Ca Santanu Brahma vs Indian Bank & Anr

[Arising out of the Order dated 05.02.2025, passed by the 'Adjudicating Authority' (National Company Law Tribunal, Kolkata Bench), Court-I in I.A (Companies Act) No. 1 of 2025 in T.P (Companies Act) No. 20 of 2022]

IN THE MATTER OF: CA Santanu Brahma, (Liquidator of The Corporate Debtor M/s. Maheswary Ispat Limited Having his office at AH 276 Salt Lake, Sector II, Kolkata 700091 ...Appellant

Versus

1. Indian Bank Having its Stressed Assets Management Large Branch at 14 India Exchange Place, 1" Floor, Kolkata 700001 ...Respondent No.1

2. State Bank of India Having its Stressed Assets Management (SAM-II Branch at 8th Floor, Nagaland House, 11 & 13 Shakespeare Sarani, Kolkata-700071 ...Respondent No.2

Present: For Appellant : Mr. Shounak Mitra & Mr. Ishan Roy Chowdhury, Advocates

For Respondent : Mr. Krishnendu Datta, Sr. Advocate with Mr. Santosh Kumar Ray, Ms. Zeba Khan, Ms. Ritika Khanwar and Mr. Yash Tandon, Advocates.

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

Introduction

The present Appeal is being filed by the Liquidator-Appellant of

Maheswary Ispat Limited - Corporate Debtor under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter, "IBC") against the

impugned order dated 05.02.2025 (Impugned Order) passed by National

Company Law Tribunal, Kolkata Bench (hereinafter, "AA"/ "NCLT") in IA

(Companies Act) No 1 of 2025 in T.P (Companies Act) No. 20 of 2022.

2. The Appellant - Liquidator contends that it was denied fees as per the

provisions of the IBC and Regulation 4(2)(b) of the Insolvency and Bankruptcy

Board of India (Liquidation Process) Regulations, 2016 ("Liquidation Process

Regulations") - LPR 2016 in short) and also the impugned order is in the teeth

of the judgment passed by this Hon'ble Tribunal in Shikshak Sahakari Bank

Limited vs Mr. Jagdish Kumar Parulkar (Company Appeal (AT)(Ins.) No.

2023 of 2024) where near identical issues of fact and law were involved. The

judgment of this Hon'ble Appellate Tribunal has been upheld upto Hon'ble

Supreme Court which has dismissed the Civil Appeal No. 1973 of 2025

therefrom on 24.02.2025.

Submissions of the Appellant-Liquidator

3. A Company Petition was filed by Tata Capital Limited (erstwhile Tata

Capital Financial Services Limited) before the Hon'ble High Court at Calcutta

numbered as C.P. No. 560 of 2011 against the Corporate Debtor under the

provisions of Sections 433, 434 and 439 of the Companies Act, 1956. The

Hon'ble High Court admitted the said petition on 12.10.2012 and

subsequently, by order dated 21.06.2016 read with order dated 28.11.2016,

the Corporate Debtor was directed to be wound-up. Accordingly, the Official

Liquidator was directed to take the possession of the Corporate Debtor. By

order dated 17.05.2022 the Hon'ble High Court at Calcutta transferred the

winding up proceedings to NCLT. Thereafter, pursuant to an application (IA

Company Appeal (AT) (Insolvency) No. 461 of 2025 2 of 45 No. 103/KB/2023) filed by one of the Secured Creditors, State Bank of India

("SBI"), liquidation was commenced under the provisions of the IBC and the

Appellant was appointed as Liquidator by order dated 19.12.2023 passed by

the NCLT. The said order was brought to the notice of the Liquidator only on

10.01.2024. On 15.01.2024, the Appellant / Liquidator made a Public

Announcement in Form B in the newspaper namely 'Business Standard' in

English and 'Aajkaal' in Bengali, inviting stakeholders of the Corporate Debtor

to file their claims. Accordingly, Indian Bank, being Respondent No. 1 herein

and State Bank of India being Respondent No. 2 herein submitted their claims

in Form D, on 17.01.2024 and 09.02.2024 respectively wherein they

expressed their intention to not relinquish their security interest being pari

passu first charge in respect of the Corporate Debtor's Panagarh Factory

situated at Village Beldanga, Panagarh- Morgram State Highway, Opposite

Amrit Chicken, PO- Chota Ramchandrapur, PS - Kansa, District- Paschim

Burdwan, Pin-713148 ("Panagarh Factory").

4. By order dated 28.02.2024, the Hon'ble Tribunal excluded a period of

27 days from the Liquidation period pursuant to an application pursuant to

IA No. 27/KB/2024 filed by the Appellant / Liquidator.

5. The 1st (first) meeting of the Stakeholder's Consultation Committee

("SCC") was held on 07.03.2024 wherein the remuneration of the Liquidator

was decided by the stakeholders through e-voting. However, no voting share

was assigned to Indian Bank and SBI, the Respondents herein, in terms of

Regulation 31A(2) of the Liquidation Process Regulations, 2016.

Company Appeal (AT) (Insolvency) No. 461 of 2025 3 of 45

6. The Liquidator made email communication dated 11.01.2024 with the

office of Official Liquidator ("OL") attached to the Hon'ble High Court at

Calcutta, to initiate the handover proceedings and met the OL on 17.01.2024

to decide the way ahead. Thereafter, the Liquidator visited the OL's office on

18.01.2024, 19.01.2024 and 31.01,2024 for inspecting the files and records

relating to the instant liquidation matter. With permission from the OL, the

documents and records were obtained by the Liquidator from the office of OL

which were vital for the instant Liquidation proceedings.

7. After thorough verification of the documents, the Liquidator made an

independent visit (prior to takeover of possession) to the Panagarh Factory to

understand the state of affairs and to ensure the presence of the Assets (as

per the list obtained from OL's record) in the factory premises. During the

same, the Liquidator observed that certain assets appearing in the list

(retrieved from OL's record) were not present in the factory premises. The

Liquidator summarised his findings and thereafter sent an email on

29.02.2024 to the OL for his record. The same was also reported and

discussed during the 1st SCC meeting.

8. Upon scrutinization of the Status Report dated 14.01.2022 filed by the

OL, the Appellant / Liquidator came to know that Respondent No. 2 SBI by

letter dtd.19.01.2017 had informed the OL that SBI as a Secured Creditor and

lead banker under consortium arrangement had taken physical possession of

Cuttack Unit (another asset) of the CD on 09.12.2015 under SARFAESI Act,

2002 and had taken only symbolic possession of the Panagarh Factory. The

report further enumerates that by a letter dated 31.12.2021 SBI intimated the

Company Appeal (AT) (Insolvency) No. 461 of 2025 4 of 45 OL that the said Cuttack Unit was sold by them through e-auction. The matter

was also reported in the 1st SCC meeting wherein the Respondent Banks were

present.

9. Notably, no document (as retrieved from OL's office) suggests that SBI

made any effort to obtain physical possession of the Panagarh Unit and

thereafter to sell the unit in order to ensure 'value maximization' of the CD's

asset. SBI instead left the assets in an inoperative state causing 'value erosion'

of the assets. Finally, on 14.03.2024, as a result of the perseverance of the

Appellant Liquidator and several personal follow-ups with OL's Office, the

Appellant was able to obtain handover of physical possession of the Panagarh

Factory from the authorized representatives of the Official Liquidator in the

presence of authorized representatives of State Bank of India and Indian

Bank, the Respondents herein.

10. Pursuant to an email communication dated 29.02.2024 from the

Appellant for compliance of Regulation 37(1) of the Liquidation Process

Regulations, 2016, the Respondents provided their proposed realization value

for the Panagarh Factory. The Respondent No. 1 via email dated 02.03.2024

intimated the intended value of the sale of the Panagarh Factory of INR 20

crores to the Appellant and the Respondent No. 2 herein, after Appellant's

reminder email dated 08.03.2024, intimated the intended value of the sale of

the Panagarh Factory at INR 15.79 crores, via email dated 12.03.2024, to the

Appellant.

11. On 15.03.2024, the Appellant requested the Respondents to contribute

jointly towards the liquidation cost of Rs. 1,34,55,000/- (Rupees One Crores

Company Appeal (AT) (Insolvency) No. 461 of 2025 5 of 45 Thirty-Four Lakhs and Fifty-Five Thousand only) in compliance of Regulation

21A (2) of the IBBI (Liquidation Process) Regulations within 14.04.2024 (i.e.

90 days from the liquidation commencement date of 16.12.2023 after

considering exclusion period of 27 days). The details of the share of the

estimated liquidation costs of the Respondents were also elaborated in the

said email. Furthermore, on 09.04.2024, the Appellant sent a reminder mail

to the Respondents herein to make payment of their share of liquidation cost

of Rs. 1,34,55,000/- (Rupees One Crores Thirty-Four Lakhs and Fifty-Five

Thousand only) in terms of Regulation 21A(2) of the Liquidation Process

Regulations, 2016 within 14.04.2024. Further, the Appellant informed the

Respondents that non-payment of the share of liquidation expenses within

14.04.2024 may cause the Panagarh Factory to become part of the

Liquidation estate in terms of Regulation 21(A)(3) of the Liquidation Process

Regulations, 2016 thereby alerting the Respondent Banks to act as per the

provision of IBC in a time bound manner in their own interest as well as

overall interest of the Code.

