Outgoing Liquidator Entitled to Minimum Fee of Rs. 2 Lakh as Per IBBI Regulations: NCLT [Read Order]

The National Company Law Tribunal (NCLT), Kochi bench has held that if the liquidator is replaced, he is entitled to a minimum fee of Rs. 2 lakh as per Schedule II of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for the tenure he has worked.

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The liquidator of M/s. Asten Realtors Private Limited, Mr. Padmakumar K. C., filed a claim against the company (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016.  During the CIRP period, the Tribunal authorized two project-wise resolution strategies.  The Tribunal designated the Applicant as the Liquidator and issued an order for liquidation on November 19, 2024.  On November 23, 2024, the applicant released a notice to the public soliciting claims.  Based on the claims received, the applicant created a list of interested parties and established the Stakeholders' Consultation Committee (SCC) on January 18, 2025.  The combined vote proportion of the respondents in the SCC was 92.99%.

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In accordance with Regulation 31(A)(11) of the IBBI (Liquidation Process), 2016, the applicant sought to, among other things, replace the current liquidator, K.C. Padmakumar, and appoint Sreenivasan P R as the liquidator as decided by the SCC. The SCC also fixed a fee of Rs. 2 Lakh per month as the fee of the liquidator to be replaced for the period he has worked, which is equivalent to the minimum fee prescribed by the IBBI for the CIRP. The SCC rejected the applicant's proposal for a monthly remuneration of Rs. 2 Lakhs per month, which was rejected by the SCC with a vote of 93.37%.

The Tribunal noted that as per Regulation 4 (2)(a) of the IBBI (Liquidation Process) Regulations, 2016, the liquidator shall be entitled to a fee at the same rate as the resolution professional was entitled to during the CIRP, for the period of compromise or arrangement under section 230 of the Companies Act, 2013.

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The bench comprising Shri. Vinay Goyal (Judicial Member) and Smt. Madhu Sinha (Technical Member) observed that the remuneration of the Liquidator was not fixed.As a result, he was entitled to his fees in accordance with Regulation 34 B (2) of the IBBI (Insolvency Resolution Process for Corporate Persons), which stipulates that the fee of the resolution professional or interim resolution professional appointed on or after October 1, 2022, cannot be less than the fee for the period specified in clause 2 of Schedule II.  The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016's Schedule II states that the liquidator is entitled to Rs. 2 lakhs every month.

As per the Regulation 7(1) of the IBBI (Liquidation Process) Regulations, 2016, “A liquidator may appoint professionals to assist him in the discharge of his duties, obligations and functions for a reasonable remuneration and such remuneration shall form part of the liquidation cost.”

The bench viewed that SCC rejected the fee proposed by the Professionals with a 93.37% vote without due application of mind and appointed Sreenivasan P.R. as the Liquidator. It fixed the remuneration of the outgoing Liquidator at Rs. 2 lakh per month for the period he has served, in line with the Schedule fee prescribed by the IBBI for the CIRP. The Tribunal also approved professional fees for the Chartered Accountant and for secretarial assistance.

To Read the full text of the Order CLICK HERE

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