National Company Law Appellate Tribunal
Venkata Sivakumar V vs Uco Bank on 25 September, 2025
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) (Ins) No. 352/2023
In the matter of:
Adv. (CA) V. Venkata Sivakumar
Liquidator of M/s. Rathna Stores Pvt. Ltd.
No. 10/11, Dr. Subbarayan Nagar Main Road,
Kodambakkam, Chennai - 600 024 ...Appellant/Party in Person
V
M/s. UCO Bank Ltd
No. 26/21, South Dhandabani Street,
Near Burkit Road, T. Nagar,
Chennai, Tamil Nadu - 600 017 ...Respondent
Present :
For Appellant : Mr. V. Venkata Sivakumar (Party-in-person)
For Respondent : Mr. Surya Teja SS Nalla, Advocate
JUDGMENT
(Hybrid Mode) [Per: Jatindranath Swain, Member (Technical)] This instant company appeal has been filed by the Appellant, Mr. V. Venkata Sivakumar, challenging the impugned order dated 12.09.2023 in IA/1175/2021, passed by the learned NCLT, Chennai-II, in CP/608/IB/2017.
The said application was filed under Section 53 of the I & B Code, 2016, and Regulation 4(2) of IBBI (Liquidation Process) Regulations, read with NCLT rules, 2016. The reliefs prayed for in the said application is extracted below: Comp App (AT) (CH) (Ins) No. 352/2023 Page 1 of 15
"To exclude the period of seven months, lost because of reasons beyond the control of the liquidator on account of supervening circumstances and grant/allow the regional remuneration as per the invoice and closed, which is in account with the provision of the regulation of 4(2) of the liquidation regulations and to pass any other or further order, as this court may deem fit and proper in the present Case and render justice."
2. However, the learned NCLT, after hearing both sides, dismissed the application holding thereof that (a) the application has been filed without mentioning the extensions that have been granted, (b) the Liquidator merely discharged his duty in disposing off the asset of the Corporate Debtor, (c) except for the time spent in litigation, nothing extraordinary in the liquidation process was carried out by the Liquidator, (d) for performing duty under Section 35 of the I&B Code, exclusion cannot be granted within the liquidation period and (e) the Liquidator has admitted that he has received his fee as per Regulation 4 of the liquidation regulation and the said fee has been paid in priority over other stakeholders and therefore the application is devoid of merits.
3. The brief facts of the case are that the Corporate Debtor, M/s. Rathna Stores Pvt. Ltd. was admitted into liquidation by the order of the learned NCLT dated 14.08.2018, and the Appellant herein was appointed as Liquidator on 11.09.2018. During the course of the liquidation, the secured creditor, M/s. UCO Bank, the Respondent herein, relinquished its security interest under Section 52 of the I &B Comp App (AT) (CH) (Ins) No. 352/2023 Page 2 of 15 Code and became the stakeholder in the Stakeholders Consultation Committee. Thereafter, the liquidator took action to sell the property consisting of land measuring 8000 ft.2 and 7-floor built-up area 33,000 ft.2 situated at Usman Road, T.Nagar and sold the said asset for an amount of Rs.27.60 crore through private sale on 21.08.2019 after getting permission from NCLT, Chennai. Further, after realising the sale proceeds on 06.09.2019, the liquidator settled his own remuneration to the tune of Rs.92.34 lakhs and the liquidation costs first and then, distributed the balance amount to the stakeholders and completed the process on the same date.
4. The Appellant contends that he lost about 7 months in handling certain extraordinary circumstances in completing the liquidation process of the Corporate Debtor, namely, (a) he contested the continuing litigations and initiated several steps including taking police protection to take possession of the assets of the corporate debtor, (b) he processed defective title deeds of the mortgaged land and the seven-floor building built thereon measuring 33,000 sq. ft and (c) he got vacated, the attachment of income tax authorities on the said property and could successfully canvass buyers for the said property despite strong opposition from the promoters of the CD and their relatives, which NCLT failed to consider. He has further contended that NCLT mistakenly took cognizance of two extensions that were given in this liquidation proceedings which were basically given to pursue the applications filed in MA/217/2019 and MA/455/2019 by the Appellant for Comp App (AT) (CH) (Ins) No. 352/2023 Page 3 of 15 fraudulent diversion of funds under Section 49 of I & B Code, which is still pending before this Appellate Tribunal in CA(AT)(INS) 56/2022. He contends that he completed the sale process of the asset in 11 months, that the pending litigations took more than six months, and as soon as NCLT passed orders on the litigations, he sold the property and realised the sale proceeds within two months and distributed the amounts to the stakeholders in accordance with Section 53 of I &B Code and that, but for these extraordinary circumstances, which extended the liquidation period, he could have completed the same in four months and would have been eligible to get the fees at a higher scale which was denied to him.