12. In response to the said emails issued by the Appellant, the Respondent

No. 1 informed the Appellant via email dated 12.04.2024 that a sum of

Rs.21,55,706/- (which was 100% of the estimated liquidation cost excluding

the Liquidator's fee) had been remitted to the designated bank account

towards their share of Liquidation costs. The Respondent No. 1 also requested

the Appellant / Liquidator to handover the possession of the Panagarh

Factory solely to Respondent No. 1 as there was no term loan outstanding of

Respondent No, 2 in respect of Panagarh Factory.

Company Appeal (AT) (Insolvency) No. 461 of 2025 6 of 45

13. Importantly, the Respondent No. 1 gave an undertaking to make

payment of the Liquidator's fee as per Regulation 4(2)(b) of the Liquidation

Process Regulations, 2016, to be determined after sale of the Panagarh

Factory. The Respondent No. 1 requested the Appellant herein to handover

the physical possession of the said Panagarh Factory solely to Respondent

No.1.

14. The Respondent No. 2, in response to the emails of the Appellant as

mentioned above, informed the Appellant via email dated 12.04.2024, that an

ad-hoc lump-sum payment of Rs. 5,40,000/- (25% of Rs. 21.55 lakhs being

estimated liquidation cost excluding the Liquidator's fee) had been paid

towards their share of Liquidation costs. Additionally, the Respondent No. 2

also gave an undertaking to pay its share of Liquidator's fee after successful

completion of sale of the Panagarh Factory and requested the Appellant herein

to handover possession of the Panagarh Factory.

15. Thus, relying on the undertakings provided by the two nationalized

banks i.e. Indian Bank and State Bank of India, and honoring the time

essence of the liquidation proceedings and to avoid unnecessary litigations,

the Appellant proceeded to hand over the physical possession of the said

Panagarh Factory to the Respondents jointly, on 30.04.2024 and accordingly

a handover document was executed between the Appellant and Respondents

on the same date. Notably, in the handover document dated 30.04.2024

jointly executed and signed by both the Respondent Secured Creditors, being

nationalized banks, also record the agreement and undertaking of the

Respondents to pay the Liquidator's Fees on completion of the sale of

Company Appeal (AT) (Insolvency) No. 461 of 2025 7 of 45 Panagarh Factory in accordance with the formula mentioned in Regulation

4(2)(b) of the Liquidation Process Regulations, 2016 along with clerkage @ 5%

thereon.

16. The Appellant has undertaken several measures for the purpose of

taking care of the realisation of the assets through the secured financial

creditors and for that reason has also coordinated with third parties and the

secured financial creditors in order to ensure successful completion of sale of

the Panagarh factory. Brief particulars of some of the steps taken by the

Appellant in coordination with third parties are mentioned below:

a. The Appellant coordinated with the office of the Official Liquidator to get possession of the Panagarh factory from the Official Liquidator.

b. The Appellant made independent visits to the Panagarh Factory to make ground level assessment of the state of affairs at the factory premises so that appropriate measure can be taken to protect the structures and the assets lying there.

c. The Appellant took handover of possession of the Panagarh factory from the Official Liquidator and took all necessary measures to preserve the said asset. Upon taking possession the Liquidator immediately engaged a new Security Agency so that strict vigilance can be exercised on the premises and structures and assets there at. During the Lok Sabha Elections in the month of April 2024, the Liquidator, through the Security Agency, coordinated with the local Police Station so that Licensed Gunmen with firearms be allowed to continue their duty in the said premises and for protection of the premises. During ground assessment it was felt by the Liquidator that without proper security including deputation of Gunman the assets under security interest of the Respondent Bank could not be protected in its true spirit.

d. The Appellant has coordinated with the Respondents to ensure handover of possession to the Respondents.

e. The Appellant was approached by several interested buyers who wanted to participate in the auction of the Panagarh Factory. The

Company Appeal (AT) (Insolvency) No. 461 of 2025 8 of 45 Appellant has held meetings with such prospective buyers and has duly explained to them about the status of the liquidation proceedings and the auction process. The Appellant assisted the Respondents in liaising with prospective buyers.

f. The Appellant has informed prospective buyers that the Panagarh Factory is with the respondent banks since they invoked their security interest. The Appellant has also requested the prospective buyers to contact the respondent banks and has ensured coordination between the respondent banks and prospective buyers.

g. The Appellant has also coordinated with the consultants of the prospective buyers and informed them regarding the Environmental Clearance License (ECL) which is part of the Liquidation estate and has not been transferred to the respondent banks. The ECL is a very important document in the relevant business sector of the corporate debtor. Though the ECL has expired, the relevance of such a license is very important for initiating operation of the corporate debtor which involves production of 'Sponge Iron'.

h. The Appellant has coordinated with the respondent banks and has also advised the two banks and sought to resolve difference of opinion between the two banks in relation to possession of the said asset. Notably, the Respondent no.1 was desirous to obtain sole possession of the Panagarh factory as will be evident from its email dated 02.03.2024 and subsequently in the email dated 12.04.2024. Similarly, the Appellant Liquidator was also requested by Respondent No. 2 to handover the possession of Panagarh Factory in favour of Respondent No. 2 as the original deed was mortgaged with them, which is evident from the email received from Respondent No. 2 on 12.03.2024. It is only due to the Appellant's timely intervention and assistance that differences between the respondent banks were resolved in an amicable manner without any litigation.

17. Thereafter on 24.10.2024, the Respondent No. 1 communicated to the

Appellant Liquidator by email that the Panagarh Factory has been sold to H1

bidder, Manbhum Ispat Private Limited ("Manbhum Ispat") and buyer has

deposited the sale consideration amount of INR 55.10 Crores on 21.10.2024.

Consequent thereto, the 'Certificate of Sale' and possession has been handed

Company Appeal (AT) (Insolvency) No. 461 of 2025 9 of 45 over to Manbhum Ispat. The copy of 'Certificate of Sale' has been provided by

Respondent No. 1 via email dated 25.10.2024.

18. Considering that 30.56 acres of land were sold by the Respondents, out

of the total area of 35.6 acres which has been physically transferred to the

said Manbhum Ispat, the Appellant filed an application being IA (Comp. Act)

No. 189/KB/2024 praying, inter alia, for direction on Manbhum Ispat to hand

over the unsold 5.04 acres of land, which was handed over by the

Respondents over and above the land of 30.56 acres sold by them. The NCLT

by order dated 17.12.2024 directed Manbhum Ispat to hand over the excess

land of 5.04 acres to the Liquidator within 2 months from the date of the

pronouncement of the order.

19. The Appellant Liquidator prayed for recalling of the order dated

17.12.2024 by application no. IA No. 18/KB/2025 filed before Hon'ble NCLT,

Kolkata after it came to his attention that the application (i.e. IA No.

200/KB/2024) pursuant to which the order dated 17.12.2024 was passed by

NCLT, was not served on Manbhum Ispat. Simultaneously, an appeal CA (AT)

(Ins) No. 161 of 2025 was filed by Manbhum Ispat before this Hon'ble Tribunal

which was heard on 28.01.2025 and accordingly, the order dated 17.12.2024

was set aside with consent of the Appellant Liquidator with direction to revive

IA No.200 of 2024 and for fresh hearing on the matter. The Adjudicating

Authority by order dated 28.01.2025 noted the direction of this Appellate

Tribunal and directed accordingly. The recalling application IA No.

18/KB/2025 was disposed of as infructuous.

Company Appeal (AT) (Insolvency) No. 461 of 2025 10 of 45

20. On 25.10.2024, the 1st SCC meeting was held wherein the details on

the determination of the share of liquidation cost upon the sale of Panagarh

Factory as well as the liquidator's fees was discussed and shared with all the

stakeholders including the Respondents by an email dated 26.10.2024.

21. After the successful completion of the sale of the said Panagarh Factory,

the Appellant by an email dated 28.10.2024 requested the Respondents for

contributing additional amount of Rs. 1,87,76,133/- (Rupees One Crore

Eighty-Seven Lakhs Seventy-Six Thousand One Hundred Thirty Three only),

jointly, towards the share of liquidation cost, in terms of proviso to Regulation

21A(2). In the said email it was clarified that the liquidator's fees arising upon

sale of the said Panagarh Factory was determined as per the undertaking

provided by the Respondents in their emails dated 12.04.2024 (issued for

initial compliance of Regulation 21A) which was also agreed and recorded in

para 5 of the handover document dated 30.04.2025, related to Panagarh

Factory. The determination of INR 1,87,76,133/- has been provided in the

said email dated 28.10.2024. The summary of the same is as under: -

Share of Secured Consolidated Total (INR) FCs (Indian Bank share of all & SBI i.e. other Respondent Bank stakeholders

Total 2,14,71,839 26,29,386 2,41,01,225 Liquidation Cost (Est.) Less: (-) 26,95,706 X X Already paid (INR 21,55,706 + INR 5,40,000

Additional 1,87,76,33 X X Contribution Payable

Company Appeal (AT) (Insolvency) No. 461 of 2025 11 of 45

22. On 19.11.2024, the Appellant issued a reminder email to the

Respondents herein requesting for payment of the additional contribution of

Rs. 1,87,76,133/- (Rupees One Crore Eighty-Seven Lakhs Seventy-Six

Thousand One Hundred Thirty-Three only).

