Dhiren Shantilal Shah vs Amma Lines Pvt. Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI BENCH TA No. 89 of 2021 (Company Appeal (AT)(Ins) No. 791 of 2020) [Arising out of Impugned Order dated 20th July, 2020 passed by the Adjudicating Authority (National Company Law Tribunal, Chennai Bench, Chennai) in I.A. No.399/2020 in MA/1140/2019 in CA/1026/2019] IN THE MATTER OF: Mr. Dhiren Shantilal Shah Liquidator of Meka Dredging Company Pvt. Ltd. Having office at: B-102, Bhagirathi Niwas, Sri M.V. Road Near Natraj Studio, Andheri East Mumbai - 400069 ...Appellant Versus 1. Amma Lines Pvt. Limited Having Registered Office at: Flat No. G-3, Eshwaripriya Apartments 95/2, Aryagowda Road Extn. West Mambalam, Chennai - 600033 ...Respondent No.1 2. Meka Infrastructure Pvt. Ltd. 304, Shiv Smriti Chambers 49, Dr. Annie Besant Road Worli, Mumbai - 400018 ...Respondent No.2 Present: For Appellant : Mr. Nitesh Jain and Mr. Dhiren S Shah, Advocates For Respondent : Mr. Sumant Batra, Sr. Advocate for R-1 and R2

(Virtual Mode) KANTHI NARAHARI, MEMBER (TECHNICAL) Preamble:

The Present Appeal is filed against the Impugned Order dated

20.07.2020 passed by the Adjudicating Authority (National Company Law

TA No. 89 of 2021 1 of 23 Tribunal, Chennai Bench, Chennai) in I.A. No.399/2020 in MA/1140/2019

in CA/1026/2019 whereby the Adjudicating Authority disposed of all the

Applications.

Brief Facts:

Appellant's Submissions:

2. The Counsel appearing for the Appellant submitted the brief facts.

3. It is submitted that the Appellant is aggrieved by the order passed by

the Learned Adjudicating Authority, the present appeal is filed on the ground

that the Adjudicating Authority held that the fees payable to the

Appellant/Liquidator will become payable only upon occurrence of the events

of respective receipts and disbursals at specified rates payable and not

otherwise. The Adjudicating Authority directed the Appellant to desist from

claiming the amounts towards liquidator fees as immediately payable. The

impugned order is in contravention of Section 53 of the IBC read with

Regulation 4(3), 42 and 44 of the I&B Code (Liquidation Process) Regulations,

2016 and also in contravention of the scheme for compromise and

arrangement.

4. The Counsel for the Appellant submitted that under Regulation 42 of

the I&B Code (Liquidation Process) Regulations, 2016, once the scheme for

compromise and arrangement approved and the liquidator is directed to

handover the management to the scheme proponent, the liquidator's fees is

due and the same is payable in terms of Section 53 of the Act within 30 days.

TA No. 89 of 2021 2 of 23 After approval of the scheme for compromise and arrangement, the role of

the liquidator is over and is fee becomes due in terms of Section 53 of the

IBC.

5. It is submitted that CIRP was initiated against the Corporate Debtor

on 09.02.2018. However, in absence of any resolution plan, the CoC passed

a resolution for liquidation of the Corporate Debtor on 27.07.2018. The

Adjudicating Authority passed the order of liquidation on 28.09.2018.

Aggrieved by the order of liquidation, the promotors filed before this Tribunal.

This Tribunal while dismissing the Appeal on 07.03.2019 directed the

liquidator to proceed in terms of the judgment passed in the matter of Y.

Shivram Prasad Vs. S. Dhanapal & Ors. in CA (AT)(Ins) No. 224/2018. The

scheme was approved unanimously by the financial and operational

creditors and workmen.

