Tribunal Upholds CoC-Approved Fee, Directs SBI to Pay Liquidation Expenses
The National Company Law Tribunal (NCLT) Ahmedabad bench has delivered a significant judgment in the case of Ramesh Kumar Totla, the liquidator of M/s Raghuvanshi Cotton Ginning and Pressing Pvt. Ltd, versus the State Bank of India (SBI). The Tribunal, comprising Sh. Shammi Khan and Sh. Sanjeev Sharma, ruled on November 21, 2025, addressing the contentious issue of the liquidator's fee and liquidation expenses in the ongoing insolvency proceedings.
The primary dispute revolved around the liquidator's entitlement to fees beyond what was fixed by the Committee of Creditors (CoC) and the payment of liquidation costs by SBI. Ramesh Kumar Totla, appointed as the liquidator following the initiation of the liquidation process on April 8, 2025, sought additional fees based on the realisation of assets by SBI under the SARFAESI Act. However, the Tribunal held that the fee payable to the liquidator should be in accordance with the CoC's decision, which had set a fee of Rs. 10 lakhs for the first six months.
The Tribunal emphasized that the liquidator's fee could not be based on the sale of assets outside the liquidation estate, as SBI had not relinquished its security interest. The judgment highlighted that the assets sold by SBI under SARFAESI were not part of the liquidation estate, and therefore, the liquidator's claim for additional fees was untenable.
Moreover, the Tribunal directed SBI to pay the liquidation expenses amounting to Rs. 1,14,948, which covered various costs incurred during the liquidation process. The decision also clarified that the CoC's resolution regarding the fee structure would prevail unless altered by the Adjudicating Authority.
The judgment referenced several precedents, including the NCLAT's rulings in similar cases, reinforcing the principle that CoC-approved fees are binding unless expressly modified by the tribunal.
This ruling provides clarity on the application of the Insolvency and Bankruptcy Code, 2016, particularly concerning the computation of a liquidator's fee and the obligations of secured creditors in liquidation processes. It underscores the importance of adhering to the CoC's decisions and the regulatory framework governing insolvency proceedings.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Liquidator's fee must be as per Committee of Creditors' decision under Regulation 39D of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Liquidator cannot claim fees based on realisation/distribution of assets outside liquidation estate, or where secured creditor has not relinquished security interest.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016, Section 52, Section 34(8), Section 36; IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 39D; IBBI (Liquidation Process) Regulations, 2016, Regulation 21A(2)(a), Regulation 4.
Ramesh Kumar Totla v. State Bank of India, (NCLT)(Ahmedabad) : Law Finder Doc Id # 2831997
