2019 (7) TMI 833 - Tri - Insolvency and Bankruptcy

Exclusion of period for which the process of corporate resolution process could not be carried out for reasons and circumstances beyond the control of the applicant as well as the Committee of Creditors (CoC) of the corporate debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is strange that when total CIRP is for 270 days (including 90 days) how a RP can expect the extension of another 294 days which is not the mandate of law. It is pertinent to mention herein that IRP or RP was never restrained by this bench to perform his duties during CIRP period. Further, CIRP is time bound proceeding, which has to be completed in a time-bound manner. More so even the Hon'ble Apex Court has observed time and again that time is the essence of Code and it has to be completed within 270 days only. Under such circumstances further prayer for extension of time for another 294 days is not justifiable. That very act itself shows that the RP has not performed his duties diligently. If no resolution plan is received and/or approved, then the only option left is to go for liquidation. The period from the date of filing of the application under Section 27 of the Code till approval of the appointment of the RP by this Adjudicating Authority from 14.02.2018 to 02.04.2018 i.e. 47 days is extended - the period from which the instant application is pending is also exempted - application allowed in part.

Summary

Issues:
1. Exclusion of time period in corporate resolution process due to circumstances beyond control.
2. Replacement of Resolution Professional (RP) during Corporate Insolvency Resolution Process (CIRP).
3. Extension of CIRP period beyond the mandated time limit.

Analysis:
1. The application sought to exclude the period where the corporate resolution process could not proceed due to reasons beyond the control of the Resolution Professional (RP) and the Committee of Creditors (CoC). The RP highlighted delays in taking charge of management and operations, leading to a request for an extension of time.

2. The record revealed that the RP was initially appointed as Interim Resolution Professional (IRP) in response to an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. Subsequently, due to challenges in finalizing financial audits and cooperation issues with erstwhile Directors, a new RP was appointed after a resolution by the CoC.

3. The Tribunal emphasized the time-bound nature of Corporate Insolvency Resolution Process (CIRP) and the importance of completing it within the stipulated 270 days. Despite the RP's plea for an additional 294 days, the Tribunal noted that the RP had sufficient time to perform duties within the existing timeline. The Tribunal referenced a judgment by NCLAT highlighting circumstances where the exclusion of certain periods is justified, but any extension cannot surpass the 270-day limit.

4. Considering the facts presented, the Tribunal partially allowed the application, extending the period from the filing of the application under Section 27 of the Code until the RP's appointment approval by 47 days. The time during which the instant application was pending was also exempted, ensuring compliance with the maximum 270-day limit for the resolution process.

This detailed analysis of the judgment from the National Company Law Tribunal, Ahmedabad Bench, addresses the issues of exclusion of time period, RP replacement during CIRP, and the extension of the CIRP period, providing a comprehensive understanding of the legal proceedings and decisions made by the Tribunal.