6. The promotors filed an application No. CA No. 1026/2019 under

Sections 230 to 232 of the Companies Act, 2013, the scheme of compromise

and arrangement in the light of the above judgment before the NCLT seeking

approval of the scheme as approved by the equity shareholders and creditors

of the company in liquidation. The Learned Adjudicating Authority vide order

dated 10.01.2020 approved the scheme. The Appellant filed its report before

the Adjudicating Authority to consider and pass appropriate orders and

directions.

TA No. 89 of 2021 3 of 23

7. On 05.05.2020 the Hon'ble Adjudicating Authority disposed of the

application being No. MA 1140/2020 and passed the order and one of the

directions is the fees of the liquidator to the extent of Rs.91,69,769/-.

However, in relation to liquidation cost other than fees, the same is required

to be defrayed by scheme proponents based on actual expenses incurred by

the Liquidator and upon the liquidator furnishing sufficient proof along with

vouchers. The Appellant sent e-mails dated 20.05.2020 and 27.05.2020 to

the Respondents to adhere to order dated 05.05.2020 with respect to the

payments of liquidation cost including the liquidator's fees within 30 days

from the date of the order dated 05.05.2020. The Appellant also submitted

the documents before the statutory auditors for certification and verification.

8. The Appellant filed above I.A. No. 399/2020 in M.A. No. 1140/2019 in

CA No. 1026/2019 under Section 60(5) of the Code seeking payment of the

liquidation cost including liquidator's fees from the Respondents. The

Learned Adjudicating Authority passed the impugned order dated

20.07.2020 which is in defiance of order dated 05.05.2020 passed in MA.

No. 1140/2020 observing that the payment of liquidator's fees shall be only

upon occurrence of a disbursal and receipt and not otherwise.

9. The Learned Counsel submitted that the Hon'ble Adjudicating

Authority vide order dated 05.05.2020 determined and decided the

liquidator's fees in terms of unamended Regulation 4 of the I&B Code

(Liquidation Process) Regulations, 2016. It is contended that once the

TA No. 89 of 2021 4 of 23 Corporate Debtor is out from liquidation process and management of the

Corporate Debtor goes into the hands of scheme proponents, the approved

fees of the liquidator be paid on priority in terms of Section 53 within 30 days

from the change of hands since the role of the liquidator is over.

10. It is submitted that the Learned Adjudicating Authority erred in

holding that the liquidator's fee is only payable on receipt and disbursal and

not otherwise. The Adjudicating Authority failed to appreciate that the

Respondents have not complied with the compulsory requirement of

complying with the provisions contained under Section 29A of the I&B Code.

11. In view of the reasons as stated above, the Learned Counsel prayed

this Bench to set aside the impugned order dated 20.07.2020 in I.A. No.

399/2020 passed by the Adjudicating Authority and sought direction to the

scheme proponent to pay the liquidator's fee on priority (within 30 days of

handing over of the management to the scheme proponent). Further sought

direction to set aside the adverse remarks against the Appellant/liquidator

in the impugned order dated 20.07.2020.

Respondent's Submissions:

12. The Learned Senior Counsel for the Respondents submitted that the

initiation of CIRP against the Corporate Debtor and the subsequent orders

passed by the Hon'ble Appellate Tribunal and the Tribunal on various

occasions.

TA No. 89 of 2021 5 of 23

13. It is submitted that the Shareholders and Creditors of the Corporate

Debtor unanimously approved the scheme in the meeting convened by the

Appellant on 05.09.2019. Vide order dated 10.01.2020 in CA No. 1026/2019

the Learned Adjudicating Authority directed the Appellant to file a report

certifying that the Respondents herein did not suffer from any

disqualification as provided under Section 29A of the Code. As per the

directions of the Adjudicating Authority the Appellant/Liquidator filed his

report dated 24.01.2020 before the Authority.

14. While so, the Appellant filed MA 1140/2019 in CA 1026/2019 before

the Learned Adjudicating Authority inter alia seeking determination of the

fees payable to the Appellant. While sanctioning the scheme, the

Adjudicating Authority vide its order dated 05.05.2020 disposed of the said

MA 1140/2019, made specific observation at para 10, 34 and 35 of the order.

