2020 (1) TMI 1376 - Tri - Insolvency and Bankruptcy

Seeking grant of extension of 60 days in CIRP time period beyond 330 days - Rule 11 of NCLT rules 2016 read with Section 60(5)(c), 12(3) of Insolvency and Bankruptcy Code, 2016 - HELD THAT - In the present case the Committee of Creditors in its 13th meeting held on 16.12.2019 with 72.40% vote share approved resolution for extension of 60 days of Insolvency Resolution Period mainly on the ground that the resolution plan is under consideration of CoC. It is mentioned in the minutes that the resolution plan is on the verge of finalization and may take another one month to finalize to the resolution plan in respect of the corporate debtor. In the facts the Corporate Insolvency Resolution Process period in the present case is further extended by 60 days from 01.01.2020. The Resolution Professional and the members of Committee of Creditors are directed to expedite the possibility of achieving resolution of the stressed assets of the corporate debtor within the extended period. List on 28.01.2020.

Issues:
1. Extension of CIRP time period beyond 330 days.
2. Application for extension based on inherent powers of NCLT under Rule 11 of NCLT rules 2016 and Section 60(5)(c), 12(3) of Insolvency and Bankruptcy Code, 2016.
3. Consideration of extension in exceptional cases to achieve resolution and avoid liquidation.
4. Reference to Supreme Court decision regarding time limit for CIRP completion.
5. Approval of extension by Committee of Creditors in a meeting.
6. Direction to expedite resolution within the extended period.

Analysis:
1. The Tribunal addressed the issue of extending the Corporate Insolvency Resolution Process (CIRP) time period beyond the statutory limit of 330 days. The resolution professional filed an application seeking a 60-day extension, citing the inherent powers of the NCLT under Rule 11 of NCLT rules 2016 and Section 60(5)(c), 12(3) of the Insolvency and Bankruptcy Code, 2016.

2. The Tribunal noted that while the usual time limit for CIRP completion is 330 days, exceptions can be made in certain cases to facilitate resolution and prevent liquidation. This discretion lies with the Adjudicating Authority (NCLT) to extend the time limit, as highlighted in a Supreme Court decision where the word "mandatorily" was struck down as arbitrary, allowing for extensions beyond 330 days under specific circumstances.

3. The Committee of Creditors, in a meeting, with a 72.40% vote share, approved the resolution for a 60-day extension of the Insolvency Resolution Period. The reason cited was that the resolution plan was nearing finalization and required additional time for completion. The Tribunal acknowledged this approval and directed the Resolution Professional and the Committee of Creditors to expedite efforts to achieve resolution within the extended period.

4. Consequently, the Tribunal allowed the application for extension, granting an additional 60 days beyond the initial 330-day period starting from 01.01.2020. The decision emphasized the importance of promptly resolving the stressed assets of the corporate debtor within the extended timeframe to benefit all stakeholders involved.

5. In another matter, specific timelines were granted to the parties involved to file replies and proofs in compliance with previous orders, indicating the Tribunal's adherence to procedural fairness and efficiency in handling the insolvency proceedings.

6. Overall, the Tribunal's judgment showcased a balanced approach, considering the legal framework, precedents, and the practicalities of the case to ensure a fair and efficient resolution process for the corporate debtor while safeguarding the interests of all stakeholders involved in the insolvency proceedings.

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