2021 (3) TMI 1063 - AT - Insolvency and Bankruptcy

Seeking extension of time period to complete CIRP of the Corporate Debtor from 270 to 330 days - initiation of Liquidation Proceedings against the Corporate Debtor - HELD THAT - In reality, the act of extending the Insolvency Resolution beyond the time limit under section 12(3) of the Code is against the underlying policy of the Code for ensuring timely resolution of Company Insolvency . Undoubtedly, an extension of time for extension of time for CIRP is a critical arena . However, the exercise of the power of extending the time limit by the Adjudicating Authority in negation of the statutory provision of the Code may be desirable in an exceptional/extraordinary circumstances of a given case - Be it noted, that speed is the gist for the working of the Bankruptcy Code . It cannot be gainsaid that the Corporate Insolvency Resolution with approval of Plan of Resolution is ultimately the exclusive domain of the Committee of Creditors . This Tribunal directs the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) to take up the application filed by the Appellant/Applicant seeking extension of 60 days for completion of CIRP pending on its file, on the next date of hearing, i.e. on 23.4.2021 and to dispose of the same on merits by passing a reasoned order , ofcourse, in a fair, Just and dispassionate manner in accordance with Law and in the manner known to Law, at an early date - application disposed off.

Summary

Issues Involved:
1. Extension of Corporate Insolvency Resolution Process (CIRP) beyond the statutory time limit.
2. Interpretation of Section 12(3) of the Insolvency & Bankruptcy Code, 2016.
3. Judicial discretion in exceptional circumstances for extending CIRP period.
4. Applicability of the decision in Committee of Creditors of Essar Steel India Limited V Satish Kumar Gupta & Ors.
5. Maintainability of the appeal against the Adjudicating Authority's order.

Extension of Corporate Insolvency Resolution Process (CIRP) beyond the statutory time limit:
The Appellant sought an extension of the CIRP period for the Corporate Debtor from 270 to 330 days, which was granted by the Adjudicating Authority. The Appellant contested the direction for commencement of liquidation if the CIRP was not completed within the extended period, citing the decision in Committee of Creditors of Essar Steel India Limited V Satish Kumar Gupta & Ors. The Appellant argued that the word "mandatorily" in Section 12(3) was struck down by the Supreme Court, allowing for judicial discretion in exceptional cases to extend the CIRP period beyond 330 days.

Interpretation of Section 12(3) of the Insolvency & Bankruptcy Code, 2016:
The Tribunal emphasized that the provisions of the Insolvency & Bankruptcy Code were enacted to streamline the resolution of corporate insolvency in the public interest. While the Code prescribes a 330-day limit for completing CIRP, the Tribunal noted that extensions beyond this limit should be exceptional and based on sound judicial discretion to ensure a suitable resolution plan and prevent injustice.

Judicial discretion in exceptional circumstances for extending CIRP period:
The Tribunal highlighted the importance of maintaining the speed and efficacy of the Bankruptcy Code, with the ultimate authority for approving a resolution plan lying with the Committee of Creditors. It was emphasized that any extension of the CIRP period should be a critical decision made in extraordinary circumstances to prevent the company from being pushed into liquidation.

Applicability of the decision in Committee of Creditors of Essar Steel India Limited V Satish Kumar Gupta & Ors:
The Tribunal referenced the Supreme Court's decision in the Essar Steel case, which allowed for extensions beyond 330 days in exceptional cases where it was in the interest of stakeholders to revive the corporate debtor. The Tribunal reiterated that while the general rule is the 330-day limit, exceptions could be made based on specific circumstances.

Maintainability of the appeal against the Adjudicating Authority's order:
The Tribunal concluded that the appeal was premature and otiose as the Adjudicating Authority had already granted the extension sought by the Appellant. The Appellant was permitted to withdraw the appeal, which was subsequently dismissed. However, the Tribunal directed the Adjudicating Authority to consider the pending application for extension of the CIRP period on its merits and dispose of it in a fair and just manner in accordance with the law.

Conclusion:
The judgment delves into the complexities of extending the CIRP period beyond the statutory limit, emphasizing the need for judicial discretion in exceptional circumstances. It clarifies the interpretation of Section 12(3) of the Insolvency & Bankruptcy Code and underscores the importance of timely resolution of corporate insolvency while balancing the interests of all stakeholders.