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2025 Supreme(Online)(NCLT) 378
NATIONAL COMPANY LAW TRIBUNAL
SMT. BIDISHA BANERJEE, SMT. MADHU SINHA, JJ
Tata Capital Financial Services Limited – Appellant
Versus
M/s. Maheswary Ispat Limited – Respondent
T.P. (Companies Act) No. 22/KB/2022
For the Appellants/Petitioners: Mr. Shaunak Mitra, Adv., Mr. Dripto Majumdar, Adv., Mr. Chandan Mohata, Adv.
For the Respondents: Ms. Muskan Saha, Adv., Ms. Zeba Khan, Adv., Mr. Santosh Kr. Ray, Adv.
The liquidator is entitled to fees only for actual work performed in the liquidation process, and secured creditors must contribute to liquidation costs even if they realize their security interests.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - IBBI (Liquidation Process) Regulations, 2016 - Liquidator's fees - Applicant Liquidator sought payment of Rs. 1,87,76,133/- from secured creditors for liquidation costs, asserting compliance with regulations. Respondent banks contended that the liquidator had no role in the sale of assets and thus should receive no fees. Court determined that the liquidator's fees are payable for actual work done, directing payment only for assets not sold by secured creditors. (Paras 30-31)
(B) Regulation 21A - Secured creditors' obligations - Secured creditors must pay towards liquidation costs even if they realize their security interest, ensuring compliance with the Code's provisions. (Paras 24-26)
Facts of the case:
The liquidator sought payment for costs related to the sale of the Panagarh factory, which was sold by the secured creditors without direct involvement from the liquidator, leading to disputes over fees. The liquidator had previously taken possession of the factory and issued a public announcement regarding the liquidation process. (Paras 4-5)
Findings of Court:
The court held that the liquidator is entitled to fees only for work done in realizing or distributing assets, and since the secured creditors conducted the sale independently, the liquidator's fees for that sale were not payable. Other fees for different assets may still be owed. (Paras 30-31)
Issues: The court addressed whether the liquidator is entitled to fees when he did not directly realize or distribute the secured asset and the obligations of secured creditors under Regulation 21A. (Paras 19-20)
Ratio Decidendi: The court concluded that a liquidator’s fees must correspond to the actual work performed in the liquidation process, affirming that secured creditors are obligated to contribute to liquidation costs despite realizing their security interests. (Paras 24-30)
Result: Application disposed of with directions for payment of fees as per the approved rates for assets not sold by secured creditors.
| Table of Content |
|---|
| 1. background of the insolvency case (Para 1 , 2 , 3 , 4 , 5) |
| 2. arguments regarding liquidation costs (Para 6 , 7 , 8 , 9) |
| 3. details of liquidation cost contributions (Para 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 4. nclat rulings on liquidator's fees (Para 18 , 19 , 21 , 22 , 23 , 24) |
| 5. court's analysis of liquidator's role (Para 25 , 26 , 27 , 28 , 29) |
| 6. court's decision on liquidator's fees (Para 30) |
| 7. conclusion and order of the court (Para 31 , 32) |
ORDER
Per Bidisha Banerjee, Member (Judicial):
1. This Court congregated through a hybrid mode.
2. We have heard Mr. Shaunak Mitra, Ld. Counsel appearing on behalf of the Applicant Liquidator and Ms. Muskan Saha, Ld. Counsel appearing on behalf of the Respondent No. 1 bank.
3. This application has been preferred by Liquidator CA Santanu Brahma, hereinafter referred to as “Applicant” against Indian Bank, hereinafter referred to as “Respondent No. 1” and State Bank of India, hereinafter referred to as “Respondent No. 2” praying for a direction upon the Respondents to make a payment of Rs. 1,87,76,133/- jointly towards the additional Liquidation Cost including the Liquidator’s Fees in adherence to the provisions of Regulation 21A read with Regulation 2(ea) and 4(2)(b) of the IBBI (Liquidation Process) regulations, 2016.
BRIEF BACKGROUND
4. Tata Capital Ltd. (erstwhile Tata Capital Financial Services Ltd.) preferred a company petition under Section 433, 434 and 439 of the Companies Act, 1956, against the corporate debtor before the Hon’ble High Court at Calcutta, which was admitted for winding up on 12.10.2012 and subsequently, vide Orders dated 21.06.2016 and 28.11.2016, the company was directed to be wound up and the Official Liquidator was directed to take over the possession of the corporate debtor company. Later, the Hon’ble High Court at Calcutta transferred the winding up proceedings to this Adjudicating Authority vide Order dated 17.05.2022, and subsequently, the applicant was appointed as the Liquidator.
5. That, on 15.01.2024, the applicant liquidator made public announcement in Form B and pursuant to the public announcement, the respondents submitted their claims in Form D and expressed their intention to not relinquish their security interest for its Panagarh factory which is held by the respondents on first charge pari-passu basis. On 14.03.2024, the applicant liquidator took the physical possession of the Panagarh factory from the Official Liquidator.
ARGUMENTS ADVANCED BY THE PARTIES
6. Mr. Shaunak Mitra, Ld. Counsel appearing on behalf of the Applicant Liquidator submitted that in compliance of Regulations 37(1) of the IBBI (Liquidation Process) Regulations, 2016, the respondent banks provided their proposed realization value of Rs. 20 Crore and Rs. 15.79 Crore respectively, for the said Panagarh factory. The applicant liquidator issued an email to the respondents on 15.03.2024 to contribute jointly towards their share of liquidation cost amounting to Rs. 1,34,55,000/- in terms of Regulation 21A (2) of the IBBI (Liquidation Process) Regulations, 2016 within 14.04.2024. The respondent banks partly contributed towards the liquidation cost in terms of Regulation 21A prior to taking possession of the Panagarh Unit and gave an undertaking by way of an email dated 12.04.2024, to pay the liquidator’s fees in terms of Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, on final determination of the proceeds from the sale of the Panagarh factory.
7. Mr. Mitra, Ld. Counsel for the Applicant Liquidator submits that based on the undertaking provided by the respondent banks, the applicant liquidator proceeded to hand over the physical possession of the said Panagarh unit, jointly to the respondents. On 25.10.2024, the applicant liquidator was informed that the Panagarh factory was successfully sold by the respondents for an amount of Rs. 55.10 Crore to M/s. Manbhum Ispat Private Limited and consequent to the sale of the said Panagarh unit on 28.10.2024, the appl
