Ashok Kumar Gulla, Liquidator Vs

Harnam Singh Thakur, Member (Judicial)

IA No. 307/2021 & 1260/2022

IA No. 307/2021 & 1260/2022 are taken up together being interconnected and interlinked.

IA No. 307/2021 is being filed by Mr Ashok Kumar Gulla, Liquidator of M/s SRS Limited (herein referred to as ‘Liquidator/Applicant’) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. IA No. 1260/2022 is being filed by Mr Ashok Kumar Gulla, Liquidator of M/s SRS Limited under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

It is prayed by the applicant in IA No. 307/2021 to fix the remuneration of the applicant at 1/3rd of the fees fixed during CIRP, i.e. Rs. 5,00,000/- p.m. + GST + Out of pocket expenses) for the period during which the applicant is unable to sell the asset for the corporate debtor due to the attachment on the assets of the CD by the Directorate of Enforcement and Income Tax Department. IA No. 1260/2022 is filed for placing on record a supplementary affidavit in IA No. 1260/2022 to fix the remuneration of the Applicant at Rs. 4 Lahks + GST monthly from 29.01.2020 up to 31.05.2022 and Rs. 2 Lahks + GST per month from 01.06.2022 for next 2 years till 31.05.2024 or till the closure of the Liquidation Process, whichever is earlier, or such other fees. The fees be paid to Liquidator and IPE in the ratio of 25:75.

The brief facts of the case, as stated in the application, are that the CIRP has been initiated by order dated 21.08.2018, and the liquidation has been commenced by order dated 15.10.2019. The applicant is appointed as the Liquidator of SRS Ltd. (Corporate Debtor). After the commencement of the liquidation, the Liquidator invited claims, and after verification of the claims from various stakeholders, he formulated the Stakeholders’ Consultation Committee (SCC). A public advertisement has been issued on 13.12.2019 inviting Expressions of Interest for the scheme of compromise or arrangement under Section 230 of the Companies Act, 2013. Thereafter, the liquidator received three schemes within the period of 90 days. It is further submitted that the sale of the corporate debtor as a going concern could not take place as the assets of the corporate debtor have been attached by ED by order dated 08.01.2020. The Income Tax Department has also provisionally attached the assets, i.e. all the Cinema assets by order dated 20.12.2018, which was further extended on 21.06.2019, 06.01.2020 and 15.07.2020. The Income Tax Attachment Order was finally vacated on 12.01.2021. The liquidator has released advertisement for the sale of cinema at 12 locations between 15.01.2021 to 30.09.2021 through e-auction. The liquidator has sold the cinema, and the sale proceeds have been used to meet the pending Insolvency Resolution Process Cost and Liquidation Cost towards pending rent, cam, security, salaries, etc. After meeting these costs, the liquidator has also distributed Rs. 2 crores to the stakeholders.

It is mentioned that the applicant has been carrying on the duties of the corporate debtor as per the Code and in accordance with Regulation 4(2)(b) of the Liquidation Process, the applicant is entitled to the fees as a percentage on the proceeds released from the sale of the corporate debtor. The applicant has made various efforts to seek a vacation of attachment from the ED. The applicant has also approached various PMLA Tribunals, Appellate Tribunals, and Punjab & Haryana High Court on several occasions, and the applicant is also addressing the queries of two thousand deposit holders and other Creditors with the help of his team. The applicant and his team have been carrying out all the activities to manage the affairs of the Corporate Debtor that, includes dealing with various stakeholders, developers, vendors, and deposit holders; attending various legal cases filed against or for the corporate debtor etc. The assets of the CD remained attached with the ED and ITD, and the applicant has not been able to earn any fees since 29.01.2020. The applicant has also taken up this concern with Secured Financial Creditor in the meeting but no fees has been approved.

The applicant has filed a supplementary affidavit by Diary No. 02378 dated 27.09.2022 stating that there has been subsequent development with the stakeholders' committee. In pursuance of the order dated 28.07.2022 of this Bench, the liquidator has conducted the 18th SCC meeting dated 08.08.2022, 19th SCC Meeting dated 22.08.2022 and 20th SCC meeting on 15.09.2022, wherein the Members of SCC have submitted that Fees will be paid as per Regulation 4(2)(b) of the Liquidation Process Regulation, 2016.