23. Thereafter, a Joint Lenders' Meeting (JLM) was called on 22.11.2024 to

discuss the Liquidator's fees arising from the additional contribution towards

Liquidation Cost wherein the Respondents requested the presence of the

Appellant. The Appellant discussed and deliberated upon the compliance of

Regulation 21A the IBBI (Liquidation Process) Regulations, 2016 and

expressed that the Respondents had partly contributed towards the

liquidation cost in terms of Regulation 21A prior to taking possession of the

Panagarh Factory and had given an undertaking via email dated 12.04.2024

to pay the fees of the Liquidator 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. Furthermore, solely relying on the

undertaking provided by two nationalized banks, the Respondents herein, the

Appellant handed over the possession of the Panagarh Factory to the

Respondents. After sale of the said Panagarh Factory, the Appellant requested

the Respondents to comply with the undertaking and also adhere to the

provisions of the Liquidation Process Regulations in this regard. The Appellant

also submits that aforesaid facts shall also be explicitly evident from the

emails dated 12.04.2024 issued by the Respondents respectively and the

terms of the handover documents dated 30.04.2024 executed by the

Respondents. After the aforesaid discussions and deliberations, the

Respondents expressed that the matter needs to be discussed with their

Company Appeal (AT) (Insolvency) No. 461 of 2025 12 of 45 respective competent authorities for approval/guidance for the payment of the

liquidation costs.

24. The Appellant issued another reminder mail on 16.12.2024, requesting

the payment of Rs. 1,87,76,133/- (Rupees One Crore Eighty-Seven Lakhs

Seventy-Six Thousand One Hundred Thirty-Three only). Further, vide email

dated 19.12.2024, the Appellant, requested the Respondents to contribute

towards the balance Liquidation cost.

25. However, despite several reminder emails, the Respondents failed to pay

the aforesaid liquidation cost and have failed to comply with the provisions

Regulation 21A(2)(a) of the IBBI (Liquidation Process) Regulations, 2016,

which provides for payment of Liquidation Costs including the fees of the

liquidator as per Regulation 2(1)(ea)(i) which would be determined as per

Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016 despite

providing the undertakings via emails dated 12.04.2024 and executing the

handover documents dated 30.04.2024 in respect of Panagarh Factory.

26. In the aforementioned facts and circumstances, the Appellant filed I.A

(Companies Act) No 1 of 2025 in T.P 22 of 2022 before the NCLT, Kolkata

Bench praying for, inter-alia, a direction on the Respondents to make

payment of Rs. 1,87,76,133/- (Rupees One Crore Eighty-Seven Lakhs

Seventy-Six Thousand One Hundred and Thirty-Three only) jointly towards

the 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.

Company Appeal (AT) (Insolvency) No. 461 of 2025 13 of 45

27. The said I.A (Companies Act) No 1/KB/2025 appeared in the cause list

of the Hon'ble NCLT, Kolkata Bench on 13.01.2025 and was heard at length

and was subsequently reserved for orders on the very same date i.e.

13.01.2025. No prayer was made by the Respondents to file any reply thereto

and the matter was heard out on the basis of the application itself. Written

Notes of Arguments were also filed by the Appellant. Thereafter, on

05.02.2025, the Adjudicating Authority, National Company Law Tribunal,

Kolkata Bench passed the impugned order disposing of I.A. (Companies Act)

No. 1/KB/2025, inter alia observing that:

"In this case, since the sale is conducted by the Secured Creditor under Section 52 of the Insolvency and Bankruptcy Code, 2016, the liquidator shall not be entitled to any fees from such realization, as the liquidator's fees are solely meant to compensate for actual work done in the process of realizing/selling assets. For all other assets, except those sold by the secured creditor, the liquidator's fees shall be payable as per the rates approved by the SCC in its meeting dated 07.03.2024 if any. Accordingly, this application being I.A. (Companies Act) No. 1/KB/20285 is disposed of."

28. The NCLT has misconstrued and misinterpreted the dictum of

Shikshak Sahakari Bank Limited (supra) as passed by this Hon'ble

Tribunal. In fact, the impugned order passed is per incuriam. The ratio of

Shikshak Sahakari Bank Limited (supra) is squarely applicable in the present

case. Even in Shikshak Sahakari Bank Limited (supra) there was no separate

"realisation" or "distribution" and despite that Appellate Tribunal ruled that

irrespective of realization or distribution, the Liquidator will still be entitled to

fee in terms of Regulation 21A of the Liquidation Process Regulations NCLT

has perversely held that in the present case, the Appellant is not entitled to

any fee from sale of the Panagarh factory.

Company Appeal (AT) (Insolvency) No. 461 of 2025 14 of 45

29. Compliance of regulations 2(ea), 2-A, 21-A and 37 of the Liquidation

Process Regulations is "absolutely necessary" as held by this Hon'ble Tribunal

in Small Industries Development Bank of India (SIDBI) v. Shri Vijender

Sharma (Company Appeal (AT) (Insolvency) No. 1027 of 2021). The refusal by

the Respondent banks to pay the Appellant's fee from sale of the Panagarh

factory amounts to non-compliance on the part of the Respondents with the

provisions of Regulation 4(2)(b) of the Liquidation Process Regulations.

30. The NCLT has failed to appreciate that a liquidator, who has

coordinated with secured financial creditors, the prospective / interested

buyers, the office of OL and has taken necessary steps to ensure sale of an

asset is entitled to a fee in terms of Regulation 4(2)(b) of the Liquidation

Process Regulations as has been held by this Hon'ble Tribunal in Shikshak

Sahakari Bank Limited (supra).

31. The Appellant played a crucial and vital role in facilitating the sale of

the said factory. In fact, if the Appellant had not coordinated with the Official

Liquidator, the Respondent banks and prospective buyers, no sale at all could

have taken place, which ultimately led to maximization of value of the assets

of the Corporate Debtor.

32. There is no embargo under Regulation 4(2)(b) of the Liquidation Process

Regulations prohibiting payment of fee to a liquidator who has taken due care

to preserve the asset and ensure coordination between secured financial

creditors, prospective buyers as well as the successful auction purchaser.

Company Appeal (AT) (Insolvency) No. 461 of 2025 15 of 45

33. The auction took place under the provisions of the SARFAESI Act, 2002

arising from the provisions of Insolvency and Bankruptcy Code, 2016 based

on the prerequisite duties carried out by the Appellant Liquidator which

involved obtaining and handing over peaceful possession of Panagarh Factory.

The Appellant had coordinated and taken care for realization of the asset

through the secured financial creditors by coordinating with the secured

financial creditors, prospective buyers and Official Liquidator in the

proceedings, in order to achieve 'value maximization' objective of IBC Laws in

a time bound manner.

34. The NCLT erred in holding that Regulation 4(2)(b) of the Liquidation

Process Regulations is not applicable to the present case. The NCLT erred in

holding that the entire action to sell the Panagarh unit was conducted solely

by the Respondent banks sans any involvement of the Appellant. Without the

involvement of the Appellant, no sale at all could have taken place.

35. In this context it is imperative to mention that for the purpose of

Regulation 37, the expected sale price of the Panagarh Factory was intimated

by Respondent No. 1 namely Indian Bank, by email dated 02.03.2024, as INR

20 (Twenty) Crores and by Respondent No. 2 namely State Bank of India, vide

email dated 12,03.2024 as INR 15.79 Crores and that the asset was sold at

INR 55.10 Crores pursuant to a Sale Notice dated 06.09.2024 having Reserve

Price at INR 51 Crores. Thus, the sale realization of Panagarh Factory has

been nearly 3 (three) times more than the expected sale realization of the

Respondent Secured Creditors. Such value maximization could not have been

Company Appeal (AT) (Insolvency) No. 461 of 2025 16 of 45 possible without a team effort (including the Respondents) where the efforts

of the Appellant Liquidator was vital and essential.

36. Appellant Liquidator played a crucial role in facilitating discussions

between the two Respondent Secured Creditors. As reflected in the email

dated 02.03.2024, Respondent No. 1 asserted exclusive first charge over the

Panagarh Factory and similar contention was also made by Respondent No.

2 as evident from the email dated 12.03.2024. Without intervening in the

shareholding arrangement among the Respondent Secured Creditors, the

Appellant Liquidator apprised them of the relevant provisions of Regulation

21A, particularly the 180-day timeline, and requested the Banks to resolve

the matter amicably to avoid litigation and ensure timely value maximization

which is the spirit, object and the crux of IBC and its Rules and Regulations

thereunder. Consequently, the Respondents reached a resolution, leading to

the publication of the sale notice for the Panagarh Factory on 06.09.2024 by

Respondent No. 1. While not a statutory obligation, the Appellant undertook

this effort in good faith, guided by the principles of law.