15. The Appellant filed IA. 399/2020 before the Adjudicating Authority

seeking payment of the fees with immediate effect. The Learned Adjudicating

Authority vide its order dated 20.07.2020 (impugned order) disposed of the

Application and held that 'in respect of the fees payable to the Liquidator, as

already dealt with vide order dated 05.05.2020, the fees will become payable

only upon the occurrence of the events of respective receipts and disbursal at

the specified percentage payable and not otherwise and in the circumstances

we direct the Liquidator to desist from claiming the amounts towards the

Liquidator fees as immediately payable'.

TA No. 89 of 2021 6 of 23

16. It is submitted that while approving the scheme vide its order dated

10.01.2020 the Hon'ble Adjudicating Authority clearly noted that the

Respondents were never disqualified under Section 29A of the Code,

however, the Adjudicating Authority gave an opportunity to the Appellant

and directed him to file a report with respect to in-eligibility of the

Respondents under Section 29A of the Code. The Learned Authority clearly

noted in its order that at the time of liquidation the account of the Corporate

Debtor was not a Non-Performing Asset as the amounts owed to the secured

financial creditors were fully settled by the Respondents in December 2018

to the tune of Rs.39.75 crores out of total debt of Rs.39.75 crores.

17. The Appellant never even contested the issue of ineligibility of the

Respondents before the Adjudicating Authority. Further the Appellant

himself filed CA 1026/2019 for approval of the scheme before the NCLT. As

per the recent amendment made under Regulation 2B of the Liquidation

Regulation as inserted by notification dated 06.10.2019, any person

ineligible for the reasons mentioned under Section 29A of the Code shall not

be able to submit a scheme of compromise or arrangement. The said issue

of applicability as well as ineligibility of the Respondents was discussed in

detail before the Learned NCLT and the Learned NCLT held that the eligibility

of the Respondents was not attracted under Section 29A of the Code.

18. It is submitted that the NCLT vide its order dated 10.01.2020 directed

the Appellant to file a report of such eligibility of the Respondents. However,

TA No. 89 of 2021 7 of 23 the said issue was never raised by the Appellant before the Learned NCLT.

In fact, the Appellant himself submitted before the NCLT that the issue of

ineligibility of the Respondents shall not be pressed by the Appellant.

However, the issue of applicability of Section 29A in the present appeal is

nothing but an afterthought and a counter reaction to the Respondents not

ceding to the unreasonable demands of the Appellant in respect of the fees

demanded by the Appellant which is contrary to law and against the

impugned order.

19. It is submitted that the Respondents submitted the scheme to the

Appellant and the Appellant himself submitted the said scheme before the

NCLT and convened a meeting of creditors and shareholders of the Corporate

Debtor. The scheme was approved by a majority of 98% of the creditors,

statutory authorities and members of the Corporate Debtor. The Learned

NCLT approved the scheme of the Respondents vide order dated 10.01.2020.

The Learned NCLT specifically recorded in the order dated 05.05.2020

passed in MA 1140/2019 that the liquidation process have been revoked and

the scheme was directed to be implemented. Therefore, the appeal is

misconceived and the Appellant being officer of Court neither has any vested

right nor any locus standi to challenge the scheme filed by himself before the

NCLT and the Learned NCLT approved the scheme as approved by a majority

of 98% of creditors.

TA No. 89 of 2021 8 of 23

20. The Appellant illegally and unauthorisedly, due to reasons best known

to him delayed in handing over of the Corporate Debtor to these Respondents

on one pretext or other for 10 months. After much delay a partial handover

was done by the Appellant to these Respondents wherein only dredgers of

the Corporate Debtor were handed over by the Appellant. Because of the

delay in handing over, the Respondents incurred an expense of Rs.2 crores

in repairing the dredgers. The Appellant has been in-charge of managing the

Affairs of Corporate Debtor since the very initiation of CIRP of the Corporate

Debtor and thus all the contemporaneous records of the Corporate Debtor

as mentioned hereunder, continue to be in the control and possession of the

Appellant.

