2023 (5) TMI 342 - AT - Insolvency and Bankruptcy

Extension of time period provided for CIRP proceedings - whether the period of 180 days should have been further extended for the purpose of accepting/awaiting the proposal made by the Appellant for the purpose of keeping the Corporate Debtor as a going concern? - HELD THAT - It is found that sufficient time was given to the Appellant for this purpose on their own asking because it has been recorded in the 5th meeting of the CoC The Chairman found that in the previous COC meeting the erstwhile directors of the corporate debtor have informed to the CoC that they will submit revise OTS (One time Settlement) proposal to the financial creditor namely Punjab National Bank till 13.03.2020, and as per information available with Resolution Professional as the said revised one time settlement proposal has not been submitted to the bank till date and the CIRP period will be expiry on 18.03.2020 . The Appellant has miserably failed to make the proposal of the amount of Rs. 7.30 Crore along with upfront of Rs. 80 lakh before 13.03.2020 which was the committed date. Be that as it may, the Corporate Debtor had rather sent an email through Ravi Vaishnav of Mayur Xerox Centre (third party) dated 16.03.2020 with the proposal along with copy of two DD dated 16.03.2020 of Rs. 40 lakh which was not the upfront amount of Rs. 80 lakh, therefore, it was rightly not found to be authentic and sufficient to establish that the Erstwhile Directors were really interested in the resolution of the dispute rather it has been, thereafter, recorded in the 5th CoC meeting that there has been a continuous effort on the part of the Erstwhile Director of the Corporate Debtor to delay and frustrate the proceedings in one manner or the other. There are no bonafide intention on the part of the Appellant - appeal dismissed.

Summary

Issues Involved:
The issues involved in the judgment include the challenge against the order allowing liquidation proceedings against a Corporate Debtor, consideration of One Time Settlement proposal, and the extension of the 180-day period for Corporate Insolvency Resolution Process (CIRP).

Liquidation Proceedings:
The appeal challenged the order allowing liquidation proceedings against the Corporate Debtor, which was admitted for Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. The CoC decided on liquidation due to the lack of a resolution plan or a viable proposal for settlement, despite a proposed One Time Settlement (OTS) not materializing within the stipulated time frame.

One Time Settlement Proposal:
The Erstwhile Director of the Corporate Debtor proposed an OTS of Rs. 7.30 crore with an upfront amount of Rs. 80 lakh, but failed to submit the proposal within the agreed timeline. The CoC, considering the conduct of the Erstwhile Director, decided to proceed with liquidation as the statutory time limit for CIRP was expiring, and no authentic proposal was received despite subsequent communications.

Extension of 180-Day Period:
The key issue was whether the 180-day period for CIRP should have been extended to await the proposal from the Appellant. The Tribunal found that the Appellant had been given sufficient time as per their own commitment, but failed to submit the required proposal within the agreed timeline. The failure to provide the proposed settlement amount and upfront payment indicated a lack of genuine intention on the part of the Appellant, leading to the dismissal of the appeal.

Conclusion:
The appeal was dismissed as the Appellant failed to submit the proposed settlement within the agreed timeline, demonstrating a lack of genuine intention to resolve the matter. The Tribunal found no valid reason to extend the 180-day period for CIRP, considering the conduct and actions of the parties involved in the case.