9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 717 - AT - Insolvency and BankruptcySeeking exclusion of 87 days from the calculation of 180 days (CIRP period) - requirement of approval of the CoC - Section 12 of Insolvency Bankruptcy Code, 2016 - whether the approval of the CoC under Section 12(2) of the Code is mandatory for seeking exclusion of time even if it is sought on grounds of lockdown/time lost during the period of any Stay /Status Quo /or for any other reason? - HELD THAT - Section 12(2) speaks about extension of the time ; Regulation 40C of the Regulations speaks about exclusion of time ; the fact that the Adjudicating Authority had exercised its Discretionary Powers under Rule 11 of the NCLT Rules, 2016, that the period sought for excluding the time period lost is based on the reasons mentioned in the table in para 10; the fact that had this period not been excluded, the Company would have gone into Liquidation, which stage of Corporate Death should be the last resort as envisaged by the Hon ble Supreme Court in a catena of Judgements; that keeping in view the scope, spirit and objective of the Code and reading Section 12 together with Regulation 40C and also the unforeseen pandemic in mind, the Adjudicating Authority has rightly excluded the period of 87 days from the CIRP period - Appeal dismissed. Nomination of IRP/RP for R-3 company - seeking a direction to remove the first Respondent as the IRP and forward the name of Mr. Munish Kumar Sharma to IBBI for its confirmation as the IRP - HELD THAT - It is not in dispute that in the 1st CoC Meeting held on 18.03.2021, 6 out of the 9 Members of the CoC present at the Meeting voted in favour of the first Respondent to appoint him as RP of the Corporate Debtor . In the 2nd CoC Meeting held on 07.04.2021, 7 out of the 9 Members of the CoC voted in favour of the first Respondent to appoint him as the Resolution Professional of the Corporate Debtor. But it is seen that the first Respondent was neither appointed as the RP nor was he replaced. Hence, he has been continuing as the RP as per the provisions of Section 16(5) of the Code. The resolution for appointment of the IRP as the RP was not approved and the other resolutions for the appointment of another Insolvency Professional, nominated by the Applicant, RP was also put to vote, but was not approved as it could not receive the requisite majority of 66%. Sections 22 and 27 of the Code lay down pre-requisites for replacing the IRP. The appointment of an IRP is clearly provided under Section 22 and the replacement of IRP under Section 27 and therefore, this Application is disposed off with a direction to the CoC to proceed in accordance with law. There is no provision under the Code which empowers one of the Members of the CoC to approach this Tribunal seeking replacement of the IRP or RP when the same is rejected by a majority of Members of the CoC. It is alleged that the IRP conducted the Meeting of the CoC in blatant contravention of the Order of this Tribunal which has directed for maintenance of Status Quo - HELD THAT - The material on record also establishes that the notice for the Meeting of the CoC was admittedly given on 13.08.2021 but was later postponed due to repeated requests by various creditors, including the Applicant and was finally convened on 23.08.2021. Additionally, it is observed that the Order of this Tribunal dated 03.08.2021 states, in the meanwhile, Status Quo as exists today qua the Impugned Order shall be maintained . It was interpreted by the IRP that as on 19.08.2021, 87 days has already been excluded from the CIRP period of 180 days. We also note that considering the Order passed by this Tribunal no items on the agenda were put to vote in the CoC Meeting held on 23.08.2021 - this Contempt Case No. 20 of 2021 fails and is dismissed.
Issues Involved:
1. Whether the approval of the Committee of Creditors (CoC) under Section 12(2) of the Insolvency and Bankruptcy Code (IBC) is mandatory for seeking exclusion of time. 2. Whether the Interim Resolution Professional (IRP) acted against the mandate of the CoC by filing an application for exclusion of time. 3. Whether the Adjudicating Authority has the inherent power to exclude time under Rule 11 of the NCLT Rules, 2016. 4. Whether the IRP’s actions constituted contempt of the Tribunal’s order directing status quo. Detailed Analysis: 1. Approval of CoC for Exclusion of Time: The main issue was whether the approval of the CoC under Section 12(2) of the IBC is mandatory for seeking exclusion of time, even if it is sought on grounds such as lockdown or stay orders. The appellant argued that any exclusion or extension of time requires a 66% voting share of the CoC. The appellant relied on the Supreme Court decision in 'Arcelormittal India Private Limited vs. Satish Kumar Gupta & Ors.' to assert that the CoC’s approval is necessary for any extension or exclusion of time. The respondent countered that Section 12(2) pertains only to extensions and not exclusions, and that Regulation 40C of the CIRP Regulations allows for exclusion of time due to lockdowns without CoC approval. 2. IRP’s Actions Against CoC Mandate: The appellant contended that the IRP convened a CoC meeting to discuss filing an application for exclusion of time, but the resolution was not passed. Despite this, the IRP filed the exclusion application without informing the CoC members, which the appellant argued was against the CoC’s express mandate. The IRP argued that the exclusion of time did not require CoC approval and was within the IRP’s rights to file the application to keep the Corporate Debtor as a going concern. The IRP cited the Tribunal’s decision in 'Sudip Bhattacharya, Resolution Professional of Reliance Naval and Engineering Ltd.' to support the argument that exclusion of the lockdown period is permissible. 3. Inherent Power of Adjudicating Authority: The Tribunal examined whether the Adjudicating Authority has the inherent power to exclude time under Rule 11 of the NCLT Rules, 2016. The Adjudicating Authority had exercised its discretion to exclude 87 days from the CIRP period due to the COVID-19 lockdown. The Tribunal noted that Regulation 40C allows for the exclusion of the lockdown period from the CIRP timeline. The Tribunal also referred to its decision in 'Quinn Logistics Private Limited vs. Mack Soft Tech Private Limited,' where it was held that unforeseen circumstances like a pandemic justify the exclusion of certain periods from the CIRP timeline. 4. Contempt of Tribunal’s Order: The appellant filed a contempt case against the IRP, alleging that the IRP conducted a CoC meeting in violation of the Tribunal’s order directing status quo. The Tribunal found that the IRP convened the meeting on 23.08.2021, interpreting the status quo order as maintaining the exclusion of 87 days already granted by the Adjudicating Authority. The Tribunal observed that no items on the agenda were put to vote during the meeting and concluded that there was no conscious and willful disobedience of its order by the IRP. Conclusion: The Tribunal dismissed the appeal, holding that the Adjudicating Authority rightly excluded the period of 87 days from the CIRP period under Regulation 40C. The Tribunal affirmed that the exclusion of time due to the lockdown did not require CoC approval and was within the discretionary powers of the Adjudicating Authority under Rule 11 of the NCLT Rules, 2016. The contempt case against the IRP was also dismissed, as there was no willful disobedience of the Tribunal’s order.
|
