2010 (1) TMI 1280 - Tri - Insolvency and Bankruptcy

Summary

Issues Involved:
1. Exclusion of time from the Corporate Insolvency Resolution Process (CIRP) period due to unavailability of the admission order copy.
2. Exclusion of time from the CIRP period due to multiple litigations impacting the process.

Detailed Analysis:

Issue 1: Exclusion of Time Due to Unavailability of Admission Order Copy
The Resolution Professional (RP) requested that the period from April 23, 2019, to April 26, 2019, be excluded from the CIRP period since the copy of the admission order was not available, delaying the RP's control over the Corporate Debtor. The Tribunal acknowledged this delay and agreed to exclude the four days from the CIRP period.

Issue 2: Exclusion of Time Due to Multiple Litigations Impacting the Process
The RP sought exclusion of the period from July 25, 2019, to November 27, 2019, due to various litigations that negatively impacted the CIRP. The Tribunal examined the following key points:

- Primary Business and Operational Challenges: The Corporate Debtor's primary business involves running an independent power plant dependent on natural gas supplied by GAIL (India) Limited. Due to non-payment by Southern Power Distribution Company of Andhra Pradesh Limited and Eastern Power Distribution Company of Andhra Pradesh Limited (DISCOMS), the Corporate Debtor could not pay GAIL, leading to the suspension of gas supply and halting operations from July 4, 2019, to October 4, 2019.

- Litigations with DISCOMS: The RP filed multiple applications seeking payment of dues from DISCOMS. The application IA No. 637/2019 was disposed of on September 5, 2019, and IA No. 740/2019 was disposed of on November 27, 2019. The non-payment by DISCOMS led to operational standstill and adversely impacted the CIRP process.

- Withdrawal of Power Purchase Agreement (PPA): Another application, IA No. 757/2019, was filed to challenge DISCOMS' withdrawal of the PPA before the Andhra Pradesh Electricity Regulatory Commission (APERC). This application was disposed of on November 27, 2019, favoring the Corporate Debtor and preventing DISCOMS from pursuing the withdrawal until the completion of the CIRP.

- Impact on Expression of Interest (EoI) and Resolution Plans: The EoI was published on July 6, 2019, with extensions due to operational challenges. Despite receiving nine EoIs, only one Resolution Plan was submitted, which was rejected by the Committee of Creditors (CoC) due to its commercial unacceptability.

- Legal Precedents and Justifications for Exclusion: The RP cited the NCLAT decision in Quinn Logistics India Pvt. Ltd. v. Mack Soft Tech Pvt. Ltd., which allows exclusion of time in justified circumstances. Additionally, the Supreme Court's decision in Essar Steel India Limited vs. Satish Kumar Gupta emphasized that the time taken in legal proceedings should not penalize the parties involved.

- Potential for Resolution: Post-litigation, potential Resolution Applicants expressed interest, and the CoC sought to explore resolution possibilities, emphasizing the need for additional time to maximize the Corporate Debtor's value.

Tribunal's Decision:
The Tribunal recognized the adverse impact of the unforeseen circumstances on the CIRP process. It allowed the exclusion of the period from July 4, 2019, to October 4, 2019 (92 days), from the CIRP period. Consequently, the application IA No. 71/2020 was disposed of, granting the requested exclusions to facilitate the completion of the CIRP process effectively.