37. Regulation 4 of the Insolvency and Bankruptcy Board of India

(Liquidation Process) Regulations, 2016, delineates the framework for

determining the Liquidator's fees. Specifically, Regulation 4(2)(b) outlines a

fee structure based on the amounts realized and distributed during the

liquidation process. However, the regulation does not preclude the Liquidator

from claiming fees in scenarios where assets of the Corporate Debtor is sold

by Secured Creditors who have not relinquished their security interest. The

Company Appeal (AT) (Insolvency) No. 461 of 2025 17 of 45 absence of restrictive language implies the Liquidator's entitlement to fees

under such circumstances.

38. There has been non-compliance on the part of Respondents in respect

of the provision of Regulation 21A(2) of the Liquidation Process Regulations,

2016 wherein it has been explicitly stated that the Secured Creditor who

proceeds to realise its security interest shall pay towards the liquidation cost

(as referred to in Section 53(1)(a) read with Section 5(16) of IBC, 2016 read

with Regulation 2(1)(ea) of Liquidation Process Regulations, 2016) in the

manner as it would have shared such cost in case it had relinquished the

security interest. Further, the conjunctive reading of 1st and 2nd proviso to

Regulation 21A(2) specifies that the Secured Creditor shall make good the

difference between the amount already paid, on estimated basis, and certain

amount payable arising from sale of the assets. The 'Liquidation Cost'

includes fees payable to the Liquidator under Regulation 4 of the Liquidation

Process Regulations, 2016. In the given instance, the Stakeholder's

Consultation Committee (SCC) in its 1st meeting held on 07.03.2024 decided

for payment of liquidator fees in accordance with the provision of Reg. 4(2)(b)

where the Respondents were present but did not have any voting share.

However, the Respondents confirmed their consensus with the decision taken

by the SCC in their respective emails dated 12.04.2024 and also in the

handover document dated 31.04.2024 of Panagarh Factory, by explicitly

undertaking to pay liquidator fees in accordance with the provision of

Reg.4(2)(b) of Liquidation Process Regulations, 2016. Respondents provided

the undertaking prior to handover of the Panagarh Factory as a part of their

statutory obligation to comply with the provision of Regulation 21A which has

Company Appeal (AT) (Insolvency) No. 461 of 2025 18 of 45 been relied upon by the Appellant being undertakings made by officials of

Nationalized Banks. Subsequently, the Respondents failed to make additional

contribution towards liquidation cost including liquidator's fees, the basis of

which was already agreed upon and was undertook to be paid, thereby

blatantly contravening the provision of Regulation 21A.

39. Adjudicating Authority has failed and/or neglected to consider the

provision of Regulation 21A in conjunctive reading with the provision of

Regulation 4(2)(b) rather considered the provision of Regulation 4(2)(b) in

isolation, The gamut of including the liquidator fees on realization of

Corporate Debtor's assets by the Secured Creditor pursuant to non-

relinquishment of security interest, initiates from the provision of Regulation

21A(2) extract of which is as follows --

"(2) Where a secured creditor proceeds to realise its security interest, it shall pay --

(a) as much towards the amount payable under clause (a) and sub-

clause (i) of clause (b) of sub-section (1) of section 53, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date; and

(b)...."

40. While determining the liquidation cost, as covered under Section

53(1)(a), for the purpose of Regulation 21A, the prerequisite condition in

determination of such cost stands on the premise that the security interest

have been relinquished by such secured creditor. By stretch of all practical

assumption, it can be understood that 'realization' and 'distribution' of assets

as envisaged in Regulation 4(2)(b) cannot be directly done by a Liquidator in

the circumstance where the security interest has not been relinquished by the

Secured Creditor. Thus, bare perusal of Regulation 4(2)(b) in isolation to

Regulation 21A completely defeats its purpose and spirit, which has precisely

Company Appeal (AT) (Insolvency) No. 461 of 2025 19 of 45 been done in the impugned order, as evident from inter alia, paragraph 16 of

the impugned order.

41. Secured creditors are required to pay liquidation costs, including the

Liquidator's fees, within a stipulated period to retain their security interests.

Liquidator's fees are considered a part of the liquidation costs, irrespective of

asset realization or distribution by the Liquidator.

42. The matter of Shikshak Sahakari Bank Limited (supra) was not on a

different footing in comparison to the instant subject matter. The Adjudicating

Authority has derived wrong inference that the Liquidator (in Shikshak

Sahakari Bank Limited) did not sell the assets and realise any proceeds but

has distributed the amount that was realized. In this context, the Appellant

humbly submits that, this Hon'ble Tribunal at paragraph 12 of the order

dated 11.12.2024 in the matter of Shikshak Sahakari Bank Limited has

recorded the submission of the Appellant Bank (i.e. Shikshak Sahakari Bank

Limited) as under --

"12. Appellant (i.e. Shikshak Sahakari Bank) also contended that the Respondent is only eligible for entitlement of fees under Regulation 4 Sub-Regulation 2(b), only when the Liquidator has actually realized or distributed any amount. However, in the present case, there has neither been any distribution nor any realization of amounts by the Respondent (i.e. the Liquidator), in so far as the secured asset of the Appellant is concem."

43. The Adjudicating Authority has failed to recognize the identity of the

instant matter with that of Shikshak Sahakari Bank Limited (supra) thereby

rendering the impugned order per incuriam. In either of the matters the

Secured Creditors did not relinquish their security interest and have not paid

the liquidation cost vis-à-vis the liquidator's fees. However, the instant matter

is on a higher footing to the extent that the Respondent Secured Creditors Company Appeal (AT) (Insolvency) No. 461 of 2025 20 of 45 have agreed upon and have given undertaking to the Appellant Liquidator

before taking over the possession of the Corporate Debtor's assets being the

Panagarh Factory. Further, the Appellant Liquidator provided detailed

calculation of the Liquidator Fees as was initially estimated and thereafter

upon final determination arising from sale of assets. Hence the subject of both

the matters are identical with more weightage being on the instant subject

matter being appealed for, on grounds that (a) the basis of determination of

liquidator fees under Regulation 4(2)(b) was agreed by the Respondents

Secured Creditors as evident from email dated 12.04.2024 received from

Respondents and execution of handover document dated 30.04.2024 by the

Respondents, for compliance of Regulation 21A(2); (b) the basis of

determination of liquidator fees under Regulation 4(2)(b) were consented by

the SCC in its 1st meeting held on 07.03.2024; and (c) subsequent contest on

an agreed matter relating to basis of determination of liquidator fees under

Regulation 4(2)(b) has been an after-thought and clear violation of the

provision of Regulation 21A.

44. The Appellant Liquidator is not making a 'demand' of fees on the plea

of having a blanket undertaking from the Respondents, as conceived from

paragraph 27 of the impugned order. On the contrary, the Appellant

Liquidator is making a rightful claim of the fee amount agreed upon by the

Respondents in accordance with the provisions of Reg. 21A.

45. Secured Creditor is mandatorily obligated to pay its share as per

Section 53(1)(a) and 53(1)(b)(i) of the Code for distribution of assets from the

sale of liquidation assets in the order of priority (waterfall mechanism).

Company Appeal (AT) (Insolvency) No. 461 of 2025 21 of 45

46. Liquidator's fees are liquidation costs, as prescribed under Regulation

2(1)(ea) and Regulation 4 of the Insolvency and Bankruptcy Board of India

(Liquidation Process) Regulations, 2016. These regulations do not make the

Liquidator's fees contingent on realization or distribution of assets but

recognize them as an essential part of the liquidation process.

47. Under Section 53(1)(a) of the Insolvency and Bankruptcy Code (IBC),

2016, liquidation costs, including the Liquidator's fees, are to be paid in

priority before any other claims. The impugned order erroneously suggests

that fees are only payable if the Liquidator realizes or distributes assets, which

contradicts the statutory scheme of the IBC.

48. In determining the Liquidators fee pertaining to "realization and/or

"distribution" the Adjudicating Authority failed to appreciate that the term

"distribution" under the Insolvency and Bankruptcy Code, 2016 (IBC) is not

confined merely to the final allocation of realized proceeds but inherently

includes all preparatory and intermediary actions undertaken by the

Liquidator leading to such distribution. The process of distribution begins

much before the actual realization of assets and includes various statutory

duties such as taking possession of the assets, securing, managing, valuing,

and facilitating their sale. These activities are intrinsic to the liquidation

process and are inextricably linked to the ultimate distribution of proceeds.

To interpret "distribution" in an isolated and narrow sense would be contrary

to the intent and framework of the IBC, which envisages liquidation as a

holistic process rather than a mere disbursement of funds. In the given

instance, the Appellant Liquidator, jointly, handed over the possession of the

Company Appeal (AT) (Insolvency) No. 461 of 2025 22 of 45 Panagrah Factory on 30.04.2024 in compliance of the IBC Laws in effect to

substantiate 'distribution' on the part of the Appellant Liquidator. Liquidator's

act of taking possession of the assets, securing them, maintaining their value,

and undertaking necessary legal and procedural steps for their realization

form an essential and inseparable part of "distribution" as contemplated

under the IBC. The very process of liquidation necessitates a structured

approach wherein every action undertaken by the Liquidator--from

possession to realization and eventual disbursement--is an element of

distribution. Excluding such integral activities from the scope of "distribution"

would not only be legally erroneous but would also defeat the purpose of

maximizing value for stakeholders in a time-bound manner, as envisioned

under the Code. By limiting the meaning of "distribution" solely to the final

allocation of sale proceeds, it disregards the comprehensive nature of the

Liquidator's role as defined under the IBC and the Liquidation Regulations.

