Liquidator's remuneration falls within realm of Committee of Creditors under Regulation 39D
The NCLAT set aside the NCLT order because it is immaterial which provision of the Code squarely governs passage of order of liquidation so long as the Committee of Creditors takes a decision with regard to liquidation costs, expenses and remuneration payable to the liquidator
The National Company Law Appellate Tribunal (NCLAT) has given certain directions in the matter of Narinder Bhushan Aggarwal vs. Little Bee International Pvt. Ltd. & Anr.
Herein the Appellant- Mr. Narinder Bhushan Aggarwal being the liquidator in M/s. Little Bee International Private Limited was aggrieved of the impugned order dated 26 February, 2019 only to the extent of remuneration of the liquidator which in terms of the impugned order was directed to be payable as per Regulations 4(2) and (3) of the Liquidation Process Regulations, 2016 and not under Regulation 39D.
The Adjudicating Authority (National Company Law Tribunal/NCLT), Chandigarh Bench, Chandigarh was of the view that Regulation 39D provides for fixation of fees separately by the Committee of Creditors for the three periods given in Section 39D and the fees in the instant case were not governed by Section 39D as the order of liquidation came to be passed under Section 33(1) (a) of the I&B Code.
The Appellate Tribunal stated that the Corporate Debtor had been sent into liquidation and the Committee of Creditors had in its 8th meeting held on 25 November, 2019, with a voting share of 69.48% approved the contribution of the estimated expenses of the liquidation by the Financial Creditors in an escrow account in the ratio of their claims.
The Committee of Creditors vide the same resolution and the same voting shares also approved the remuneration of the Appellant for the conduct of liquidation proceedings at Rs. 50,000/- per month or such proportion to the value of the liquidation estate assets as specified by the Board as per Regulation 4(2) of the Liquidation Process Regulations, 2016.
The Appellate Tribunal also affirmed that the order of liquidation had been passed and the Corporate Debtor was undergoing the liquidation process.
As per the Appellate Tribunal, it was immaterial which provision of the 'I&B Code' squarely governs the passage of order of liquidation. The fact remained that the Committee of Creditors had taken a decision in regard to the liquidation costs, expenses and the remuneration payable to the liquidator which in the light of the recommendation of the Committee of Creditors with the requisite percentage brings it within the ambit of Regulation 39D.
Therefore, it was not permissible to resort to any other provision which would come into effect only if the action of the Committee of Creditors fell beyond the purview of Regulation 39D.
The remuneration of the liquidator falling within the realm of the Committee of Creditors in terms of Regulation 39D, the Hon'ble NCLAT found that the impugned order could not be sustained.
Thus, the impugned order was set aside to the limited extent of remuneration of the liquidator and this Appeal was disposed of with the direction that the liquidator's remuneration would be governed in accordance with the recommendation of the Committee of Creditors.