"a. Books of Accounts including the bank account opened for liquidation;

b. Income tax records up to the period 2019-20; c. Audited Balance sheets for 2017-18, 2018-19 and 2019-20; d. Tax audit reports, GST returns (filed copies), PF returns; e. ROC returns for 2017-18, 2018-19 and 2019-20, inter alia. f. Removal of charge from ROC for the assets secured. g. Files and the correspondences of the legal cases going on and attended by Liquidator."

21. It is submitted that the above-mentioned records till date have not

been handed over by the Appellant which clearly depicts that the Appellant

disregards the facts that the Corporate Debtor is in the process of

resuscitation and the Appellant is only concerned about his fees.

TA No. 89 of 2021 9 of 23

22. It is submitted that the Appellant is guilty of misrepresenting the facts

in the appeal. The Appellant in the memo of parties still mentions that he is

a Liquidator of the Corporate Debtor, whereas by virtue of operation of the

orders dated 10.01.2020, 05.05.2020, 15.05.2020 passed by the NCLT, it is

clear that on approval of the said scheme, the scheme proponents took over

the management of the Corporate Debtor in terms of the Scheme and thus,

the Appellant was appointed as the independent observer on the board of the

Corporate Debtor. The Appellant deliberately concealed material facts that

he appointed as independent observer to oversee the enforcement and

implementation of the said scheme.

23. It is submitted that the findings in the impugned order dated

20.07.2020 are nothing but a reiteration of its findings in its orders dated

10.01.2020, 05.05.2020 and 15.05.2020 which have duly been accepted by

the Appellant. Further, the present Appeal is only endeavour of the Appellant

to make a wilful gain to himself and cause a wilful loss to the Corporate

Debtor without performing his responsibilities during the process of the

implementation of the scheme. On this account itself the conduct of the

Appellant being a professional deserves to be deprecated and required to

pass strict directions against the Appellant and the present Appeal is

deserves to be dismissed with punitive costs.

24. Further the Appeal is barred by the estoppel for the reasons that the

Appellant himself filed an application bearing MA No.793/2019 seeking leave

TA No. 89 of 2021 10 of 23 of the Learned NCLT to convene a meeting of creditors and shareholders for

consideration of the scheme proposed by the Respondents. The scheme was

duly presented by the Appellant himself and the NCLT vide its order dated

10.01.2020 approved the said scheme. As per Clause 4.5 of the Scheme, it

was provided that the liquidator's fee will be decided and approved by the

IBBI. In order to get more clarity with respect to his fees again preferred an

application being MA No. 1140/2019 seeking fixation or approval of the fee

of the liquidator. The said MA No.1140/2019 allowed vide order dated

05.05.2020 and fixed the fees payable to the Appellant and the Learned NCLT

relied on the calculations submitted by the Appellant on the basis of the

estimated fees payable if the said distribution was happening under Section

53 of the Code. However, the Learned Adjudicating Authority vide impugned

order dated 20.07.2020 reaffirmed its directions passed vide orders dated

10.01.2020 and 05.05.2020, hence the present appeal is barred by the

principles of estoppel.

25. It is submitted that the CIRP cost was duly paid by the Respondents

as per the directions of the Learned NCLT in its orders dated 15.05.2020 and

22.05.2020.

26. It is submitted that the conduct of the Appellant was in fact strongly

deprecated by the Learned NCLT while passing the impugned order to

repeated and consistent endeavour to abuse his power and to derail the

TA No. 89 of 2021 11 of 23 implementation of the scheme in order to suit his personal agenda which is

most unbecoming of a Liquidator under the provisions of the Code.

27. It is submitted that the Appellant filed the present Appeal

misrepresenting and by concealing the facts only in order to unjustly enrich

himself. In view of the facts as stated above the appeal deserves to be

dismissed with cost.

