2019 (7) TMI 1710 - Tri - Companies Law

Extension of CIRP period - exclusion of days from the CIRP period - HELD THAT - It is not in dispute that in this case Corporate Debtor was admitted in CIRP by Order dated 06.07.2017. The appeal against that Order was pending in between 13.07.2017 to 8.01.2019 i.e. for period of 530 days approximately. Ld. Adjudicating Authority at Kolkata the Order dated 04.03.2019 excluded 45 days but did not assign any specific reason as to why only period of 45 days allowed to exclude. It could be because of expeditiously disposal of this case which was pending more than two years. Whether further period of 30 days can be excluded from counting total period of 270 days? - HELD THAT - It is not in dispute that the Corporate Debtor is ongoing concerned and Profit-Making Company. While strictly adhering time limited stated under Section 12 of IBC for completing CIRP period, this Adjudicating Authority also cannot lose sight of the object of Insolvency and Bankruptcy Code to preserve assets of the Corporate Debtor from going in Liquidation. As far as possible Adjudicating Authority and all Stakeholders are required to make efforts to resolve the insolvency of the Corporate Debtor first and if not, then to pass order of liquidation. No prejudice will be caused against to anyone if further period of 30 days is allowed to exclude in counting total period of 270 days. The Corporate Debtor is ongoing and Profit Making Company. Numbers of Employees and Workmen are still working there. The matter was pending at Appellate stage more than 500 days. Although, there was no stay to the proceeding but it was always a matter concern of all stakeholders to as what will be outcome of the appeal and hence, they did not proceed with CIRP effectively. It is submitted that the members of CoC have received eighteen Resolutions Plans. So, in order to save the Corporate Debtor from going into Liquidation, this application filed by CoC is allowed by permitting them to exclude period of 30 days more from counting total period of 270 days. Members of CoC are directed to complete Corporate Insolvency Resolution Process of the Corporate Debtor within 30 days from today by accepting/rejecting the Resolution Plans those they have received - application allowed.

Summary

Issues:
1. Application under Section 7 of Insolvency and Bankruptcy Code filed by Financial Creditor against Corporate Debtor for default in paying Financial Debt.
2. Admission of Corporate Debtor in Corporate Insolvency Resolution Process (CIRP) and appointment of Resolution Professional.
3. Completion of CIRP period without receiving any Resolution Plan and challenge to the admission order.
4. Dismissal of appeal by NCLAT and subsequent challenge in Supreme Court.
5. Exclusion of days from CIRP period to expedite resolution process.
6. Guidelines for exclusion of period in CIRP counting.
7. Application for exclusion of further period and replacement of Resolution Professional.
8. Jurisdiction of Adjudicating Authority in considering replacement of Resolution Professional post-CIRP period.

Analysis:
1. The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor for defaulting on a significant financial debt. The Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (CIRP), and an Interim Resolution Professional was appointed.

2. Despite the completion of the CIRP period without receiving any Resolution Plan, the Corporate Debtor challenged the admission order. The appeal process led to delays in the resolution process, with multiple stakeholders filing interim applications during the proceedings.

3. The National Company Law Appellate Tribunal (NCLAT) dismissed the appeal, which was further challenged in the Supreme Court and subsequently dismissed. To expedite the resolution process, the Adjudicating Authority excluded days from the CIRP period and directed the Committee of Creditors (CoC) and Resolution Professional to accelerate the process.

4. The Adjudicating Authority considered guidelines for excluding periods in the CIRP counting, emphasizing the need to balance timely resolution completion and preventing the Corporate Debtor from liquidation. The Authority allowed the exclusion of a further period to save the ongoing and profit-making company.

5. The CoC filed applications for the exclusion of additional days and the replacement of the Resolution Professional. The Authority permitted the exclusion of the requested period and approved the replacement of the Resolution Professional based on the CoC's decision.

6. Considering the circumstances and guidelines provided by the Supreme Court, the Authority allowed the exclusion of the additional period to ensure the resolution of the Corporate Debtor without causing prejudice. The order directed the CoC to complete the resolution process promptly and replace the Resolution Professional.

7. The Authority emphasized the importance of maintaining the balance between completing the CIRP in a timely manner and preventing liquidation, ultimately allowing the applications filed by the CoC and issuing necessary directives for the resolution process.

Conclusion:
The judgment addressed various issues related to the Insolvency and Bankruptcy Code, focusing on the completion of the Corporate Insolvency Resolution Process, exclusion of periods, replacement of Resolution Professional, and balancing the interests of stakeholders to prevent liquidation of the Corporate Debtor. The detailed analysis provided insights into the legal proceedings and decisions made by the Adjudicating Authority to expedite the resolution process while safeguarding the interests of all parties involved.