The Liquidator's functions, including taking control of assets, resolving

disputes regarding ownership, ensuring compliance with legal mandates, and

overseeing the entire liquidation process, are all fundamental components of

distribution as well as realization within the broader statutory framework.

Any restrictive interpretation that severs these essential activities from the

scope of distribution would create ambiguity, disrupt the settled principles of

liquidation, and unfairly undermine the Liquidator's statutory duties and

entitlement to fees.

49. The breakup of Sharing of the Liquidation Costs was placed and

discussed at the 8th SCC meeting convened on 25.10.2024 and it was in

compliance with Regulation 21-A of the Liquidation Process Regulations,

Company Appeal (AT) (Insolvency) No. 461 of 2025 23 of 45 2016. Segregating the assets which formed part of the Liquidation estate with

those not forming part of the Estate in deciding the Liquidators fee payable is

de hors the provision of law and IBC. The segregation of assets forming part

of the Liquidation Estate from those that do not, for the purpose of

determining the Liquidator's fee, is contrary to the provisions of the Insolvency

and Bankruptcy Code, 2016 (IBC), as well as the established legal framework

governing liquidation proceedings. The IBC provides a comprehensive

mechanism for the liquidation process, including the manner in which the

Liquidator's fee is to be computed, without permitting arbitrary exclusions or

artificial classifications of assets within the Liquidation Estate. By

undertaking such segregation, the Adjudicating Authority has acted beyond

the scope of the statutory provisions and established judicial precedents,

thereby creating an inconsistency with the principles of law governing

liquidation. The Liquidation Estate, as defined under the IBC, comprises all

assets, properties, and rights of the corporate debtor, and any attempt to

selectively classify or exclude certain assets from this Estate while

determining the Liquidator's fee is legally untenable. This approach not only

disregards the express provisions of the IBC but also undermines the objective

of ensuring a fair and transparent liquidation process in accordance with law.

Such an interpretation adversely affects the rights of the Liquidator, who is

entitled to fees in accordance with the framework prescribed under the IBC

and the Liquidation Regulations. It also sets an incorrect precedent that could

lead to unwarranted complications in future liquidation proceedings.

Therefore, the impugned decision warrants reconsideration, as it is not only

Company Appeal (AT) (Insolvency) No. 461 of 2025 24 of 45 inconsistent with the legal provisions but also detrimental to the efficient and

orderly conduct of the liquidation process.

50. A holistic interpretation of the Insolvency and Bankruptcy Code (IBC)

and its associated regulations suggests that the Liquidator's fees are integral

to the liquidation costs. The regulations aim to ensure that the Liquidator is

fairly compensated for the duties performed, regardless of the outcome

concerning asset realization. This interpretation aligns with the broader

objectives of the IBC to facilitate an effective and equitable insolvency

resolution process. By failing to recognize the Liquidator's entitlement to fees,

effectively penalizes the Liquidator for circumstances beyond his control.

Further, it violates the principle of natural justice, as it deprives the

Liquidator of due compensation for his work.

51. IBC does not differentiate between liquidation processes with assets

and those without. Even where a corporate debtor has no assets, a Liquidator

is still required to complete the process, file reports, and ensure compliance.

In multiple cases it has been upheld that the Liquidator's fees must be paid

as part of the liquidation cost, regardless of realization or distribution. The

impugned order, by holding otherwise, introduces an artificial distinction that

has no legal basis. If the Liquidators are not compensated unless they recover

assets, many cases where the corporate debtor has no, or limited assets will

go unattended. This would frustrate the objectives of the IBC, which seeks to

provide a time-bound resolution mechanism. In the facts and circumstances

as stated herein above, the Appellant states and respectfully submit that there

is just cause to forthwith set aside the order dated 05.02.2025 in I.A

Company Appeal (AT) (Insolvency) No. 461 of 2025 25 of 45 (Companies Act) No 1 of 2025 in T.P (Companies Act) No. 22 of 2022, to the

extent challenged herein.

52. The impugned order to the extent that it decides that the Appellant is

not entitled to any fee from the sale of Panagarh unit is contrary to the ratio

of State Bank of India v. Navjit Singh as held by this Hon'ble Tribunal.

53. NCLT failed to appreciate that in the present case in the absence of the

Appellant's fee remaining unpaid, there has not been absolute compliance of

regulations 2(ea), 2-A,21-A and 37 of the Liquidation Process Regulations and

sections 52/53 of the IBC as held by this Hon'ble Tribunal in Small Industries

Development Bank of India (SIDBI) v. Shri Vijender Sharma.

Counter of R1- Indian Bank

54. The Respondent No. 1 claims that are secured financial creditor of the

Corporate Debtor, M/ s. Maheshwary Ispat Limited, with a valid security

interest over the Panagarh Factory. The Respondent No. 1 had submitted its

claim in Form D on 17.01.2024, clearly expressing its intention not to

relinquish its security interest in the Panagarh Factory. This was in

accordance with the provisions of Section 52 of the Insolvency and

Bankruptcy Code, 2016 ("IBC"), which grants secured creditors the right to

realize their security interest outside the liquidation process.

55. The Respondent No. 1 submits that the Appellant's contention

regarding entitlement to liquidator's fees on the sale proceeds of the Panagarh

Factory is misconceived and contrary to the scheme of the IBC. The

Respondent No. 1, along with Respondent No. 2 (State Bank of lndia), had

clearly opted to realize its security interest outside the liquidation process

Company Appeal (AT) (Insolvency) No. 461 of 2025 26 of 45 under Section 52 of the IBC. The sale was conducted by the secured creditors

themselves without any involvement of the Liquidator. Therefore, the

Liquidator is not entitled to any fees on such realization. The Respondent No.

1 categorically denies that it had given any unconditional undertaking to pay

the Liquidator's fees as alleged by the Appellant. While there were discussions

regarding contribution towards liquidation costs as required under

Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016, there was

never any agreement to pay the Liquidator's fees on the entire sale proceeds

of the Panagarh Factory. The Respondent No. 1 had already contributed a

sum of Rs. 21,55,706/- towards the liquidation costs, which was

proportionate to its obligation under Regulation 21A.

56. The sale was conducted by the secured creditors themselves without

any involvement of the Liquidator. The Liquidator's fees are meant to

compensate for the actual work done in selling assets. In the present case,

the Liquidator did not conduct the sale of the Panagarh Factory; it was done

by the secured creditors under Section 52 of the IBC. Therefore, the

Liquidator is not entitled to any fees on such realization.

57. The Joint Lenders' Meeting (JLM) held on 21.11.2024 and 22.11. 2024

did not result in any binding agreement to pay the Liquidator's fees as alleged

by the Appellant. The minutes of the meeting clearly state that both banks

agreed to "take up the matter with their Higher Competent Authorities and

also Legal clearance for seeking guidance/ approval for the payment of

Liquidation Fees". This was merely an agreement to consider the matter

further and not a binding commitment to pay the fees.

Company Appeal (AT) (Insolvency) No. 461 of 2025 27 of 45

58. The Respondent No. 1 submits that the NCLT has correctly interpreted

the provisions of the IBC and the IBBI (Liquidation Process) Regulations,

2016. The Liquidator's fees are meant to compensate for the actual work done

in selling assets. In the case, the Liquidator did not conduct the sale of the

Panagarh Factory; it was done by the secured creditors under Section 52 of

the IBC. Therefore, the Liquidator is not entitled to any fees on such

realization. The Appellant's reliance on the decision of this Appellate Tribunal

in the case of Shikshak Sahakari Bank Limited is misplaced and inapplicable

to the present case. The factual matrix in that case was entirely different.

59. The refusal of banks to pay the Liquidator's fee in the present case

would not amount to non-compliance, as the Liquidator is not entitled to any

fee as per Regulation 21A of the Liquidation Process Regulations. The NCLT

correctly interpreted that Regulation 4(2)(b) of the IBBI (Liquidation Process)

Regulations, 2016, which deals with the Liquidator's fees, applies only to

assets that form part of the liquidation estate and are realized by the

Liquidator. It does not apply to assets realized by secured creditors outside

the liquidation process under Section 52 of the IBC.

60. It is claimed that Regulation 21A of the IBBI (Liquidation Process)

Regulations, 2016 requires secured creditors to contribute towards the

liquidation costs in proportion to the amount they realize from the secured

assets. The Respondent No. 1 has already contributed a sum of Rs.

21,55,706/-towards the liquidation costs, which is proportionate to its

obligation under Regulation 21A.

61. It is denied that Rs. 1,87,76,133/-is pending fee of the Appellant.

Company Appeal (AT) (Insolvency) No. 461 of 2025 28 of 45 Section 52 of the IBC grants secured creditors the right to realize their

security interest outside the liquidation process. This is a special right given

to secured creditors, recognizing the primacy of their security interest. When

a secured creditor opts to realize its security interest outside the liquidation

process, the asset is effectively taken out of the liquidation estate. As such,

the fees for such assets are not part of the Liquidation costs.