Analysis / Appraisal:

28. Heard the Learned Counsel appeared for the respective parties,

perused the pleadings, documents filed in support of their case. After

analysing the pleadings, the issue felt for consideration is whether the

Appellant has made out any prima facie case seeking the reliefs as prayed in

the Appeal and whether the order passed by the Adjudicating Authority need

any interference.

29. The Appeal is directed against the order of the Adjudicating Authority

dated 20.07.2020 whereby the Adjudicating Authority disposed of the

application filed by the Appellant and settled the issue of fee payable to the

Appellant thereby the Appellant prayed this Tribunal to set aside the order

dated 20.07.2020 in I.A. No. 399/2020 in M.A. No. 1140/2019 and sought

direction to pay the liquidators fee on priority basis and also sought direction

to set aside the adverse remarks passed against the liquidator in the above

impugned order.

TA No. 89 of 2021 12 of 23

30. Accordingly, this Tribunal deciding the issue of fee payable to the

Appellant and the consequence reliefs.

31. It is an admitted fact that the CIRP initiated against the Corporate

Debtor i.e. Meka Dredging Company Pvt. Ltd. on 09.02.2018. In absence of

any Resolution Plan the CoC passed a resolution for liquidation of Corporate

Debtor. In pursuance thereof the RP filed an Application No. MA No.

344/2018 seeking liquidation of the Corporate Debtor. While so, the

Adjudicating Authority passed an order of liquidation in respect of the above

Corporate Debtor on 28.09.2018 and appointed the Appellant as Liquidator.

While so, the Promoters of the Corporate Debtor filed an Appeal CA (AT) (Ins)

No. 696/2018 against the order of liquidation and this Tribunal disposed of

the said Appeal on 07.03.2019 with an observation and direction as under:

"Learned Counsel appearing on behalf of the Appellant submits that a sum of Rs.14 cores was due and out of which a settlement for Rs.10.38 crores has been made. Earlier, also two financial creditors paid total amount of Rs.37 crores to Asset Reconstruction Company (India) Limited and Rs. 2.5 crores to L&T Finance, who have given no dues certificate. However, on completion of the resolution process we cannot allow any settlement with the Promoters and the creditors."

This Tribunal however, directed the Liquidator to proceed with in

terms of the decision made in "Y. Shivram Prasad Vs. S. Dhanapal & Ors.

in CA (AT) (Ins.) No. 224/2018."

TA No. 89 of 2021 13 of 23

32. In view of the judgment of this Tribunal, the Respondent submitted a

scheme of compromise and arrangement under Section 230 of the

Companies Act, 2013 on 01.06.2019 in the light of the judgment in the

matter of Y. Shivram Prasad. The liquidator moved an Application MA No.

793/2019 before the Adjudicating Authority seeking leave to convene a

meeting of the creditors and shareholders for considering scheme proposed

by the Promoters. The Adjudicating Authority allowed the said I.A. on

02.08.2019. The meeting of creditors and shareholders convened and the

Promoters proposed a scheme to settle all class of creditors.

33. The scheme proponents filed the scheme of compromise and

arrangement under Section 230 of the Companies Act, 2013. Thereafter, the

Liquidator filed an application being CA 1026/2019 before the Adjudicating

Authority seeking relief that the scheme of compromise and arrangement

approved by the equity shareholders and creditors of the company in

liquidation be approved so as to bind the equity shareholders and creditors.

The Adjudicating Authority passed a detailed order on 10.01.2020 regarding

sanctioning the scheme and the eligibility of the Respondents under Section

29A of the Code.

34. The Appellant filed an application being MA No. 1140 of 2019 in CA

No. 1026/2019 under Section 60(5) of the Code praying the Tribunal to

approve and payment of the fee of the Appellant. The Adjudicating Authority

passed a detailed order on 05.05.2020.

