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2020 (9) TMI 840 - Tri - Insolvency and BankruptcyExclusion of period of 4 days from CIRP period - these were the days when the copy of admission order was not available and the Resolution Professional could not take control of the Corporate Debtor - HELD THAT - In the present case, it is a matter of record that the RP had to deal with various litigation relating to non-payment of dues by DISCOMS as well as withdrawal of approval of the Power Purchase Agreement from Hon'ble APERC and also had to struggle to run the Corporate Debtor as a going concern in view of suspension of supply of gas by GAIL due to non-payment of their dues - It also appears that while the RP was struggling with these issues, Form-G was published on 06.07.2019 and 9 EoIs were received from the prospective Resolution Applicants. However, only one Resolution Plan was received in view of the litigation with DISCOMS, withdrawal of Power Purchase Agreement and disruption of supply of gas and the operations remaining standstill. The circumstances prevailing during the period had adversely impacted the CIRP process in achieving the objectives of the Code i.e., maximisation of value of the assets of the Corporate Debtor and running the Corporate Debtor as a going concern - This Adjudicating Authority is of the view that the facts and circumstances of the instant case will squarely fall within the category of unforeseen circumstances which have adversely impacted the CIRP process. Thus, the period during which the supply of gas remain suspended/disrupted i.e., from 04.07.2019 to 04.10.2019 should be excluded from the CIRP period and therefore the exclusion of a period of 92 days from computation of 270 days is allowed with immediate effect for completion of the CIRP process. Application disposed off.
Issues Involved:
1. Exclusion of time period for calculating the Corporate Insolvency Resolution Process (CIRP). 2. Impact of litigation on the CIRP. 3. Non-payment of dues by DISCOMS and its consequences. 4. Suspension of gas supply by GAIL. 5. Withdrawal of Power Purchase Agreement (PPA) by DISCOMS. 6. Maximization of value and running the Corporate Debtor as a going concern. 7. Justification for exclusion of certain periods from the CIRP timeline. Issue-wise Detailed Analysis: 1. Exclusion of Time Period for Calculating the CIRP: The Resolution Professional (RP) sought exclusion of time periods from the CIRP calculation due to delays caused by litigation and operational disruptions. The RP requested the exclusion of four days when the admission order was not available and the period from 25 July 2019 to 27 November 2019 due to litigation impacts. The Tribunal acknowledged these requests, citing the decision in Quinn Logistics India Pvt. Ltd. v. Mack Soft Tech Pvt. Ltd & Ors., which allows for such exclusions under justified circumstances. 2. Impact of Litigation on the CIRP: The RP highlighted multiple litigations that marred the CIRP process. These included applications for the release of past dues from DISCOMS and the challenge against the withdrawal of the PPA by DISCOMS. The Tribunal noted that these litigations consumed substantial time and adversely impacted the CIRP by hindering the operations and resolution process. 3. Non-Payment of Dues by DISCOMS and Its Consequences: The RP filed applications seeking payment from DISCOMS for invoices dated 11.07.2019. Due to non-receipt of these payments, the Corporate Debtor could not pay GAIL for gas supply, leading to the suspension of gas supply and halting the operations of the power plant from 04.07.2019 to 04.10.2019. This disruption significantly affected the CIRP and the interest of potential Resolution Applicants. 4. Suspension of Gas Supply by GAIL: GAIL suspended the gas supply due to non-payment of dues by the Corporate Debtor, which relied on gas for its power plant operations. The Tribunal recognized that this suspension led to the non-operational status of the power plant, further complicating the CIRP and reducing the attractiveness of the Corporate Debtor to potential investors. 5. Withdrawal of Power Purchase Agreement (PPA) by DISCOMS: The RP also dealt with litigation concerning the withdrawal of the PPA by DISCOMS before the Andhra Pradesh Electricity Regulatory Commission (APERC). The Tribunal found that this litigation added to the uncertainty and negatively impacted the CIRP, deterring potential Resolution Applicants and affecting the viability of the Corporate Debtor. 6. Maximization of Value and Running the Corporate Debtor as a Going Concern: The Tribunal emphasized that the primary objectives of the CIRP are the maximization of the value of the Corporate Debtor's assets and maintaining it as a going concern. The disruptions and litigations during the CIRP period hindered these objectives, leading to inadequate responses from prospective Resolution Applicants and the rejection of the single Resolution Plan received. 7. Justification for Exclusion of Certain Periods from the CIRP Timeline: The Tribunal concluded that the circumstances presented by the RP, including the suspension of gas supply and ongoing litigations, constituted "unforeseen circumstances" that justified the exclusion of certain periods from the CIRP timeline. Consequently, the Tribunal allowed the exclusion of the period from 04.07.2019 to 04.10.2019 (92 days) from the 270-day CIRP period, enabling the completion of the CIRP process. Conclusion: The Tribunal granted the exclusion of 92 days from the CIRP period due to the justified and unforeseen circumstances presented by the RP. The decision aimed to facilitate the completion of the CIRP and ensure the maximization of the Corporate Debtor's value. The application IA No. 71/2020 was disposed of accordingly.
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