62. It is contended that the Clarification of Regulation 4(2)(b) clarifies that

where a liquidator the Clarification of Regulation 4(2)(b) clarifies that where

a liquidator realizes any amount, but does not distribute the same, he shall

be entitled to a fee corresponding to the amount realised by him, and where

a liquidator distributes any amount, which is not realised by him, he shall be

entitled to a fee corresponding to the amount distributed by him only. In the

present case, liquidator having neither realised nor distributed is entitled to

NIL fees.

63. NCLT has correctly held that the Appellant's claim for liquidator's fees

on the entire sale proceeds of the Panagarh Factory is not only contrary to

the scheme of the IBC but also amounts to unjust enrichment. The Liquidator

did not conduct the sale of the Panagarh Factory, it was done by the secured

creditors themselves. Therefore, the Liquidator is not entitled to any fees on

such realization. The impugned order is legally sound and does not suffer

from any infirmity warranting interference by this Hon'ble Tribunal.

Appraisal

64. In this case, pursuant to transfer of winding-up proceedings

(winding-up order passed in Oct 2016) from the Hon'ble High Court at

Company Appeal (AT) (Insolvency) No. 461 of 2025 29 of 45 Calcutta, the Adjudicating Authority (NCLT, Kolkata) initiated Liquidation

proceedings of the Corporate Debtor (CD) under the Code, by order dated

19.12.2023 and appointed the Appellant as the Liquidator. There was no

CIRP proceedings in the instant matter. The Respondent Banks submitted

their claims and did not relinquish the security interest in Panagarh

Factory, in terms of Section 52 of the Code. The Respondents informed the

Appellant about the estimated realization value of Panagarh Factory as INR

20 Crores (R1) and INR 15.79 Crores (R2), respectively, in terms of Reg.

37(1) of the IBBI Liquidation Process Regulations. On 12.04.2024 (i.e. 115

days from the date of commencement of Liquidation proceedings of

19.12.2023) the Respondent Banks paid INR 21,55,706/-, in aggregate, being

part payment of the estimated Liquidation Cost without considering the

Liquidator's fees. We note that by part payment, the Respondents failed to

comply with the provision of Reg. 21A(2)(a), in its entirety. The Respondent

Banks had agreed and undertook to pay the Liquidator's Fees in accordance

with the provision of Reg. 4(2)(b). (emails issued in this regard are @ 189 and

191 of APB). Considering the undertaking given by the Respondents

Nationalized Banks in terms of the second proviso to Reg. 21A(2), the

Appellant obtained possession from the Official Liquidator and handed over

the possession of the Panagarh Factory, jointly, to the Respondents. In

the handover document dated 30.04.2024, both the Respondent Banks,

reconfirmed their agreement by providing an undertaking to pay the

Liquidator Fees in accordance with the provision of Reg. 4(2)(b). The

Respondents sold the Panagarh Factory on 21.10.2024 i.e. 307 days from the

liquidation commencement of 19.12.2023, for an amount of INR 55.10 Crores

Company Appeal (AT) (Insolvency) No. 461 of 2025 30 of 45 which is 200% more than their expected realizable value, as stated in para 2

above.

Issue in this Appeal

65. Heard both sides and also perused the material on record basis. The

issue in this Appeal is -

"Whether the liquidator can be denied his entitlement to fees under Reg. 4(2)(b) read with Reg. 21A(2) of the Liquidation Process Regulations, 2016 when the secured creditors have directly realised security interest (namely Panagarh Factory) under SARFAESI Act?"

66. Before proceeding further, it would be beneficial to reproduce the

meaning of liquidation cost as per the Insolvency & Bankruptcy Code,

2016 and the Liquidation Process Regulations, 2016 governing the

payment of liquidation cost, which are reproduced as follows:

"Section 5(16) of IBC 2016: liquidation cost means any cost incurred by the liquidator during the period of liquidation subject to such regulations, as may be specified by the Board.

Regulation 2(ea) (ea)1: "liquidation cost" under clause (16) of section 5 means-

(i) fee payable to the liquidator under regulation 4;

(ii) remuneration payable by the liquidator under sub-regulation (1) of regulation 7;

(iii) costs incurred by the liquidator under sub-regulation (2) of regulation 24;

(iv) costs incurred by the liquidator for preserving and protecting the assets, properties, effects and actionable claims, including secured assets, of the corporate debtor;

(v) costs incurred by the liquidator in carrying on the business of the corporate debtor as a going concern;

1 Liquidation Process Regulations, 2016

Company Appeal (AT) (Insolvency) No. 461 of 2025 31 of 45

(vi) interest on interim finance for a period of twelve months or for the period from the liquidation commencement date till repayment of interim finance, whichever is lower;

(vii) the amount repayable under sub-regulation (3) of regulation 2A;

(viii) any other cost incurred by the liquidator which is essential for completing the liquidation process:

Provided that the cost, if any, incurred by the liquidator in relation to compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013), if any, shall not form part of liquidation cost."

67. Regulation 21-A1 mandates Secured Creditors to inform the Liquidator

of their decision to realise their security interest and to pay their share of the

liquidation costs. The relevant portion of Regulation 21-A(2)1 is extracted as

follows:

"21-A. Presumption of security interest. (1) A secured creditor shall inform the liquidator of its decision to relinquish its security interest to the liquidation estate or realise its security interest, as the case may be, in Form C or Form D of Schedule II:

Provided that, where a secured creditor does not intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall be presumed to be part of the liquidation estate.

(2) Where a secured creditor proceeds to realise its security interest, it shall pay -

(a) as much towards the amount payable under clause (a) and sub- clause (i) of clause (b) of sub-section (1) of section 53, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date; and

(b) the excess of the realised value of the asset, which is subject to security interest, over the amount of his claims admitted, to the liquidator within one hundred and eighty days from the liquidation commencement date:

Provided that where the amount payable under this sub- regulation is not certain by the date the amount is payable under

Company Appeal (AT) (Insolvency) No. 461 of 2025 32 of 45 this sub-regulation, the secured creditor shall pay the amount, as estimated by the liquidator:

Provided further that any difference between the amount payable under this sub regulation and the amount paid under the first proviso shall be made good by the secured creditor or the liquidator, as the case may be, as soon as the amount payable under this sub-regulation is certain and so informed by the liquidator.

(3) 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.

Explanation. It is hereby clarified that the requirements of this regulation shall apply to the liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019."

68. On a conjoint reading of Reg. 21A(2), Reg. 2(ea) and Reg. 4(2)(b) of

the Liquidation Process Regulations 2016, we note the legal position that

emerges is as follows:-

 Reg. 21A(2) clearly establishes that the Secured Creditors who have realized their security interest under section 52 of IBC, 2016 are obligated and mandated to pay their share of liquidation cost as they would have done "in case they had relinquished the security interest." Simply put, the decision of the Secured Creditors to relinquish security interest or not, has no bearing on the payment obligation of such secured creditors towards the liquidation cost which includes liquidator's fees under Reg.2(ea)(i) and also has no bearing on the mode of calculation of such amount to be contributed.

 Reg. 21A(2) categorically binds all secured creditors to pay the share of liquidation cost regardless of whether the security interest is relinquished or not. In fact, Regulation 21A(2) makes it clear that the quantum of contribution to liquidation costs including liquidator's fees by such secured creditors is to be calculated as they would have done "in case they had relinquished the security interest." The only way to calculate such costs as per Reg.21A(2) under the Liquidation Process Regulations in regard to a sale of security interest under section 52, is by applying the formula in Reg.4(2)(b).

 Reg. 2(ea)(i) of the Liquidation Process Regulations, 2016 distinctly defines 'Liquidation Cost' as including the Liquidator's fee as per Regulation 4.

 The manner of determination of Liquidator's Fees is also not open to interpretation. Reg. 4 enumerates the method of determination of the liquidator's fee.

Company Appeal (AT) (Insolvency) No. 461 of 2025 33 of 45

69. In the facts of the present case, there is no scope of application of Reg.

4(1) or Reg. 4(2)(a). As per Reg. 4(1A), the Stakeholders' Consultation

Committee has decided upon payment of the Liquidator's fee in terms of

Reg. 4(2)(b) in regard to the clear mandate of Reg.21A(2). Furthermore, the

Respondent Banks have confirmed and undertaken to pay the Liquidator's

fees in terms of Reg. 4(2)(b) as evident from the emails dated 12.04.2024. They

have also made initial part payment of INR 21.56 Lacs (by R1) and INR 5.40

(by R2), respectively.

70. Furthermore, the Adjudicating Authority has come to conclusion that

ratio of this Appellate Tribunal's judgment of Shikshak Sahakari Bank Limited

(supra) is not applicable in the present case. We note that the facts of the

aforementioned case are analogous to those in the current case. The issue

framed in the referred judgment were:

"25. The issues which arise from the facts of the case are as follows:

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 214A of the Liquidation Process Regulations, 2016?"

