2018 (1) TMI 1655 - Tri - Insolvency and Bankruptcy

Seeking for extension of time from 180 days to 270 days - Application filed by present RP - HELD THAT - I is represented by the present RP that the present application has been necessitated in view of the fact that 90 days period is also expiring on 28.1.2018 and has sought for further extension of period by 90 days to be calculated from the date of the pronouncement of order i.e. 16.01.2018. However, in this respect the Resolution Professional has invoked Rule 11 of NCLT Rules, 2016 read with Rule 51 of NCLT Rules, 2016 seeking for modification under the provisions of IBC under Section 12(2) read with Regulation 40(2) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. Perusal of Section 12(2) of the IBC, 2016 shows that this Tribunal has got the power to extend the period of CIRP beyond 180 days based on a resolution passed by the Committee of Creditors with a vote of 75%. Further perusal of Section 12(3) shows that this Tribunal has got power to extend the time period by 90 days beyond 180 days and not exceeding the said extended period of 270 days. Since the time limit beyond 270 days cannot be extended for completing the CIRP process, this Tribunal is not in a position to allow the prayer as sought for by the Resolution Professional and hence in the circumstances the application is dismissed and the Resolution Professional is directed to complete the CIRP process within the extended period of 90 days. Application dismissed.

Summary

Issues Involved: Application for extension of time in Corporate Insolvency Resolution Process (CIRP) beyond 180 days.

Issue 1: Application for extension of time in CIRP beyond 180 days

The judgment pertains to an application filed by the Insolvency Resolution Professional (IRP) seeking an extension of time in the Corporate Insolvency Resolution Process (CIRP) beyond the initial 180 days. The original IRP was replaced by a new Resolution Professional (RP) due to a suggestion from the Insolvency and Bankruptcy Board of India. The new RP filed an application for extension of time from 180 days to 270 days, as the original application for extension was filed after the expiry of 180 days. The RP invoked Rule 11 of NCLT Rules, 2016, read with Rule 51 of NCLT Rules, 2016, seeking modification under the provisions of the Insolvency and Bankruptcy Code (IBC) under Section 12(2) read with Regulation 40(2) of Insolvency and Bankruptcy Board of India Regulations, 2016.

Issue 1 Analysis:

The Tribunal examined Section 12(2) and Section 12(3) of the IBC, 2016. Section 12(2) empowers the Tribunal to extend the CIRP period beyond 180 days based on a resolution passed by the Committee of Creditors with a 75% vote. However, Section 12(3) limits the extension to 90 days beyond the initial 180 days, not exceeding a total of 270 days. The Tribunal clarified that the CIRP process cannot be extended beyond 270 days. Consequently, the Tribunal dismissed the application for further extension of time and directed the Resolution Professional to complete the CIRP process within the extended period of 90 days, as requested.

Conclusion:

The judgment highlights the strict adherence to the statutory provisions governing the CIRP timeline under the IBC, emphasizing that extensions beyond 270 days are not permissible. The decision underscores the importance of timely completion of the CIRP process within the prescribed legal framework, ensuring efficient resolution of insolvency cases while upholding the integrity of the insolvency resolution mechanisms.