Regulator finds liquidator charging excess fee of Rs 5.46 crore; orders disgorgement
Amit Gupta, appointed as the liquidator for multiple corporate debtors, including Winsome Diamonds and Jewelry, Forever Precious Jewellery and Diamonds, Kohinoor Diamonds Private, Provogue (India), Hindustan Dorr Oliver, HDO Technologies, and Padmavati Wires and Cables Ltd, has been found guilty of charging excess fees totaling ₹5.46 crore. This figure, determined by the regulatory authorities, highlights significant irregularities in his management of liquidation proceedings.
The allegations stem from his unauthorized practices, including altering timeframes for fee calculation and claiming additional expenses beyond what is permitted under the Insolvency and Bankruptcy Code (IBC) and the Liquidation Regulations. If liquidator Gupta fails to provide granular details to justify his actions within four weeks, the excess fee will remain fixed at ₹5.46 crore. The authorities have also directed that this amount, deemed an unlawful gain, be disgorged and restitution provided to stakeholders who suffered due to the misallocation of funds.
Details of Excess Fee charged
| Liquidation case | Excess fee charged (Rs) |
| Padmavati Wires and Cables Private Limited | 73,986 |
| Winsome Diamonds and Jewellery Limited | 60,05,506 |
| Forever Precious Jewellery and Diamonds Limited | 3,13,427 |
| HDO Technologies Limited | 98,70,004 |
| Hindustan Dorr Oliver Limited | 1,90,29,582 |
| Provogue (India) Limited | 1,86,08,884 |
| Kohinoor Diamonds Private Limited | 7,62,235 |
| Total | 5,46,63,624 |
Key Findings of Misconduct
Winsome Diamonds case
In the cases of Winsome Diamonds, Forever Precious Jewellery, and Kohinoor Diamonds, Mr. Gupta extended the initial six-month timeframe for calculating fees. This decision contradicted the terms of his appointment by the Committee of Creditors (CoC). By allocating the maximum realizations and distributions to the highest fee slab, Mr. Gupta enriched himself unjustly. Notably, he continued liquidation activities even during periods he claimed as excluded for fee calculation, showcasing a clear conflict in his actions.
Provogue (India) Limited Case
In Provogue’s liquidation, Gupta leveraged the COVID-19 pandemic as a pretext to extend the fee calculation period, despite engaging in realization and distribution activities during this time. This unjustified extension resulted in an excess fee of ₹1.74 crore, further evidencing his non-compliance with established guidelines.
Hindustan Dorr Oliver and HDO Technologies Cases
For these entities, Amit Gupta manipulated fee calculations by altering previously established parameters. He claimed additional exclusions for 33 months and 42 months, respectively, which allowed him to maximize his earnings. These exclusions were inconsistent as he actively conducted liquidation activities during these periods. Moreover, he claimed ₹1.30 crore in fixed fees, compared to ₹40 lakh earlier claimed, which was not aligned with the Liquidation Regulations. An improper meeting of secured creditors post-liquidation further indicated procedural violations.
Padmavati Wires and Cables Case
In this matter, Gupta claimed out-of-pocket expenses in addition to his scheduled fees, an action not supported by the Liquidation Regulations.
Implications and Regulatory Response
The actions of Gupta reflect a pattern of deliberate manipulation to secure undue financial benefits at the cost of stakeholders. Such conduct raises serious concerns about his adherence to professional ethics and the integrity of the insolvency process.
The regulatory authority has provided the liquidator with an opportunity to furnish additional information to justify his actions. However, failure to do so will solidify the excess fee figure, and the authorities are prepared to disgorge the funds and ensure stakeholders are compensated.