71. We also note that the judgment of this Hon'ble Tribunal in Shikshak

Sahakari Bank Limited (supra) squarely applies in the instant appeal as both

have identical facts:

 Sale of CD's Asset: By Secured Lenders under SARFAESI Act, 2002

 Proceeds from Received by Secured Lenders without direct Asset Sale: involvement of Liquidator

 Distribution of By Secured Lenders without direct involvement Proceeds on Asset of Liquidator Sale:

Company Appeal (AT) (Insolvency) No. 461 of 2025 34 of 45  Compliance of 90- Amount received beyond 90 days in the day period as per Shikshak Sahakari Bank Limited (supra). In Reg. 21A(2)(a): the present case the amount received on 12.04.2024 (i.e. 115 days from Liquidation commencement date of 19.12.2023)

 Contribution to In Shikshak Sahakari Bank Limited (supra) Liquidation Cost NCLAT observed that full liquidation cost was in terms of Reg. not paid by Banks. And in the present case 21A: Respondent Banks did not pay the Liquidation Cost in full but made payment excluding the Liquidator's Fees which is also part of Liquidation Cost.

 Conclusion of Sale Beyond 180 days. of Assets whether within 180 days as (Note: In the present case s ale concluded on per Reg. 21A(2)(b): 22.10.2024 i.e. 307 days from Liquidation commencement date of 19.12.2023)

In the earlier case of Shikshak Sahakari Bank Limited (supra) this Appellate

Tribunal had held that:

"37. In brief, with respect to the Secured Financial Creditor, the situation is clearly enumerated in Regulation 21-

A(2)(a), which is applicable in this case. The Liquidator's fee is also prescribed under Regulation 4. Regulations 4(1) and 4(1A) provides primacy to CoC and consultation Committee. The Respondent's claim that the Liquidator is entitled for a fee under Regulation 4(2)(b) only when he has actually realised or distributed any amount is not tenable in the light of Regulation 21A."

72. Respondent No. 1 referred to para 31 of the order of Shikshak Sahakari

Bank Limited (supra) judgment at the time of hearing and argued that the

Secured Creditor in that case had failed to comply with the 90- d a y time

limit as stipulated in Reg. 21A(2). Based on such observation, the

Respondent No. 1 attempted to draw a completely artificial and non-

existent distinction and fallaciously argued that the assets in Shikshak

Sahakari Bank Limited (supra) case became part of Liquidation Estate. But

the actual fact in that case is that the secured asset did not vest in the

Company Appeal (AT) (Insolvency) No. 461 of 2025 35 of 45 Liquidation Estate, but rather was sold under the SARFAESI Act without

involvement of the Liquidator and definitely not under IBC, 2016. In any

event, in the present appeal also, there has been complete failure of the

Respondent Banks to comply with the 90-day timeline in Reg.21A(2)(a) and

also the 180-day timeline in Reg. 21A(2)(b). In other words, there is no factual

distinction between the present Appeal and the case of Shikshak Sahakari

Bank Limited (supra).

73. In the impugned order, NCLT Kolkata held that the Liquidator in

Shikshak Sahakari Bank Limited (supra) made distribution of the amount

realised and hence concluded that the instant matter is on a different footing

from the Shikshak Sahakari Bank Limited (supra) matter. Such conclusion is

completely erroneous, as paragraph 8 and 9 of the order of Shikshak Sahakari

Bank Limited (supra) case clearly establishes the fact that the Liquidator in

Shikshak Sahakari Bank Limited (supra) matter did not make any

distribution of the proceeds, which is exactly identical to the instant

appeal. In view of the above, it is evident that Shikshak Sahakari Bank Limited

(supra) is absolutely identical to the present case and the same is a binding

precedent and ought to be followed in the present case to grant appropriate

relief to the Liquidator.

74. NCLT erred in holding that the ratio of this Hon'ble Tribunal in

Shikshak Sahakari Bank Limited (supra), as has been approved by the Hon'ble

Supreme Court, is not applicable to the present case. NCLT misconstrued,

misinterpreted and misread the ratio of this Hon'ble Tribunal in Shikshak

Sahakari Bank Limited (supra), as has been approved by the Hon'ble Supreme

Company Appeal (AT) (Insolvency) No. 461 of 2025 36 of 45 Court. We note that NCLT failed to appreciate that even in Shikshak Sahakari

Bank Limited (supra) there was no separate "realisation" or "distribution". The

Appellant took due care for sale of the Panagarh factory through the secured

financial creditors and for that reason, coordinated for all the activities to

ensure sale of the said factory as was held in Shikshak Sahakari Bank Limited

(supra). NCLT erred in holding that in the case of Shikshak Sahakari Bank

Limited (supra), the liquidator therein did not sell the asset or realize any

proceeds but merely distributed the amount that was realized. NCLT despite

observing that even in Shikshak Sahakari Bank Limited (supra) this Hon'ble

Tribunal held that irrespective of realization or distribution, the Liquidator

would still be entitled to fee under regulation 21A of the Liquidation Process

Regulations, could not have held that the Appellant was not entitled to any

fee from sale of the Panagarh Unit.

75. Further this Tribunal's judgment in 'State Bank of India Vs. Navjit

Singh in Company Appeal (AT) (Insolvency) No. 151 of 2022' it was held:

".....

6. We have considered the submissions of Learned Counsel for the parties and perused the record. In so far as the claim of the Appellant is concerned of Rs. 29,34,54,879.59/- it has been admitted by the Liquidator the said claim is the claim admitted in the Liquidation Process and no further adjudication was called for with regard to the said claim. In the present case, the admission of the claim is not sought to be challenged by State Bank of India. In so far as the payment of Liquidator's Fee in paragraph 13 as noted above, Adjudicating Authority has disposed of the application with the direction to make payment of Liquidator's Fee and ensure compliance of Regulations 2(ea), 2A, 21A, 37 of the Liquidation Regulations and Section 52/53 of the Code. The order passed by the Adjudicating Authority does not warrant any interference. What was directed was as per Liquidation Regulation 21A as extracted in Paragraph 10 of the Judgment from which it is clear, even if the secured creditor proceeds to realise its security interest it is liable to pay fee as contemplated under Regulation 21A (2)(a). The

Company Appeal (AT) (Insolvency) No. 461 of 2025 37 of 45 Adjudicating Authority has only directed the Applicant to follow the regulations as noted in paragraph 13."

76. Further in this Tribunal's judgment in Small Industries Development

Bank of India (SIDBI) v. Shri Vijender Sharma [Company Appeal (AT) (Ins.)

No. 1027 of 2021] it was held that:

"21. It thus becomes quite clear that compliance of regulations 2(ea), 2-А, 21-A and 37 of the Liquidation Process Regulations and Section 52/53 of the IBC are absolutely necessary even if the secured creditor proceeds to realise its security interest.

22. We thus, find that the liquidator has carried out his responsibility with due diligence and without any prejudice to Appellant or any other stakeholder, and therefore, cannot be held responsible for delay that has taken place in pursuing the liquidation of the corporate debtor. Therefore, we come to the conclusion that the Adjudicating Authority has not committed any error in excluding period from 30.11.2018 to 24.2.2020 from the liquidation process for calculation of liquidator's fees slab under Regulation 4 of the Liquidation Process Regulations. Being devoid of merit, the appeal is dismissed."

77. Both the above judgements support the case of the Appellant-

Liquidator.

78. Additionally, we find that the reliance placed on the Clarification in Reg.

4(2)(b) is misconceived as the same evidently refers to and covers the situation

where one liquidator who is realizing the assets is different from another

liquidator who is distributing the proceeds and hence does not apply to the

instant matter.

79. So far, as the terms 'realisation' and 'distribution' in Reg. 4(2)(b) are

concerned, they have to be given same meaning when read in the context

of Reg. 21A(2). If the contention of Respondent No. 1, as orally argued is

accepted then it will lead to a completely illogical and unwanted situation

where a liquidator will never be able to earn any fees in regard to

Company Appeal (AT) (Insolvency) No. 461 of 2025 38 of 45 Reg.21A(2). As highlighted above, Reg.21A(2) is a mandatory provision

imposing obligation on secured creditors to pay Liquidation Costs (which

includes Liquidation fees) calculated on the basis as they would have

shared in case they had relinquished the security interest.

80. We also note that the Respondent Banks have given repeated written

undertakings to pay the balance amount of liquidation cost comprising of

liquidator's fees determined in terms of Reg. 4(2)(b). This tantamounts to a

binding obligation against the Respondent Banks. The undertakings of the

Respondent Banks relating to determination and payment of Liquidator's

Fees as per Reg. 4(2)(b) read with Reg. 21A(2), was consequent to their

decision of selling Panagarh Factory under SARFAESI Act, as it is evident

from the facts mentioned above. Thus, we find that the undertakings given

by Respondent Banks were based on conscious commercial decision and

subsequent denial for payment of Liquidator's fees arising on attaining the

sale of Panagarh Factory, is surely an afterthought to deprive the Appellant

of his legitimate entitlement. Hence, construing such undertaking by the

NCLT, Kolkata as 'not a blanket undertaking' is erroneous, and the

Respondents are estopped from resiling from their admitted obligation to pay

Liquidator's fees in terms of Reg. 4(2)(b) read with Reg. 21A(2) of the

Liquidation Process Regulations, 2016 arising on sale of Panagarh Factory.

