Pranav B Prem

The National Company Law Tribunal (NCLT) Kochi Bench, comprising Shri. Vinay Goel (Judicial Member) and Smt. Madhu Sinha (Technical Member), has held that an outgoing liquidator is entitled to a minimum fee of Rs. 2 lakh per month as per Schedule II of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, for the period he has served.

Background of the Case

On January 25, 2023, the NCLT admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), against M/s. Asten Realtors Private Limited. During the Corporate Insolvency Resolution Process (CIRP) period, the Tribunal approved two project-wise resolution plans. Subsequently, on November 19, 2024, the Tribunal passed an order for liquidation and appointed Mr. K.C. Padmakumar as the Liquidator. Following his appointment, Mr. Padmakumar issued a public announcement inviting claims on November 23, 2024, with the last date for submission of claims being December 19, 2024. After collating the claims, he prepared a list of stakeholders and constituted the Stakeholders' Consultation Committee (SCC) on January 18, 2025. The Respondents, Piramal Capital and Housing Finance Limited and Fedex Finance Private Limited, together held a 92.99% voting share in the SCC. Since the Committee of Creditors (CoC) had not fixed the remuneration of the liquidator, Mr. Padmakumar proposed a fee of Rs. 2.5 lakh per month, which he subsequently reduced to Rs. 2 lakh per month. However, the SCC rejected the revised fee proposal with a 93.37% vote and, with a 94.30% vote, resolved to replace the Liquidator with Mr. Sreenivasan P. R.

Also Read: NCLAT Rules: Lease Hold Rights Existing In Favor Of Corporate Debtor Cannot Be Terminated During Moratorium Period U/S 14 Of IBC

Application Before the NCLT

The Applicant, Mr. Padmakumar, filed an application under Regulation 31(A)(11) of the IBBI (Liquidation Process) Regulations, 2016, seeking:

1. The replacement of the present Liquidator, Mr. K.C. Padmakumar, and the appointment of Mr. Sreenivasan P. R. as the new Liquidator.

2. Fixation of Rs. 2 lakh per month as the fee for the outgoing Liquidator for the period he served.

3. Approval of Rs. 10,000 per month for the Chartered Accountant and Rs. 15,000 per month for secretarial assistance.

4. Direction to the Respondents to make the payments as fixed by the Tribunal and clear pending liquidation costs.

NCLT Observations and Ruling

The Tribunal, while examining the matter, considered several regulations under the IBBI framework.

Entitlement to Minimum Fee: The Tribunal referred to Regulation 4(2)(a) of the IBBI (Liquidation Process) Regulations, 2016, which states: "(2) In cases other than those covered under sub-regulation (1) and (1A), the liquidator shall be entitled to a fee— (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)."

 

Since the liquidator's remuneration was not fixed, the Tribunal held that the outgoing Liquidator was entitled to fees in accordance with Regulation 34B(2) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which mandates that the fee for a resolution professional appointed on or after October 1, 2022, shall not be less than the fee specified in Schedule II. As per Schedule II, where the quantum of claims is between Rs. 50 crores and Rs. 500 crores, the minimum fee is Rs. 2 lakh per month. The Tribunal held that "Applying the said minimum fee structure, the Applicant is eligible for a fee of Rs. 2 Lakh per month."

 

Rejection of Fee Without Due Consideration: The Tribunal noted that the SCC rejected the fee proposal by a 93.37% vote without providing specific reasons. It observed: "There should have been a specific reason by the SCC for such rejection. It appears that the SCC has rejected such a claim without due application of mind and deliberations."

 

Payment for Professionals: The Tribunal also referred to Section 35(1)(i) of the IBC, 2016 and Regulation 7(1) of the IBBI (Liquidation Process) Regulations, 2016, which allow a liquidator to appoint professionals and include their remuneration as part of the liquidation cost. The Tribunal approved professional fees of Rs. 10,000 per month for the Chartered Accountant and Rs. 15,000 per month for secretarial assistance but limited the payment period to the duration of actual service or until the SCC passed a resolution to discontinue their services.

Final Directions

The NCLT, while allowing the application, issued the following directions:

1. Mr. K.C. Padmakumar is replaced by Mr. Sreenivasan P. R. as the new Liquidator, as resolved by the SCC.

2. The outgoing Liquidator is entitled to a minimum fee of Rs. 2 lakh per month for the period he served, as per Schedule II of the IBBI Regulations.

3. The professional fees of Rs. 10,000 per month for the Chartered Accountant and Rs. 15,000 per month for secretarial assistance are approved for the period they worked, subject to verification by the SCC.

4. The Respondents are directed to clear the liquidation cost, including pending professional fees, upon submission of proper documentation.

5. All parties must comply with the order within 30 days of receipt.

Also Read: Once CoC And Adjudicating Authority Approve Resolution Plan, Payment Terms Are Final, holds NCLAT New Delhi

The Tribunal emphasized that the outgoing Liquidator's entitlement to the minimum fee aligns with the statutory framework, ensuring fair compensation for the services rendered during the liquidation process.

Appearance

For the Applicant: Mr. Vinod P.V., Adv.

For the Respondents: None appeared. 

Cause Title: Mr. Padmakumar K. C., Liquidator of M/s. Asten Realtors Private Limited V. Piramal Capital and Housing Finance Limited & Anr.

Case No: IA(IBC)/79/KOB/2025 In CP(IBC)/54/KOB/2022

Coram: Vinay Goel [Member Judicial], Madhu Sinha [Member Technical]

[Read/Download order]