IBC

SHIKSHAK SAHAKARI BANK LTD VS MR. JAGDISH KUMAR PARULKAR, LIQUIDATOR : CASE SUMMARY

The National Company  Law Appellate Tribunal (NCLAT)  in Shikshak Sahakari Bank Ltd. Vs. Mr. Jagdish Kumar Parulkar, Liquidator held that Liquidator is entitled to a fee under Regulation 4 (2) (b) only when he has actually realized or distributed any amount is not tenable in light of Regulation 21 A of IBBI (Liquidation Process) Regulations, 2016.

FACTS OF THE CASE

CIRP was initiated in the matter of Narendra Solvex Pvt. Ltd. (Corporate Debtor)  vide order dated 16.09.2021. CIRP was not successful as such liquidation order was passed vide order dated 27.01.2024.  The Appellant filed claim of Rs 5,95,45,557/-. In the claim form, the Appellant stated that it is not relinquishing security interest. The Appellant opted to realise its security interest through its own proceedings under SARFAESI Act, 2002 in the manner provided under Section 52(1)(b) of the Code.  The Liquidator requested the Appellant to pay the Liquidator Fee which was only partly paid. The Liquidator filed Application before NCLT for payment of Liquidator Fee of Rs. 25,47,229/-.

FINDINGS OF THE NCLAT

The NCLAT determined two issues – (i) Whether the Liquidator’s fee is payable even if the Liquidator did not directly realise or distribute the secured asset ? (ii) Whether the Appellant has complied with Regulation 21 A of the Liquidation Process Regulations, 2016 ?

The NCLAT noted that the Secured Creditor is mandatorily obligated to pay its share as per Section 53(1) (a) and 53 (1)(b)(i) of the Code which provides for distribution of assets from the sale of liquidation assets in the order of priority. Further Regulation 21A (3) of Liquidation Process Regulations, 2016, provides that where a Secured Creditor fails to comply with Sub-regulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate. The Appellant neither paid full liquidation costs nor demonstrated compliance with Regulation 21A (2). The 90  day period from the Liquidation commencement date also lapsed without payment of liquidation costs.

The NCLAT observed that the contention of the Respondent that the Liquidator is entitled to a fee under Regulation 4 (2) (b) only when he has actually realized or distributed any amount is not tenable in light of Regulation 21 A.

The NCLAT  did not find any infirmity in the decision of NCLT and dismissed the appeal.

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Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

Mukesh Kumar Suman

Mukesh Kumar Suman

Mukesh Kumar Suman is an advocate based at Delhi. He has rich experience in civil, criminal, commercial, arbitration and corporate insolvency matters. He regularly appears before District Courts, NCLT, NCLAT, High Court and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

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