TA No. 89 of 2021 14 of 23

35. The contention of the Appellant is that he is entitled to his fees

calculated on the basis of both realization of liquidation estate and its assets

on the transaction of sale as a going concern and as well as fees for

distribution of proceeds to be calculated as per the distribution time

schedule filed along with the Application No. 1140/2019.

36. It is an admitted fact that vide order dated 10.01.2020 in CA No.

1026/2019 the Adjudicating Authority approved the scheme of compromise

and arrangement.

37. The case of the Appellant before the Adjudicating Authority is that

prior to the amendment of the Regulation made w.e.f. 25.07.2019, the

presentation of a scheme under Section 230 in absence of any specific

provision during the liquidation of the Corporate Debtor was not envisaged

in the scheme, for the same. Under the circumstances subsequent to order

of liquidation in case of a scheme being placed, the same is required to be

treated as a sale of Corporate Debtor as a going concern under liquidation

effectively to bring it within the ambit of the Regulations as it stood prior to

25.07.2019. Accordingly, the claim of the Appellant is that he is entitled

to his fees calculated on the basis of both realization of liquidation

estate and its assets on the transaction of sale as a going concern.

38. The fact remains that the liquidation order was passed on 20.09.2018

in respect of Corporate Debtor. The Respondents filed scheme before the

TA No. 89 of 2021 15 of 23 Adjudicating Authority in view of 11th Schedule to IBC, 2016 read with

Section 23 of the Companies Act, 2013. The IBBI (Liquidation Process)

Regulation, 2016,

Regulation 2 sub-regulation (1) (ea) defines 'liquidation cost' under Clause

(16) of Section 5 means:

(a) Fee payable to the liquidator under Regulation 4

(b) Remuneration payable by the liquidator under Regulation

7.

(c) Cost incurred by the liquidator under sub -regulation 2 of Regulation 24 and

(d) Interest on interim finance for a period of 12 months or for the period from the liquidation commencement date till repayment of interim finance, whichever is lower.

'liquidator's fee'

Sub-regulation (1) of Regulation 4 defines as under:

The fee payable to the liquidator shall form part of the liquidation cost.

2. The liquidator shall be entitled to such fee and in such manner as has been decided by the committee of creditors before a liquidation order is passed under Sections 33 (1) (a) or 33 (2).

3. In all cases other than those covered under sub-

regulation (2), the liquidator shall be entitled to a fee as a percentage of the amount realized net of other liquidation costs, and of the amount distributed.

TA No. 89 of 2021 16 of 23

4. The liquidator shall be entitled to receive half of the fee payable on realization under sub-regulation (3) only after such realized amount is distributed."

39. A combined reading of Regulation 2 (ea) read with Regulation 4 of IBBI

(Liquidation Process) Regulation, 2016 shows that the fees of the Liquidator

can be decided by the CoC before a liquidation order is passed by the

Tribunal in terms of Section 33 of IBC, 2016 and in its absence sub-

regulation (3) of Regulation 4 of the liquidation process Regulations shall

come into play wherein it is provided that the liquidator shall be entitled to

a fee both on a percentage of the amount realize net of other liquidation costs,

and of the amount distributed as per the percentages given in the table

provided under sub-regulation (3) of Regulation 4 itself. The parties are in

concord that at the time of passing resolution under Section 33(2) of the IBC,

2016 seeking for liquidation of the Corporate Debtor, the Liquidator's fee

being part of the Liquidation cost in terms of Section 5(16) read with

Regulation 2(ea) and Regulation 4(2) had not been fixed by the CoC and in

the circumstances sub-regulation (3) of Regulation 4 of IBBI (Liquidation

Process) Regulations comes into play.

40. The Appellant calculated the fees payable to him as a percentage in

relation to both realization as well as distribution based on the scheme itself.