The extraordinary circumstances, as per his claim, are (i) that the property was in the custody of the promoters during CIRP process and no action was taken by the RP and he took possession of the same, immediately after taking over as liquidator with the help of police after getting necessary orders from NCLT, (ii) that he took necessary action to rectify the defects in the title deeds of the property and the deviations in the construction of the building to the extent possible to make the property saleable, (iii) that the property was attached by the Income Tax department towards their claim of ₹60 crore for which the erstwhile RP did not take any action and the Appellant only took necessary steps and vacated the Income Tax department attachment by getting orders from NCLT, which consumed nearly 6 months of time and which delayed the sale of the assets to realise its value. He further submits that the facts of the case will clearly establish the sincere and Comp App (AT) (CH) (Ins) No. 352/2023 Page 4 of 15 dedicated efforts put in by him to realise the property within six months, but the same could not be done on account of factors beyond his control.
5. He submits that the learned NCLT disregarded the binding precedents of this Appellate Tribunal which had laid down the law regarding exclusion of time lost due to litigation for computation of remuneration to the Liquidator as per Regulation 4(2) of the liquidation regulations in the matter of SIDBI Vs. Shri Vijender Sharma in CA (AT) (INS) 1027/2021. He has further submitted that the learned NCLT erroneously categorised his prayer for exclusion of time with the earlier applications moved by him for extension of liquidation period in 2021, which was basically to seek time to reverse the fraudulent transactions undertaken by the erstwhile management of the Corporate Debtor and rejected the instant application without proper application of mind. Accordingly, he submits that the impugned order may be set aside, and the Respondent UCO Bank may be directed to pay the additional remuneration along with 12% interest per annum as prayed for in IA/1175/2021.
6. The Respondent UCO bank has contended to the contrary, stating that the above appeal is devoid of merits and is liable to be dismissed in limine and that the Appellant has been adequately compensated in the form of remuneration for his functions as Liquidator for Rathna Stores/Corporate Debtor under Section 34(8) of the Code read with Regulation 4 of the liquidation regulations thereof from the Comp App (AT) (CH) (Ins) No. 352/2023 Page 5 of 15 liquidation estate. He has further submitted that 2 years after receiving his due remuneration, the Liquidator filed the application IA/1175/2021 seeking exclusion of 7 months of time for computing additional remuneration along with interest, which is belated and the said time period is already subsumed in extensions earlier granted by the learned NCLT and that the application did not provide the exact period during which the litigation was pending and that the application was filed merely as an afterthought to make a further claim for remuneration, which should not be considered.
He has also stated that the duties of the Liquidator under Section 35 of the I & B Code includes sale of the assets included in the liquidation estate and therefore, performing the same is not an extraordinary task to warrant additional compensation. He has further stated that the issue of remuneration is exhaustively provided under Regulation 4(2) of the liquidation process regulations, 2017 and the fee structure is specifically prescribed on a percentage basis linked to the amount realised and distributed from the liquidation estate and the said statutory prescription leaves no scope for any additional or equitable claim for remuneration beyond what has been expressly provided therein. He has further stated that the statutory duties of the Liquidator under Section 35 of I&B Code includes taking custody of assets, defending litigations, selling assets, and distribution of sale proceeds among the stakeholders, that the plea of the Appellant to exclude the time lost in litigation for taking position, rectifying defects and lifting of attachment Comp App (AT) (CH) (Ins) No. 352/2023 Page 6 of 15 made by Income Tax department is totally misconceived and that the conclusion of the learned NCLT that performance of statutory duties cannot be treated as extraordinary work for claiming exclusion is absolutely correct.
