2019 (7) TMI 1424 - Tri - Insolvency and Bankruptcy

Exclusion of certain period from CIRP - revival of mining lease - delay in passing revival order - exclusion of period of 135 days from 27.08.2018 to 08.01.2019 and in addition to it the period of 147 days starting from 09.11.2018 to 04.04.2019 from the CIRP of the corporate debtor - grounds on which exclusion is sought that Government of Telangana revived the mining lease under Rule 20(6) of Minerals (other than Atomic Hydro Carbons Energy Minerals) Rules, 2016 - HELD THAT - Pendency of IA No. 551/2018 is not a ground for exclusion. It is filed against decision of RP in admitting the claims of certain financial creditors. There is ample time for any resolution applicant to submit resolution plan on or after 10.01.2019. 270 days already expired from the date of admission. No bidder came forward to bid for corporate debtor company. Had there been really resolution applicants for acquiring the corporate debtor company. Resolution plan would have been filed. When ample time is given for Prospective resolution applicants yet none filed any resolution plan to acquire corporate debtor company and to make it on going concern. Mere delay in passing revival order by issuing GO for revival of the Leases. It cannot be said that Prospective Resolution Applicants are not able to file resolution plan with RP on that ground alone. Till date no one came forward to file Resolution plan for the corporate debtor. There are absolutely no justifiable grounds for extending certain period as prayed from CIRP. Already application was filed by RP for passing order of liquidation following approval by CoC. The two grounds referred to in the application basing on which exclusion is sought are not at all sufficient grounds for exclusion of CIRP. Applicant also not filed any resolution passed by CoC authorising to file application for exclusion. There are absolutely no grounds to exclude the time as prayed - application dismissed.

Summary

Issues:
1. Exclusion of specific periods from the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
2. Revival of mining leases by the Government of Telangana and its impact on the CIRP process.
3. Role of the Committee of Creditors (CoC) in decision-making for exclusion of time from CIRP.
4. Justifiability of excluding certain periods from CIRP based on the circumstances presented.

Issue 1: Exclusion of specific periods from CIRP:
The Tribunal considered an application under section 60(5) of the Insolvency and Bankruptcy Code seeking exclusion of 135 days from 27.08.2018 to 08.01.2019 and an additional 147 days from 09.11.2018 to 04.04.2019 from the CIRP. The application was based on the revival of mining leases by the Government of Telangana and the need for time to finalize any Resolution Plan. The Tribunal analyzed the grounds for exclusion, including the actions of the Resolution Professional (RP) and the impact of the revival of leases on the CIRP timeline.

Issue 2: Revival of mining leases and its impact:
The applicant contended that the corporate debtor's mining leases were renewed by the Government of Telangana on 08.01.2019 after a period of inactivity due to financial crisis. The revival of these leases was crucial for potential Resolution Applicants to come forward with plans. The Tribunal examined the timeline of events, including RP's efforts to address the lease renewal issue and the subsequent revival of the leases, to determine the impact on the CIRP process and the justification for excluding the mentioned periods.

Issue 3: Role of the CoC in exclusion decisions:
The Tribunal deliberated on the absence of a formal resolution by the CoC regarding the exclusion of time from CIRP. It questioned whether a financial creditor, even if a CoC member, could independently seek exclusion without CoC's decision. The Tribunal emphasized the importance of CoC approval for certain actions under the Insolvency and Bankruptcy Code, highlighting the need for collective decision-making by the creditors' committee in matters concerning the CIRP timeline.

Issue 4: Justifiability of excluding periods from CIRP:
The Tribunal assessed the justifiability of excluding specific periods from CIRP based on the circumstances presented. It scrutinized the lack of resolution plans during the extended CIRP period, the absence of bids for the corporate debtor, and the RP's application for liquidation. The Tribunal concluded that the grounds presented for exclusion were insufficient, emphasizing that the absence of resolution plans and the RP's liquidation application did not warrant the exclusion of time from the CIRP process.

In the final judgment, the Tribunal dismissed the application for exclusion, emphasizing the lack of justifiable grounds and the absence of resolution plans or bids for the corporate debtor. The decision highlighted the importance of CoC decisions in matters related to the CIRP timeline and underscored the necessity of collective creditor approval for actions under the Insolvency and Bankruptcy Code.