The Liquidator's fee has been quantified to the extent of Rs. 91,69,768/- in

the aggregate with a break up of Rs.70,69,670/- towards fees calculated on

the basis of realization and the remaining amount computed on the basis of

TA No. 89 of 2021 17 of 23 amount to be distributed to the stakeholders as a percentage amount to a

sum of Rs.21,00,098/-.

41. The stand of the Respondents is that the composite scheme as

envisaged by the scheme proponents as a scheme of compromise and

arrangement, the same cannot be divided into two parts namely; one for

fixing the percentage of fees of the Liquidator upon realization and the other

on the basis of distribution of proceeds to the stakeholders as contemplated

under the unamended Regulation 4 of IBBI (Liquidation Process) Regulation,

2016.

42. The Adjudicating Authority having considered all the aspects and

observed that the scheme as contemplated by the Respondents cannot be

considered as a transaction of the sale falling within the ambit of Regulation

32 of Liquidation Process Regulation, 2016. The amended Regulation 4 of

the Liquidation Process Regulation, 2016 draws a distinction in this

connection in the event of a scheme proposed and as well as in his absence

as repeatedly brought forth in the earlier portion no such distinction or for

that matter no specific mention has been made in relation to a scheme and

in relation to the fees payable to the Liquidator under the concerned

Regulations pre-amended. The IBBI issued a clarification to the Regulation

4 as it was amended on and from 25.07.2019 as under:

"Clarification: Regulation 4 of these Regulations, as it stood before the commencement of the IBBI (Liquidation Process)

TA No. 89 of 2021 18 of 23 Regulation, 2016 shall continue to be applicable in relation to the Liquidation Process already commenced before the coming into force of the said amendment Regulations."

43. In view of the above clarification, the Adjudicating Authority at para

31 of the order dated 05.05.2020 observed as under:

"31. Thus, in view of the clarifications and also taking into consideration the scheme per se as propounded by the Scheme proponents itself, applying Regulation 4 of Liquidation Process Regulations, 2016 as it stood prior to amendment made w.e.f. 25.07.2019, we find that the calculation as given by the Liquidator in the typed set filed along with the application which tabulation has also been extracted in para 22 supra is sustainable and in the absence of Committee of Creditors fixing the fees of the Liquidator or the Liquidation costs, is required to be hence allowed."

44. The Adjudicating Authority at para 34 observed that in case of any

infraction on the part of the Respondents in implementing the scheme as

sanctioned, with regard to Liquidator's fee in accordance with tabulation as

given in para 22 of the order dated 05.05.2020 shall be brought to the notice

of the Adjudicating Authority.

45. After the order of the Adjudicating Authority dated 05.05.2020 several

applications have been filed by the parties. The Appellant filed an application

seeking payment of his fees. On the other hand, the Respondents filed

application seeking direction to the Appellant to handover the assets of the

company and also to adjudicate the dispute in relation to the liquidation

TA No. 89 of 2021 19 of 23 cost. The Adjudicating Authority vide order dated 20.07.2020 disposed of the

applications filed by the Appellant and the Respondents.

46. The Adjudicating Authority clearly stated that, upon occurrence of the

event of a disbursal or a receipt the payment becomes due to the liquidator

on a percentage basis of such actual receipts and disbursal and not

otherwise. The Adjudicating Authority already directed vide its order dated

05.05.2020 that the Appellant/Liquidator to be an independent observer of

the Board which is a part of the implementing agency of the scheme. The

Learned Counsel for the Respondents vehemently contend that the Appellant

has not handed over the assets of the Corporate Debtor and continued to be

liquidator of the Corporate Debtor, thereby huge loss caused to the

Respondent. In the order dated 20.07.2020, the Adjudicating Authority also

observed that the Liquidator has failed to hand over the reins of the company

in liquidation to the scheme proponents on the ground that the CIRP cost,

liquidation cost as well as liquidation fee have not been remitted. The NCLT

observed that the liquidator should not have withheld the handing over of

the reins of the company in liquidation and its management even upon

approval of the scheme as early as 10.01.2020. It is clearly held that the

Appellant being the implementing agency which is required to manage the

affairs of the company in liquidation and not the Liquidator.

