2020 (1) TMI 1337 - Tri - Companies Law

Exclusion of period of 60 days from the CIRP as per Section 12(3) 2nd proviso of Code - section 12(3) r/w section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - A bare perusal of Section 12 of the IBC, 2016 mandates that the CIRP period should be completed within the period of 330 days. Further, it has been clearly stated that the CIRP extension, beyond the stipulated period of 180 days, shall be granted only once, not exceeding 90 days. However, the IBC, Amendment Act, 2019 fails to address on how this Tribunal can treat the Applications which seek for CIRP extension beyond the period of 270 days to 330 days. In the facts of the present case, it is evident from the records that CIRP extension was already granted once for a period of 90 days from 23.10.2019 and thereby the 270 days period of CIRP came to an end on 21.01.2020. The second proviso to sub-section 3 of Section 12 of the IBC, 2016 states that the CIRP shall be mandatorily completed within a period of 330 days from the Insolvency commencement date, including any extension of the period of the CIRP granted under this section and the time taken in the legal proceedings - thus, it can be inferred from the second proviso to sub-section 3 of Section 12 of the IBC, 2016 that after granting extension once for a maximum period of 90 days, and upon 270 days of the CIRP coming to an end, this Tribunal has the power to exclude certain period from the CIRP proceedings provided the said exclusion period should not exceed the total CIRP period of 330 days. In other words, exclusion can be granted only for a period of 60 days after the expiry of 270 days. As to the facts of the present case, it can be seen, that if the 60 days are excluded from the CIRP period, the total period of the CIRP would be 330 days as mandated under Section 12 of the IBC, 2016. The Application stands allowed and the period of 60 days stands excluded from the CIRP timeline and as a result thereof, the Corporate Insolvency Resolution Process of the Corporate Debtor is directed to be completed on or before 20.03.2020 - Application allowed.

Summary

Issues:
Application for exclusion of 60 days from the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Resolution Professional filed an application seeking to exclude 60 days from the CIRP under the Insolvency and Bankruptcy Code, 2016. The application stated that due to delays caused by various factors, including a stay order and difficulties in collecting information, the CIRP timeline was affected. The Committee of Creditors (CoC) had previously granted a 90-day extension, but further delays occurred during the process. The CoC then passed a resolution requesting the exclusion of 60 days from the CIRP to allow for the completion of the process. The Tribunal considered the application in light of the relevant provisions of the IBC, 2016, specifically Section 12, which mandates the completion of the CIRP within 330 days.

The Tribunal noted that the IBC Amendment Act, 2019 did not address how applications seeking CIRP extension beyond 270 days to 330 days should be treated. It was established that a previous 90-day extension had already been granted, and the CIRP was set to end on a specific date. Referring to the second proviso of Section 12(3) of the IBC, the Tribunal concluded that after the initial 270 days, exclusion could be granted for a maximum of 60 days, ensuring compliance with the 330-day limit for completing the CIRP.

Drawing on a recent Supreme Court decision regarding the time limit for insolvency resolution processes, the Tribunal emphasized the importance of completing the CIRP within the specified timeframe. The Court's ruling allowed for extensions in exceptional cases where it served the interests of stakeholders and was not due to litigants' fault. Considering this guidance and the legal provisions, the Tribunal approved the application, excluding 60 days from the CIRP timeline to ensure completion by a specified date. The decision aligned with the statutory requirements and the Supreme Court's interpretation of the IBC, 2016.

In conclusion, the Tribunal granted the exclusion of 60 days from the CIRP timeline, directing the completion of the Corporate Insolvency Resolution Process by a specified date. The decision was based on a thorough analysis of the legal provisions, previous extensions granted, and the Supreme Court's guidance on extending timelines in exceptional circumstances to protect stakeholders' interests and avoid liquidation.