He has further submitted that the ratio laid down in SIDBI Vs. Vijender Sharma is clearly distinguishable; The relevant para of the judgment is extracted hereunder: -
13. We reproduce the relevant portion of Regulation 37 of the Liquidation Process Regulations, 2016 hereunder for better appreciation of the matter: -
"37. Realization of security interest by secured creditor.
(1) A secured creditor who seeks to realize its security interest under section 52 shall intimate the liquidator of the price at which he proposes to realize its secured asset.
(2) The liquidator shall inform the secured creditor within twenty one days of receipt of the intimation under subregulation (1) if a person is willing to buy the secured asset before the expiry of thirty days from the date of intimation under sub-regulation (1), at a price higher than the price intimated under sub-
regulation (1)."
xx xx xx xx xx
14. After receipt of this e-mail, SIDBI communicated to the liquidator the estimated price of Rs. 3.60 crores at which it wished to realize its security interest in HSIIDC Bawal Property vide email dated 8.3.2019.
15. We now examine the contention of the Learned Counsel for liquidator that SIDBI could not understand and/or Comp App (AT) (CH) (Ins) No. 352/2023 Page 7 of 15 interpret Regulation 21-A, which is regarding presumption of security interest. The relevant portion of Regulation 21-A of Liquidation Process Regulations is reproduced below: -
"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 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 Comp App (AT) (CH) (Ins) No. 352/2023 Page 8 of 15 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."
8. The respondent submits that in the aforesaid case, exclusion of time was granted only for the reason that the delay therein was caused due to misinterpretation of law by the secured creditor which compelled the Liquidator to file multiple applications before the adjudicating authority and that the said circumstances are peculiar to that case and cannot be widely applied for exclusion of time spent during the liquidation. He has further stated that in the present case, no such delay on the account of the secured creditor exists and the time taken is solely on account of the normal exercise of duty by the liquidator in bringing the assets of the corporate debtor for sale and for realisation of its value. The respondent has further stated that regulation 4(2) of the liquidation process regulations 2017 is clear and unambiguous, that there is no scope for judicial intervention with the same, and that there is no residual equity to make payment to appellant on ex aequo et bono basis, and therefore the claim for additional remuneration is misconceived.
9. In view of the submissions as above, the issue for consideration before us is as to whether NCLT disregarded the settled law/binding precedents while passing the order, whether NCLT misinterpreted the request of the appellant for exclusion Comp App (AT) (CH) (Ins) No. 352/2023 Page 9 of 15 of time as that of extension of time, and that whether NCLT failed to recognise that work done by him was extraordinary in nature.
10. There is no dispute regarding to the facts between the Appellant and the Respondent and also the facts as narrated in the impugned order by NCLT. The first point to consider is to whether the work done by the liquidator is extraordinary. Section 35 of the I & B Code outlines the duties of the liquidator and all the above items which the liquidator claims have been narrated there.
35. Powers and duties of liquidator.
(1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely: --
(a) to verify claims of all the creditors;
(b) to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;
(c) to evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report;
(d) to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary;
(e) to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;
(f) subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body Comp App (AT) (CH) (Ins) No. 352/2023 Page 10 of 15 corporate, or to sell the same in parcels in such manner as may be specified;1
[Provided that the liquidator shall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant].
(g) to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business;
(h) to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself;
(i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities;
(j) to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code;
(k) to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor;
Comp App (AT) (CH) (Ins) No. 352/2023 Page 11 of 15
(l) to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions;
(m) to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt document, application, petition, affidavit, bond or instrument and for such purpose to use the common seal, if any, as may be necessary for liquidation, distribution of assets and in discharge of his duties and obligations and functions as liquidator;
(n) to apply to the Adjudicating Authority for such orders or directions as may be necessary for the liquidation of the corporate debtor and to report the progress of the liquidation process in a manner as may be specified by the Board; and
(o) to perform such other functions as may be specified by the Board.
