NCLT Kolkata Refuses To Exclude Stay Period For Liquidator's Fee Calculation Amid Misconduct Allegations

The National Company Law Tribunal (NCLT) at Kolkata has refused to exclude, for the purpose of computing a liquidator's fee, the period during which the liquidation process was affected by appellate orders, holding that such benefit cannot be granted where the delay is linked to disputes over the liquidator's conduct

A coram of Judicial Member Labh Singh and Technical Member Rekha Kantilal Shah said, “In our view, if any dispute arises due to misconduct of the liquidator, resulting in litigation which eventually leads to a stay of the entire proceedings, the liquidator ought not to be granted the benefit of exclusion of such time periods, for the purpose of remuneration.”

The dispute arose in the liquidation of Visa Power Ltd., which began in October 2018 after the failure of the resolution process. Bharat Heavy Electricals Ltd. asserted a lien over plant and machinery at the project site, setting off a series of challenges before the tribunal and the appellate tribunal and later the Supreme Court. Orders passed along the way restricted removal and dealing with the assets, slowing the liquidation.

The liquidator argued that these judicial orders prevented any meaningful progress. Since his fee is linked to realisation and distribution, he sought exclusion of the period covered by those restraints, saying the delay was beyond his control.

The bench examined the earlier findings of the appellate tribunal, which had raised serious concerns about the liquidator's conduct, including in the auction process. It noted that although parts of that ruling have been stayed by the Supreme Court, the issues remain under consideration and have not been finally settled.

Against that backdrop, the tribunal declined to exclude the period from fee computation, pointing to the absence of a final determination and the nature of the disputes involved.

It, however, extended the liquidation period up to the date of its order, noting that the earlier extension had already run out.