2019 (3) TMI 1190 - AT - Insolvency and Bankruptcy

Counting the total days permissible for completion of CIRP - Completion of CIRP process - exclude certain period for the purpose of counting the total period of 270 days - RP seeking excluding the period from the date of pronouncement of the order and communication of the order to the Interim Resolution Professional (IRP) i.e. from 25th March, 2018 to 6th April, 2018 for calculating the total period of 270 days of corporate insolvency resolution process - the Committee of Creditors decided to appoint Mr. Shailen Shah, as a Resolution Professional in place of Ms. Purnima Dhiraj Shetty. HELD THAT - The earlier Resolution Professional had not taken any effective steps due to which the Committee of Creditors recommended to appoint the appellant on 15th June, 2018, and the appellant was intimated by the Adjudicating Authority on 16th August, 2018 and the matter is remained pending before the Adjudicating Authority for more than a month after which the order was passed on 6th August, 2018, we are of the view that the period between filing application for approval of the name of the appellant and date of communication of the order i.e.16th August, 2018 should be excluded for the purpose of counting the period of 270 days. This period for exclusion will be in addition to the exclusion of period as already made by the Adjudicating Authority by impugned order dated 26th October, 2018. We accordingly direct to exclude the aforesaid period for counting 270 days. The Resolution Professional will now take immediate steps to take up the matter with Committee of Creditors and in turn the Committee of Creditors will pass appropriate order under Section 30 in accordance with law and place its decision before the Adjudicating Authority for its decision.

Summary

Issues:
1. Exclusion of period for calculating total period of corporate insolvency resolution process.
2. Challenge to exclusion of further period for appointment of Resolution Professional.
3. Pending resolution plans and exclusion of period for consideration.
4. Opposing exclusion leading to liquidation of Corporate Debtor.

Issue 1: Exclusion of period for calculating total period of corporate insolvency resolution process
The Resolution Professional of a company filed an application seeking exclusion of the period between the date of order and communication of the order to the Interim Resolution Professional for calculating the total period of 270 days of corporate insolvency resolution process. The Adjudicating Authority noted the admission of a petition by an Operational Creditor and certified copy of the order issued. Referring to a previous decision, the Appellate Tribunal partially allowed the exclusion of a specific period.

Issue 2: Challenge to exclusion of further period for appointment of Resolution Professional
The appellant challenged the order excluding a period between the appointment of a new Resolution Professional and the communication of the decision. The appellant was appointed as Resolution Professional after a series of events, and the exclusion of this period was contested. The Bank of India and the suspended Board of Directors supported the exclusion due to pending resolution plans, while the Operational Creditor opposed it fearing liquidation of the Corporate Debtor.

Issue 3: Pending resolution plans and exclusion of period for consideration
The lead Bank of the Committee of Creditors mentioned pending resolution plans as a reason to support the exclusion of a specific period for their consideration. The decision was also backed by the suspended Board of Directors. However, the Operational Creditor opposed the exclusion, highlighting the risk of liquidation if the exclusion was not allowed.

Issue 4: Opposing exclusion leading to liquidation of Corporate Debtor
The Operational Creditor opposed the exclusion of the period, emphasizing the possibility of liquidation if the exclusion was granted. Despite the opposition, the Appellate Tribunal considered the circumstances and directed the exclusion of the period for counting the 270 days, instructing immediate steps to be taken by the Resolution Professional and the Committee of Creditors to move forward with the resolution process.

In conclusion, the Appellate Tribunal allowed the appeal, directing the exclusion of the specified period and providing instructions for further proceedings to be carried out promptly in accordance with the law.