We have heard learned counsel for the applicant and respondents and have perused the record carefully.

In the 20th Meeting of SCC held, the following discussion took place which is reproduced below :-

“The Liquidator thereafter sought views of all the members of SC present in the meeting.

● Mr Rakesh Verma, AGM, SBI mentioned that they had already submitted their views that the fees be paid as per Reg 4 (2) (b) of the IBBI Liquidation Process Regulation, 2016 and will submit further details on justification through email latest by 16 September 2022.

● Ms Anubha Mathur, Senior Manager, BOI and Ms. Meenindra S.R, Chief Manager, Union Bank of India stated that they are in discussion with higher authorities & will convey decision through email latest by the 16th September 2022. Subsequently, Bank of India vide mail dated 16.09.2022 stated that "We are of the opinion that fee payment may be made in terms of regulation 4 (2)(b) of the IBBI (Liquidation Process) Regulations, 2016 as a percentage of Liquidation Proceeds.

● Mr Kuppanna M Dakulagi, Manager (Credit), Punjab National Bank stated and also reiterated through email and the extract of mail send by PB is reproduced here "In the absence of any explicit provision for ring the liquidator fees by the SC we as a part of SCC can't decide over the issue. As such we will be able to pay in terms of Regulation 4 (2b) of the IBBI (Liquidation Process) regulations 2016"

● Mr Abhinav Garg, representative of Deposit Holders stated that they do not have any comments and Secured Financial Creditors decide in the matter. The representatives from Statutory Authority and Operational Creditor also did not offered any view in the matter and were of the view that Secured Financial Creditor decide the matter.

The Liquidator in response to the queries from Mr. Rakesh Verma, AGM, SBI stated that last meeting of CoC was held on 10th May 2019 (i.e. 13** meeting) wherein approval of the Resolution Plan submitted by Resolution Applicant was put up for approval through voting from 14th May 2019 to 16th May 2019 (till 8 PM) and the same was rejected. Hence, Resolution Professional had filed application under section 33 (1) of the IBC,2016 on 17th May 2019, seeking approval for liquidation Process from Hon'ble NCLT Chandigarh, before the expiry of CIRP period which ended on 18th May 2019. No approval for fee of Liquidator as per Regulation 39 D of IBBI (Insolvency Resolution Process for Corporate Process) Regulation, 2016 was sought from members of CoC as such Regulation was introduced subsequently through amendment on 25th July 2019. The CD was admitted into liquidation vide order dated 15' October 2019 from Hon"ble NCLT, Chandigarh.

The Liquidator further informed in response to the observation of PNB, that Secured Financial Creditors were earlier members of CoC and hence have powers to approve fee as per the Regulations. He further stated that in the event, member of CoC does not approve the fee of the liquidator, the fee payable is as per regulation 4(2)(b) of IBBI (Liquidation Process) Regulation  2016  based  on  net  realisation  and  distribution.  Hence, Secured Financial Creditor has not provided any approval and did not consider the fact that due to PAO of ED, the liquidator will not be able to recover any fees as per Regulation 4(2)(b) of IBBI (Liquidation Process) Regulation, 2016 and have not appreciated the situation presently prevailing.

The Liquidator stated that approval of Liquidator fee as per Regulation 4(2)(b) of IBBI (Liquidation Process) Regulation, 2016 is defacto available. The members were requested to approve fixed fee considering the specific circumstances of the matter. The Liquidator and his team continues to discharge role without any fees since 29th January 2020 and this situation may continue.”

We have carefully considered the views of the members of the SCC on the issue of payment of fees to the Liquidator. it is also noted that they have taken into account the work done by the liquidator and also the quantum of work which remains to be completed by the liquidator. While acknowledging the uncertainties of the duration of the liquidation process, we see no reason to disagree with the considered view of the member of SCC on payment of remuneration to the liquidator as per Regulation 4 (2) (b) of the IBBI Liquidation Process Regulation, 2016. In the result, the prayer for fixing a particular amount as the remuneration of the liquidator for the liquidation period is not acceded to.

In view of the aforesaid discussion, IA Nos.307/2021 and 1260/2022 are dismissed and disposed of accordingly.