47. The Adjudicating Authority clearly observed that the

Appellants/Liquidator's fee is not payable immediately as demanded by the

TA No. 89 of 2021 20 of 23 Liquidator and is required to be excluded from the statement as annexed

along with Auditor's certificate. The Adjudicating Authority further directed

the Appellant/Liquidator to make arrangement to handover the reins of the

management of the Corporate Debtor including the possession of assets of

the Corporate Debtor, if not already done within a period of 10 days from the

date of order i.e. 20.07.2020. It is also observed that no fees shall be

chargeable by the Liquidator for the same and if not handed over as above,

the risk and responsibility and costs shall be to the personal account of the

Liquidator without any recourse to the funds or assets available with that of

the Corporate Debtor.

48. The Learned Counsel for the Respondents contend that in spite of the

directions passed by the Adjudicating Authority the Appellant has not

handed over the assets of the Corporate Debtor with an intention to arm

twist the Respondent for achieving illegal gains. It is also submitted that still

the Appellant had not handed over the following books as stated in para 32

of the counter affidavit filed by the Respondents.

"a. Books of Accounts including the bank account opened for liquidation;

b. Income tax records up to the period 2019-20; c. Audited Balance sheets for 2017-18, 2018-19 and 2019-20; d. Tax audit reports, GST returns (filed copies), PF returns; e. ROC returns for 2017-18, 2018-19 and 2019-20, inter alia. f. Removal of charge from ROC for the assets secured. g. Files and the correspondences of the legal cases going on and attended by Liquidator."

TA No. 89 of 2021 21 of 23

49. The Respondents in the short note of legal submissions dated

14.07.2022 at para 22, page 5 it is state as under:

"In view of the order dated 20.07.2020 passed by the Learned NCLT, in view of the above, Amma Lines vide its letter dated 27.07.2020 duly sent the cheques bearing Nos.666414 and 666515 for a total amount of Rs.98,69,502/- to the Appellant towards undisputed portion in the Liquidation costs and towards the undisputed portion in the invoice of knowledge marine and engineering works private limited, a company appointed by the Appellant for manning and maintaining the dredgers of the Corporate Debtor."

50. It is stated that the above-mentioned cheques were duly presented and

encashed by the Appellant on 31.07.2020.

51. The Respondents contended that they have made the entire CIRP costs

as well as the liquidation costs (barring the disputed sum of Rs.4,21,100/-

which is still pending mediation before the statutory auditors), in accordance

with the directions of the Learned NCLT.

Finding:

52. Having gone through the order passed by the Adjudicating Authority

dated 20.07.2020 this Tribunal do not find any infirmity or illegality in the

above order. This Tribunals takes serious note on the part of the Appellant

that the Appellant failed to disobey the orders of the Adjudicating Authority

dated 20.07.2020 in toto and also it is evident from the observations of the

order itself. Further, the Respondents also clearly mentioned that the

TA No. 89 of 2021 22 of 23 Appellant purposely delayed in handing over the reins of the Corporate

Debtor to the Respondents for the reasons best known to him. It was only a

partial handing over was done by the Appellant to the Respondents.

53. Keeping in view of the of the paramount interest of the Corporate

Debtor, this Tribunal directs the Appellant to handover the books of accounts

to the Respondents herein as mentioned in para 48 hereinabove, within a

period of one week from the date of receipt of copy of this judgment, if not

already handed over.

54. Viewed in that perspective this Tribunal comes to a resultant

conclusion that the Appellant has not made out any case either on law or on

facts. Further, this Tribunal holds that the Appeal is frivolous and vexatious

and the same is dismissed. However, no orders as to cost. Applications if

any, pending stand closed.

[Justice M. Venugopal] Member (Judicial)

[Kanthi Narahari] Member (Technical) 2nd August, 2022

pks

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