(2) The liquidator shall have the power to consult any of the stakeholders entitled to a distribution of proceeds under section 53:
Provided that any such consultation shall not be binding on the liquidator:
Provided further that the records of any such consultation shall be made available to all other stakeholders not so consulted, in a manner specified by the Board.
11. It can be clearly seen that as per Section 35(1)(f), sale of assets of the CD is one of the duties of the liquidator. Therefore, it naturally follows that he has to remove the road blocks on the path to such process. All the acts which the liquidator has claimed to have done will come under the ambit of the processes undertaken to sell the asset of the CD and to realise its value. Further, the litigations he engaged Comp App (AT) (CH) (Ins) No. 352/2023 Page 12 of 15 in such as lifting of the attachment of income tax department, and taking control of the property were before NCLT only. He has not produced any evidence as to when he applied for such reliefs and when they were granted by NCLT. So, it cannot be said that these litigations hindered his performance. Therefore, there is no ground to differ with the view of NCLT that the steps taken by the Liquidator are routine in nature and nothing out of ordinary while realising the assets in the liquidation estate.
12. Regarding whether NCLT has disregarded the ratio pronounced in the matter of SIDBI v. Vijendra Sharma, which has been relied upon by the Liquidator in his support, it is seen from the order that NCLT has not thought it fit to consider the pleading of the liquidator for exclusion of time on the ground that during the relevant time, only extension of time was sought, and the same has been granted and since it is the duty of the liquidator to take possession of the assets, conduct the case before the appropriate forum in order to different the CD, the time spent in such activities cannot be taken to be excluded from the liquidation period for the purpose of computing remuneration to be paid to the liquidator. Further, as pointed out by the Respondent, in the said case, the delay in proceeding was caused by the secured creditor itself, and that is not the case in the instant appeal. Further, it cannot be expected that the assets to be included in the liquidation estate are to be free from all defects and encumbrances when the liquidator takes charge of them.
It is duty of the liquidator to rectify the defects if any, in the assets to make them Comp App (AT) (CH) (Ins) No. 352/2023 Page 13 of 15 saleable and to ensure value maximisation. The other judgments referred to by the Appellant will not strictly apply to the instant case as they relate to different set of circumstances.
13. Further, the liquidator has sold the assets in 2019 and realised his remuneration in 2019 itself. He could have asked for exclusion of period at that time itself. However, he had asked for extension of time only. The ratio relied upon him has been pronounced only in 2021, and therefore the conclusion of NCLT that application is result of an afterthought cannot be faulted. The corresponding portion of the impugned order is extracted below:
9. On a perusal of records, it is seen that the liquidation of the Corporate Debtor was ordered on 14.08.2018. The Applicant herein was appointed as the Liquidator on 11.09.2018.
10. It is to be noted here that the Liquidator had originally filed IA 186/2021 before this Tribunal seeking extension of liquidation period and this Tribunal vide its order dated 05.05.2021 extended the Liquidation period of the Corporate Debtor.
11. ... ...
12. ... ...
13. It is seen that by virtue of two orders passed by this Tribunal, the Liquidation period in respect of the Corporate Debtor was extended from 17.02.2020 till 05.11.2021.
Already, the hurdles faced by the Liquidator in conducting the Liquidator process were considered and accordingly the Liquidation period was extended from time to time.
Comp App (AT) (CH) (Ins) No. 352/2023 Page 14 of 15 ....
17. Further, it is also required to be noted that the application has been filed, without making any averment as to how many extensions were granted, when the distribution under section 53 was completed and the exact period during which the litigation was pending.
Thus, it has to be held that there is no question of NCLT misinterpreting the application of the appellant for exclusion of time as extension of time and that NCLT was very clear in what was being applied for and what it thought of such prayer.
14. Accordingly, the conclusion derived by NCLT that the application filed by the liquidator is bereft of facts and devoid of merits doesn't warrant any interference at our hands. Hence, the appeal is held to be without merits and hence is dismissed accordingly.
[Justice Rakesh Kumar Jain] Member (Judicial) [Jatindranath Swain] Member (Technical) 25.09.2025 AR/MS/AK Comp App (AT) (CH) (Ins) No. 352/2023 Page 15 of 15