2020 (6) TMI 754 - AT - Insolvency and Bankruptcy

Delay of 10 days in filing the Resolution Plan application - Section 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - Admittedly, the resolution plan of Mr. Surender Kumar Chawla has been approved by the Committee of Creditors within the extended timelines duly allowed by this Appellate Tribunal and the process of the approval of the resolution plan of Mr. Surender Kumar Chawla by the Committee of Creditors was completed within the extended period as allowed by this Appellate Tribunal - However, since only one day was left for the Resolution Professional to file an application under Section 31 of the I B Code for placing the approved resolution plan before the Adjudicating Authority for approval which despite diligence and best efforts on his part was improbable as he was left only with one day to complete all legal formalities including seeking performance guarantee in terms of the approved resolution plan , further extension of time by 10 days enabling the Resolution Professional to seek approval of the resolution plan from the Adjudicating Authority is warranted. This is a fit case for exercising the jurisdiction by this Appellate Tribunal being an exceptional case to depart from the general rule of 330 days being outer limit prescribed under the law for completion of the corporate insolvency resolution process inclusive of period of judicial intervention - Refusal to exercise discretion by the Adjudicating Authority, has resulted in miscarriage of justice and frustrating the object of the I B Code - Appeal allowed.

Summary

Issues: Delay in filing application under Section 31 of the Insolvency and Bankruptcy Code, 2016.

The judgment by the National Company Law Appellate Tribunal, New Delhi, revolves around the delay in filing the application under Section 31 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) by the Resolution Professional for seeking approval of a resolution plan. The Committee of Creditors had approved the resolution plan of Mr. Surender Kumar Chawla on 5th February, 2020, while the application for approval was filed on 17th February, 2020, causing a delay of 10 days. The Resolution Professional argued that the delay was due to statutory compliances like seeking performance guarantee, and requested an extension of time under Rule 11 of the NCLAT Rules, citing a previous judgment in a similar scenario.

The Appellate Tribunal considered the circumstances and decided that the case warranted the exercise of power under Rule 11 of the NCLAT Rules. While the resolution plan was approved within the extended timelines, the Resolution Professional faced challenges in filing the application within the prescribed period due to legal formalities. The Tribunal noted that failure to grant an extension would lead to serious implications, potentially pushing the Corporate Debtor into liquidation, which was to be avoided at all costs. Therefore, the Tribunal allowed the appeal, set aside the impugned order, and extended the period of the corporate insolvency resolution process by 10 days to enable the Resolution Professional to seek approval of the resolution plan from the Adjudicating Authority.

In conclusion, the judgment highlights the importance of considering exceptional circumstances and exercising discretion to prevent injustice and uphold the objectives of the Insolvency and Bankruptcy Code. The decision to extend the timeline for the corporate insolvency resolution process in this case was deemed necessary to safeguard the interests of all stakeholders and prevent the liquidation of the Corporate Debtor.