(2)(a) read with Proviso to Regulation 2B(3) of the Liquidation Regulations, 2016. It was contended that Regulation 2B had been prepared to balance the equity to encourage only the serious proposals of compromise or arrangement and hence, the time taken, was taken outside the liquidation period and where compromise or arrangement was not sanctioned by the Tribunal, the Applicant (Proponent of the Scheme) of such compromise or arrangement was burdened with the cost. Appellant was not required to work free of cost during the period of consideration of the scheme of compromise and arrangement. It was the Scheme Proponent, who had to bear the liquidation fee. The terminology of “liquidation cost”, was not applicable to cases under Section 230 of the Companies Act, 2013. Adjudicating Authority was unjustified in depriving the Appellant of its legitimate fee and the order was against the provisions of the Code and Regulations. Respondent submitted that the Liquidator pressurized the Respondent into making payment, which was clear from the email sent by the Liquidator on 23.12.2022. Even after the scheme was rejected on 17.02.2023, the Liquidator accepted the amount from the Respondent and that as per Regulation 2B(3) of the Liquidation Regulations, 2016, cost in relation to compromise and arrangement was to be borne by the parties, who proposed compromise and arrangement. It was held that Liquidator was entitled to his fee as per the statutory provision of Section 34, sub-section (8) and (9) read with Regulation 4 of Liquidation Regulations, 2016. No fee could be charged from the Scheme Proponent, who had submitted the Scheme under Section 230 of the Companies Act, 2013 read with Regulation 2B of Liquidation Regulations, 2016. Liquidator was not entitled to claim any liquidation fee from Respondent for the period during which compromise and arrangement scheme was under consideration. Liquidator had claimed a fee of Rs.23,01,000/-, which was clearly unsustainable. Liquidator had given the details of all expenses and fee payable totaling to Rs.24, 12,172. At the highest, the Liquidator was entitled to expenses. Thus, even if we allow all expenses claimed in paragraph 14 of the reply of the Liquidator, he was not entitled to a fee of Rs.23,01,000/- and after deducting the amount of Rs.23,0 1,000/- in total amount, the Liquidator at best was entitled for amount of Rs.1,1 1,172/- towards all expenses claimed by the Liquidator. In view of the foregoing discussions and our conclusion, Adjudicating Authority had rightly directed the Liquidator to refund of the amount. Liquidator at best was entitled to expenses as claimed by him in the liquidation process and if the amount of all expenses claimed by the Liquidator were deducted, still the Liquidator was liable to refund the amount of Rs.22,77, 108/-, as per his own calculation.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
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