Secured Creditor Is Liable To Pay Liquidator's Fees Under Rule 21A Of Liquidation Regulations If Option U/S 52 Of IBC Is Exercised: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan, Barun Mitra and Arun Baroka has held that the fee of the liquidator has to be paid within 90 days from the liquidation commencement date as provided under Regulation 21A of the Liquidation Regulations if the secured creditor opts to realise its security interest under section 52 of the code. Observations: The tribunal at the outset observed that Regulation 21-A of the Liquidation Process Regulations, 2016,mandates Secured Creditors to inform the Liquidator of their decision to realise their security interest and to pay their share of the liquidation costs within 90 days. The tribunal after going through the relevant provisions observer that “It will be clear from this provision that the Secured Creditor is mandatorily obligated to pay its share as per Section 53 and 53of the Code which provides for distribution of assets from the sale of liquidation assets in the order of priority.. Further, Regulation 21A of Liquidation Process Regulations, 2016, provides that where a Secured Creditor fails to comply with Sub-Regulation, the asset, which is subject to security interest, shall become part of the liquidation estate.” It further added that the Appellant failed to comply with this mandate. In Small Industries Development Bank of India v. Shri Vijender Sharma this tribunal has held that “It thus becomes quite clear that compliance of regulations 2, 2-А, 21-A and 37 of the Liquidation Process Regulations and Section 52/53 of the IBC are absolutely necessary even if the secured creditor proceeds to realise its security interest.” This case squarely supports the case of the respondent.