CA-230(6)

No Liquidator’s fee can be charged from Scheme Proponent, who has submitted Scheme of Compromise and Arrangement under Sec. 230 of Companies Act, 2013 | Liquidator is entitled to his fee under Sec. 34 & Liquidation Regulation 4 and Cost under Regulation 2B – CA Jai Narayan Gupta (Liquidator of Barcle Enterprises Limited) v. Radhasiriya Properties Pvt. Ltd. – NCLAT New Delhi

In this landmark judgment, Hon’ble NCLAT held that:
(i) The statutory provision is clear that Liquidator can only claim cost incurred from the parties who proposed the compromise or arrangement.
(ii) The Rule making Authority is fully aware of the difference between the cost and fee. Liquidation Regulation 2B, does not include fee. Regulation 4 of Liquidation Regulations, 2016 deals with fee.
(iii) Regulation 2B does not indicate that any fee by Liquidator can be charged from the Scheme Proponent. The Liquidator is entitled to his fee as per the statutory provision of Section 34, sub-section (8) and (9) read with Regulation 4 of Liquidation Regulations, 2016.
(iv) No fee can be charged from the Scheme Proponent, who has submitted the Scheme under Section 230 of the Companies Act, 2013 read with Regulation 2B of Liquidation Regulations, 2016.
(v) Cost incurred with regard to compromise or arrangement has to be borne by the Corporate Debtor or Scheme Proponent.

No Liquidator’s fee can be charged from Scheme Proponent, who has submitted Scheme of Compromise and Arrangement under Sec. 230 of Companies Act, 2013 | Liquidator is entitled to his fee under Sec. 34 & Liquidation Regulation 4 and Cost under Regulation 2B – CA Jai Narayan Gupta (Liquidator of Barcle Enterprises Limited) v. Radhasiriya Properties Pvt. Ltd. – NCLAT New Delhi Read Post »

When scheme of compromise and arrangement proposed by Applicant is rejected at its first motion by Creditors, Proviso to Rule 2B(3) of Liquidation Process Regulations 2016 does not apply and Liquidator is not entitled to claim his fees and other costs from the Applicant – Radhasiriya Properties Pvt. Ltd. Vs. Jai Narayan Gupta Liquidator of Barcle Enterprises Ltd. – NCLT Kolkata Bench

In this case, Applicant who is a proponent of a composite scheme of compromise and arrangement has deposited Rs. 23,01,000/- and however, the scheme has been rejected by the Creditors. The Liquidator has refused to refund the amount to the applicant. Issue before the NCLT is “whether the Liquidator is entitled to claim his fees and other costs in relation to liquidation, from the Applicant who is a proponent of a composite scheme of compromise and arrangement, when the scheme proposed by him is rejected by the creditors”.

NCLT Kolkata Bench held that:
(i) A combined going through of Regulation 2B (3) of the IBBI (Liquidation Process) Regulations, 2016 and Section 230(6) of the Companies Act, 2013 envisages that if any cost incurred by the Liquidator, in relation to compromise or arrangement sanctioned by the Tribunal, shall be borne by the corporate debtor.
(ii) Proviso to Rule 2B(3) of the Liquidation Process regulations 2016, provides for bearing of cost by the parties who proposed compromise or arrangement only when such a scheme is not sanctioned by the Tribunal under sub section (6) of Section 230 of the Companies Act.
(iii) The Scheme proposed by the Applicant was rejected unanimously at its first motion of compromise or arrangement and this Adjudicating Authority did not have any scope to sanction the scheme and therefore there is no case made out by the liquidator for invoking proviso to Rule 2B(3) of liquidation process regulations 2016.
(iv) Thus, we are in view that the all the costs, incurred by the Liquidator in relation to compromise or arrangement including liquidator fee were wrongly claimed from the Applicant.

When scheme of compromise and arrangement proposed by Applicant is rejected at its first motion by Creditors, Proviso to Rule 2B(3) of Liquidation Process Regulations 2016 does not apply and Liquidator is not entitled to claim his fees and other costs from the Applicant – Radhasiriya Properties Pvt. Ltd. Vs. Jai Narayan Gupta Liquidator of Barcle Enterprises Ltd. – NCLT Kolkata Bench Read Post »

Important judgment on Stakeholders Consultation Committee(SCC) and Compromise or Arrangement under IBC – Ramesh Kumar Chaudhary Vs. Anju Agarwal Liquidator of M/s. Shree Bhawani Paper Mills Ltd.- NCLAT New Delhi

Important judgment of NCLAT on (a) Role of Stakeholders Consultation Committee(SCC) for obtaining any advice with regard to Scheme for Compromise or Arrangement under Section 230, (b) Applicability of Section 230(6), in case of no meeting was convened under Section 230(1), (c) Computation of 66% voting on the members of the SCC present, (d) Consent of the secured creditors, not less than 75% under Section 230(2)(c) and (e) Process to be followed by the Liquidator for obtaining approval for Compromise or Arrangement.

Important judgment on Stakeholders Consultation Committee(SCC) and Compromise or Arrangement under IBC – Ramesh Kumar Chaudhary Vs. Anju Agarwal Liquidator of M/s. Shree Bhawani Paper Mills Ltd.- NCLAT New Delhi Read Post »

The Promoter, if ineligible u/s 29A cannot make an application for Compromise & Arrangement u/s 230 of the Companies Act, 2013 – Arun Kumar Jagatramka Vs. Jindal Steel and Power Ltd. & Anr – Supreme Court

Hon’ble Supreme Court holds that the IBC has made a provision for ineligibility under Section 29A which operates during the course of the CIRP. A similar provision is engrafted in Section 35(1)(f) which forms a part of the liquidation provisions contained in Chapter III as well. In the context of the statutory linkage provided by the provisions of Section 230 of the Act of 2013 with Chapter III of the IBC, where a scheme is proposed of a company which is in liquidation under the IBC, it would be far-fetched to hold that the ineligibilities which attach under Section 35(1)(f) read with Section 29A would not apply when Section 230 is sought to be invoked. Such an interpretation would result in defeating the provisions of the IBC and must be eschewed.

The Promoter, if ineligible u/s 29A cannot make an application for Compromise & Arrangement u/s 230 of the Companies Act, 2013 – Arun Kumar Jagatramka Vs. Jindal Steel and Power Ltd. & Anr – Supreme Court Read Post »

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