2020 (10) TMI 1310 - AT - Insolvency and Bankruptcy

Exclusion of lockdown period on the ground that 90 days period of extension was still in hand - HELD THAT - Having regard to the imposition of lockdown on account of outbreak of COVID-19 declared as pandemic from 23rd March, 2020 to 29th May, 2020 (Nationwide) and the fact that the State of Maharashtra where the Corporate Office of the Corporate Debtor is stated to be located has been worst hit with most of the areas declared Red Zone culminating in extension of lockdown till 31st August, 2020, the hardship was required to be mitigated by allowing the exclusion as prayed for. This appeal is allowed by directing that the period of lockdown w.e.f. 25th March, 2020 till 31st August, 2020 shall be excluded while computing the period of CIRP. To avoid any confusion/ambiguity, it is made clear that this direction will not in any case be construed as interference with the extension of 90 days time granted by the Adjudicating Authority, which shall begin only after expiry of the period of CIRP period of 180 days after excluding the period from 25th March, 2020 upto 31st August, 2020 - appeal disposed off.

Summary

Issues: Extension of CIRP timeline due to COVID-19 lockdown

The Appellate Tribunal, National Company Law Appellate Tribunal, New Delhi, addressed the issue of extending the Corporate Insolvency Resolution Process (CIRP) timeline due to the COVID-19 lockdown. The Resolution Professional of a specific company appealed against an order granting a 90-day extension to complete the CIRP but not excluding the lockdown period. The Tribunal considered the impact of the lockdown declared from March to August 2020, especially in Maharashtra, and the need to mitigate hardships faced. After hearing arguments from both parties, the Tribunal decided to exclude the lockdown period from the CIRP timeline. The Tribunal clarified that this exclusion did not interfere with the 90-day extension granted by the Adjudicating Authority. The judgment was made in the unique circumstances of the case and was not intended to set a precedent for all cases.

The Tribunal recognized the exceptional circumstances caused by the COVID-19 pandemic and the subsequent lockdown, particularly in Maharashtra, where the Corporate Office of the Corporate Debtor was located. The Tribunal noted the adverse impact of the lockdown on the CIRP timeline and the need to address the resulting hardships faced by the Resolution Professional. By excluding the lockdown period from the computation of the CIRP timeline, the Tribunal aimed to provide relief and ensure a fair and effective resolution process. This decision highlighted the Tribunal's consideration of practical challenges and the importance of adapting legal procedures to unforeseen events such as a pandemic-induced lockdown.

The Tribunal's decision to exclude the lockdown period from the CIRP timeline was based on the principle of fairness and equity. By acknowledging the significant disruptions caused by the lockdown, the Tribunal sought to balance the interests of all parties involved in the insolvency resolution process. The exclusion of the lockdown period was a measure to address the exceptional circumstances and ensure that the Resolution Professional had adequate time to complete the CIRP effectively. The Tribunal's approach reflected a nuanced understanding of the challenges posed by external factors like the COVID-19 lockdown and the need for flexibility in interpreting legal timelines to achieve a just outcome in insolvency proceedings.

In conclusion, the Appellate Tribunal's judgment in this case underscored the importance of adapting legal procedures to unforeseen events like the COVID-19 pandemic and subsequent lockdown. By excluding the lockdown period from the CIRP timeline, the Tribunal aimed to mitigate hardships faced by the Resolution Professional and ensure a fair resolution process. The decision was specific to the unique circumstances of the case and did not set a precedent for all cases. The Tribunal's ruling demonstrated a pragmatic and equitable approach to addressing challenges arising from external factors impacting insolvency proceedings, emphasizing the need for flexibility and fairness in interpreting and applying legal timelines during extraordinary circumstances.