2021 (2) TMI 90 - AT - Insolvency and Bankruptcy

Seeking extension of time beyond 330 days - Section 60(5) read with Section 12A of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - After hearing learned counsel for the parties and for reasons stated in the appeal that the discretion should have been exercised by the Adjudicating Authority in acceding to the request of the Resolution Professional in extending the time beyond 330 days, we are of the considered opinion that this being a fit case where indulgence of this Appellate Tribunal is warranted for extending the timelines to prevent the Corporate Debtor from being pushed into liquidation and a viable Resolution Plan being approved by the COC, allowing of appeal will promote the interest of justice - The appeal is allowed and after excluding the period of judicial intervention viz. from 25th September, 2020 till today, grant extension of time by two weeks from today.

Summary

Issues:
Application of Resolution Professional seeking time extension under I&B Code rejected by Adjudicating Authority - Committee of Creditors (COC) challenges the rejection citing exceptional circumstances - Interpretation of discretion to extend time beyond 330 days - Adjudicating Authority's role in promoting stakeholders' interests and preventing liquidation.

Analysis:
The judgment revolves around the rejection of the Resolution Professional's application seeking an extension of time beyond 330 days under the Insolvency and Bankruptcy Code, 2016. The Committee of Creditors (COC) contested the rejection, emphasizing the Adjudicating Authority's discretion to extend time in exceptional circumstances, as highlighted in a previous judgment. The COC argued that a short period was needed to finalize the Resolution Plan, and the extension would prevent the Corporate Debtor from facing liquidation.

The Appellant's representative, a Senior Advocate, argued that the COC was close to finalizing the Resolution Plan before the CIRP expiration date. They requested an extension to conduct a final meeting for plan approval. Reference was made to a Supreme Court judgment outlining exceptional circumstances for time extension to safeguard stakeholders' interests and avoid liquidation.

The Respondent's Advocate did not dispute the facts presented by the Appellant's representative. It was acknowledged that internal approvals were obtained, and a final meeting was required for Resolution Plan approval. After considering the arguments, the Appellate Tribunal concluded that the Adjudicating Authority should have exercised discretion in extending the timeline beyond 330 days. The Tribunal found it necessary to prevent liquidation and facilitate the approval of a viable Resolution Plan by the COC. Consequently, the appeal was allowed, and a two-week extension was granted, excluding the period of judicial intervention.

In conclusion, the judgment highlights the importance of considering exceptional circumstances and stakeholders' interests when deciding on time extensions under the I&B Code. The Adjudicating Authority's role in preventing liquidation and promoting a viable Resolution Plan was emphasized, leading to the decision to grant an extension in this particular case to serve the interest of justice and prevent adverse outcomes for the Corporate Debtor.