81. The Respondent No. 1 argued that the Liquidator had not played any

role in selling or realizing of the asset and that the Respondents made

realization by themselves. Further, referring to the clarification to Reg.

4(2)(b), the Respondent No. 1 contended that the payment of fees to

Company Appeal (AT) (Insolvency) No. 461 of 2025 39 of 45 Liquidator is performance - linked. The above arguments have been

squarely rejected by this Hon'ble Tribunal in Shishak case (supra) where

it has been categorically held that -

"... the Respondent / Liquidator is taking care of the realization of the assets through the Secured Financial Creditor and, for that reason, he has to coordinate for all activities and it is his overall responsibility to take care of the realization. In such situation, as argued by the Appellant (i.e. Shishak Sahakari Bank) the clarification provided under Sub-Reg. 2(b) (of Reg. 4) may not be helpful for the Appellant."

82. We further note that, Involvement and role of Liquidator, without which

sale of security interest would not have been possible. The Appellant

Liquidator undertook several steps / activities for protecting the Panagarh

Factory without which the Respondent Banks would not have achieved a

successful sale under SARFAESI Act. Appellant has elaborated the steps

taken by it which are noted in its submissions herein earlier and are not being

repeated here. Appellant Liquidator also coordinated with the Respondent

No. 1 and 2 in mediating / resolving differences of opinion between the

Respondent Banks in relation to taking over possession of the Panagarh

Factory inter alia referring to their respective rights on the sale proceeds. As

will be evident from the letter dated 02.03.2024 (page 180 of the Appeal), the

Respondent No. 1 contended that since Respondent No. 2's exposure in

respect of the Panagarh factory was "...towards working capital loan only and

not term loan. Hence, SBI (i.e R 2) is having second charge on fixed assets of

Panagarh unit of the Company." Similar views were iterated by Respondent

No. 1 in its email dated 12.04.2024. Thus, the Respondent No.1 asserted that

it should have first right from sale proceeds of the said factory. It is only when

the Liquidator intervened, the two Respondent Banks resolved their disputes

Company Appeal (AT) (Insolvency) No. 461 of 2025 40 of 45 and agreed "...to have the handover of possession of the assets of the CD at

Panagarh made jointly in favour of the secured creditors...". We note that

without the Liquidator's efforts to get handover of the premise from the

Official Liquidator and dispute mitigation among the Respondent Banks,

the sale of the Panagarh Factory would have been difficult, if not

impossible. The Appellant-Liquidator is taking care of the realisation of the

assets through the Secured Financial Creditor and, for that reason, he has to

coordinate for all the activities and it is his overall responsibility to take care

of the realisation. In such a situation, as argued by the Appellant, the

clarification provided under Regulation 4(2)(b) may not be helpful for the

Appellant. We note that the Liquidator has undertaken significant

responsibilities during the liquidation process, including asset management,

stakeholder communication, and compliance with statutory obligations.

These duties necessitate considerable effort and resources, justifying the

entitlement to fees. The absence of asset realization or distribution does not

diminish the scope of the Liquidator's work. Therefore, compensating the

Liquidator solely based on physical realization or distribution would not

adequately reflect the services rendered. We therefore find that, apart from

the legal stand stated hereinabove, the mentioned activities clearly

demonstrate that the Liquidator is entitled to fee as per Regulation 4(2)(b) for

'realization' and 'distribution.'

Conclusion

83. Upon careful consideration of the pleadings, the submissions advanced

by the learned counsel for the parties, and the documentary record, this

Appellate Tribunal is persuaded to hold that the Adjudicating Authority

Company Appeal (AT) (Insolvency) No. 461 of 2025 41 of 45 committed a manifest error in law and on facts, in dismissing the Application

of the Appellant-Liquidator.

84. The Adjudicating Authority failed to appreciate that Regulation 21A(2)

of the IBBI (Liquidation Process) Regulations, 2016, read conjointly with

Regulation 2(ea) and Regulation 4(2)(b), unequivocally obligates a Secured

Creditor, who chooses to realise its security interest outside liquidation under

Section 52 of the Code, to bear its proportionate share of the liquidation costs

-- which statutorily include the fee of the Liquidator. The Respondent Banks,

by their express emails dated 12.04.2024 as well as the handover document

dated 30.04.2024, consciously undertook to pay the Liquidator's fees as per

Regulation 4(2)(b). Having derived the benefit of possession and subsequent

sale of the Panagarh Factory, they cannot now resile from their statutory and

contractual undertaking.

85. The interpretation adopted by the Adjudicating Authority, that the

Liquidator's fees are payable only when he directly realises or distributes

assets, is contrary to settled law. In Shikshak Sahakari Bank Limited v. Mr.

Jagdish Kumar Parulkar [Company Appeal (AT) (Ins.) No. 2023 of 2024,

decided on 11.12.2024], this Tribunal held that:

"With respect to the Secured Financial Creditor, the situation is clearly enumerated in Regulation 21A(2)(a), which is applicable in this case. The Liquidator's fee is also prescribed under Regulation

4. Regulations 4(1) and 4(1A) provides primacy to CoC and Consultation Committee. The Respondent's claim that the Liquidator is entitled for a fee under Regulation 4(2)(b) only when he has actually realised or distributed any amount is not tenable in the light of Regulation 21A."

Company Appeal (AT) (Insolvency) No. 461 of 2025 42 of 45

86. The above ratio, which has been affirmed up to the Hon'ble Supreme

Court by dismissal of Civil Appeal No. 1973 of 2025 on 24.02.2025, squarely

governs the present case. The factual matrix is virtually identical -- in both

cases, the secured creditors did not relinquish their security interest, yet the

Tribunal recognised that the Liquidator's statutory entitlement to fee cannot

be defeated by such election.

87. Similarly, in State Bank of India (supra), this Tribunal upheld the

Adjudicating Authority's direction that even if the secured creditor proceeds

to realise its security interest, it is bound to make payment of the Liquidator's

fee in terms of Regulations 2(ea), 2A, 21A and 37 of the Liquidation

Regulations read with Sections 52 and 53 of the Code.

88. Again, in Small Industries Development Bank of India (SIDBI)

(supra), this Tribunal categorically observed that:

"Compliance of Regulations 2(ea), 2-A, 21-A and 37 of the Liquidation Process Regulations and Sections 52/53 of the IBC are absolutely necessary even if the secured creditor proceeds to realise its security interest."

89. In the present case, not only did the Respondent Banks fail to comply

with the timelines prescribed under Regulation 21A(2)(a) and (b) (i.e., 90 and

180 days respectively), but also defaulted in paying the full liquidation cost

including the Appellant's fee, despite repeated reminders and despite having

given written undertakings. Such conduct amounts to a clear violation of the

statutory mandate and undermines the objectives of the Code.

Company Appeal (AT) (Insolvency) No. 461 of 2025 43 of 45

90. The reasoning adopted by the Adjudicating Authority that the

Liquidator had "no role in the sale" is also factually untenable. The record

demonstrates that the Appellant took possession of the Panagarh Factory

from the Official Liquidator, secured the premises, engaged security,

coordinated with local authorities, mediated disputes between Respondent

Banks, liaised with prospective buyers, and ensured that the asset could be

put to sale in a value-maximising manner. The sale proceeds of INR 55.10

crores, nearly three times the expected realisation indicated by the

Respondents (INR 15.79-20 crores), would not have been possible without the

intervention and efforts of the Appellant. The Appellant's role falls squarely

within the scope of "realisation" and "distribution" as contemplated under

Regulation 4(2)(b).

91. In view of the foregoing, we hold that the impugned order dated

05.02.2025 passed by the Adjudicating Authority in I.A. (Companies Act) No.

1 of 2025 in T.P. (Companies Act) No. 20 of 2022 is contrary to law and binding

precedents, and therefore liable to be set aside.

Order

92. Accordingly, this Appellate Tribunal passes the following order:

a) The Appeal, being Company Appeal (AT) (Insolvency) No. 461 of

2025, is allowed.

b) The impugned order dated 05.02.2025 passed by the National

Company Law Tribunal, Kolkata Bench, in I.A. (Companies Act) No.

1 of 2025 in T.P. (Companies Act) No. 20 of 2022 is hereby set

aside.

Company Appeal (AT) (Insolvency) No. 461 of 2025 44 of 45

c) It is held that the Appellant-Liquidator is entitled to his fees

determined in accordance with Regulation 4(2)(b) of the IBBI

(Liquidation Process) Regulations, 2016, arising from the sale

proceeds of the Panagarh Factory, being part of the liquidation cost

as defined under Regulation 2(ea).

d) The Respondent Banks are directed to forthwith contribute jointly

the balance amount of Rs. 1,87,76,133/- towards liquidation costs

including the Liquidator's fee, together with clerkage at 5% as

agreed in the handover document dated 30.04.2024, within a

period of six weeks from the date of this judgment.

e) In the event of default, the Appellant-Liquidator shall be at liberty

to seek enforcement of this order before the Adjudicating Authority.

f) No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Justice N. Seshasayee] Member (Judicial)

[Arun Baroka] Member (Technical) New Delhi. August 29, 2025.

Pawan

Company Appeal (AT) (Insolvency) No. 461 of 2025 45 of 45