2018 (6) TMI 1665 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Exclusion from the total time period for the corporate insolvency resolution process of the Corporate Debtor - HELD THAT - According to the RP a period of 22 days got lost owing to the various proceedings initiated by different entities including M/s. M.K. Shah Exports Limited questing various steps taken by the RP in taking the CIRP in progress towards its logical conclusion. That apart some other entities too had filed other proceeding from time to time some dragging the RP and COC to the Adjudicating Authority again and again which also profoundly interferes with work assigned to COC and RP. According to the RP if the period is not extended as prayed for to compensate the period so lost in defending various steps taken by the RP/COC then the RP or for that matter COC may be handicapped in presenting proper resolution plan(s) which is certainly not in the interest of any of the stakeholders involved in the proceeding under consideration. Application allowed.

Issues Involved:
1. Exclusion of time period from the Corporate Insolvency Resolution Process (CIRP).
2. Extension of time period for CIRP.
3. Eligibility criteria for Prospective Resolution Applicants (PRAs).
4. Appeals and legal proceedings affecting CIRP timeline.

Issue-wise Detailed Analysis:

1. Exclusion of Time Period from CIRP:
The applicant, the Resolution Professional (RP), requested the exclusion of a 22-day period from the total time allocated for the CIRP of the Corporate Debtor, Assam Company India Limited. This request was made under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016). The RP argued that these 22 days were lost due to various legal proceedings initiated by different entities, which interfered with the CIRP's progress. The RP cited the case of Quinn Logistic India (P.) Ltd. Vs. Mack Soft Tech Pvt. Ltd., where it was established that certain periods could be excluded from the 270-day resolution process under justified circumstances.

2. Extension of Time Period for CIRP:
The RP also sought an extension of the CIRP period by an additional 22 days beyond the initial deadline of July 23, 2018. The RP had previously approached the tribunal on April 6, 2018, seeking an extension beyond the 180-day period, which was granted, extending the deadline to July 23, 2018. The RP argued that without this extension, the CoC and the RP would be handicapped in presenting proper resolution plans, which would not be in the interest of the stakeholders.

3. Eligibility Criteria for PRAs:
The eligibility criteria, specifically the requirement of a minimum Tangible Net Worth (TNW) of INR 400 crores for Category 'A' PRAs, was challenged by M/s. M.K. Shah Exports Ltd. The tribunal, on April 26, 2018, partially accepted the challenge and required the RP/CoC to reconsider the eligibility criteria. This led to an appeal by the CoC/RP to the NCLAT, which stayed the tribunal's order on May 10, 2018, allowing the RP to proceed with the CIRP.

4. Appeals and Legal Proceedings Affecting CIRP Timeline:
Several legal proceedings and appeals affected the CIRP timeline. The RP highlighted that these proceedings, including the challenge by M/s. M.K. Shah Exports Ltd. and another application by James Warren Tea Company, significantly interfered with the CIRP. The tribunal acknowledged that these proceedings justified the exclusion of the 22-day period from the CIRP timeline.

Conclusion:
The tribunal, after considering the submissions and materials on record, found that the RP's request for extension was justified. The tribunal granted an additional 14 days for the CoC/RP to submit the resolution plan, starting from the 271st day and expiring on the 284th day from the initiation of CIRP on October 26, 2017. The application was accordingly allowed and disposed of.

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