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2019 (11) TMI 1623 - Tri - Insolvency and BankruptcySeeking extension of 45 days time for completion of the corporate insolvency resolution process of the corporate debtor (By RP on instructions of the committee of creditors of the corporate debtor) - HELD THAT - The resolution professional has filed the instant application before this hon'ble Adjudicating Authority for seeking extension of time by 45 days beyond the period of 330 days wherein the CIRP period of the corporate debtor is coming to an end on November 14, 2019. The application is supported by the resolution passed by the CoC in its 15th meeting held on November 8, 2019 - in view of the latest decision of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT the hon'ble apex court held that the CIRP may be extended even beyond the period of 330 days and shows that is not the mandatory provision of the law rather is the discretion of the Adjudicating Authority to extend the period of 330 days for the completion of CIRP. We have gone through the grounds on which the RP has claimed extension period of CIRP. One of the grounds on which the RP claimed exclusion/extension of period of CIRP, is that in the meeting of CoC held on November 8, 2019 it was unanimously resolved that the RP is authorized to file an application with the hon'ble National Company Law Tribunal for seeking exclusion/extension of the CIRP period of 45 days and the reason for filing an application for exclusion/extension of CIRP period is for RP has received two resolution plans and members presented in the meeting are not authorized to take decision, CoC members are required to send the proposal to their respective competent authority and needed approx. 15 to 20 days to complete before voting. There is no dispute that this Adjudicating Authority, in the light of the decisions passed by the hon'ble apex court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, is empowered to exclude/extend the period of CIRP beyond 330 days but the embargo has already been imposed by the hon'ble apex court while exercising this power and the embargo is, it is only in exceptional cases . The time can be extended. The general rule being that 330 days is the outer limit within which resolution of the assets of the corporate debtor. Thus, it is not a ground on which this Adjudicating Authority will exercise its power in view of the decision of Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta - the prayer to extend the CIRP is hereby rejected.
Issues Involved:
1. Extension of 45 days for completion of the Corporate Insolvency Resolution Process (CIRP). 2. Grounds for seeking exclusion of certain periods from the CIRP timeline. 3. Legal precedents and their applicability to the extension request. Detailed Analysis: Extension of 45 Days for Completion of CIRP: The resolution professional (RP) filed an application seeking an extension of 45 days for the completion of the CIRP of the corporate debtor. The CIRP was initially admitted on December 19, 2018, and the RP was appointed. The application was supported by the resolution passed by the Committee of Creditors (CoC) in its 15th meeting held on November 8, 2019. Grounds for Seeking Exclusion: The RP cited several grounds for seeking the exclusion of certain periods from the CIRP timeline: 1. Delayed Submission of Assets and Liabilities: The suspended directors did not provide the details of assets and liabilities of the corporate debtor as on the insolvency commencement date until July 12, 2019, causing a delay of 7 months. 2. Extension of Expression of Interest (EOI) Submission Dates: The last date for submission of EOI was extended twice due to the appointment of a new process advisor and the time required for value maximization and better resolution. 3. Delay in Appointment of RP: The IRP was confirmed as the RP only in the 6th CoC meeting held on May 4, 2019, causing a delay of approximately five months. 4. Delay in Valuation Reports: There was a significant delay in the submission of valuation reports by the appointed valuers, necessitating the appointment of a third valuer. 5. Maximizing Value and Balancing Interests: The RP argued that the extension was necessary to keep the corporate debtor as a going concern and to maximize the value of assets and balance the interests of all stakeholders. Legal Precedents and Applicability: The RP relied on the judgment in Quinn Logistics India P. Ltd. v. Mack Soft Tech P. Ltd., where specific grounds for exclusion of delay from the statutory time period of resolution were identified. These grounds included stays by courts, non-functioning of the RP, and delays caused by the adjudicating authority. The RP also referenced the Supreme Court decision in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, which held that the CIRP could be extended beyond 330 days in exceptional circumstances, emphasizing that the statutory time limit should not be an unreasonable restriction on a litigant's rights under Articles 14 and 19(1)(g) of the Constitution of India. Tribunal's Decision: The tribunal acknowledged that it is empowered to extend the CIRP period beyond 330 days in exceptional cases, as per the Supreme Court's ruling. However, it emphasized that the general rule is that 330 days is the outer limit for the resolution process. The tribunal also considered the decision in State Bank of India v. Manibhadra Polycot, where the Supreme Court set aside an order excluding certain periods from the CIRP timeline that were not incurred in litigation processes. The tribunal found that the CoC's resolution to authorize the RP to file for an extension was not based on delays incurred in litigation but on the need for CoC members to obtain approvals from their respective authorities. Conclusion: The tribunal concluded that the grounds presented by the RP did not justify an extension beyond the 330-day limit, as they were not related to litigation delays. Therefore, the application for extending the CIRP by 45 days was rejected. Order: The prayer to extend the CIRP is hereby rejected.
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