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2023 (10) TMI 894 - HC - Insolvency and BankruptcyJurisdiction to extend the limitation for completion of the Corporate Insolvency Resolution Process (CIRP) beyond the statutory period as prescribed under Section 12 of IBC of 2016. HELD THAT - Hon ble the Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT while striking down the word mandatorily , was of the view that if the CIRP is on the verge of being settled, then in such exceptional cases, the time for completion of the process may be extended even beyond the period of 330 days as stipulated in second proviso to Section 12(3) of IBC of 2016. Thus, any proposal for extension of CIRP beyond 330 days should clearly reflect that the extension was being granted on account of the fact that the CIRP was nearing completion and grant of one further extension would result to a positive outcome so that the Corporate Debtor could be put back on its feet. However, bare perusal of the order dated 25.08.2022, passed by the NCLT, Guwahati Bench makes it clear that there is no such indication in the order that the extension was being granted for the reason that the resolution plans submitted on record, were likely to revive and bring the Corporate Debtor back on its feet. Rather a perusal of the order would indicate that the same has been rendered in gross ignorance to the mandate of first proviso to Section 12(3) of the IBC of 2016. Appeal dismissed.
Issues Involved:
1. Jurisdiction of NCLT to extend the Corporate Insolvency Resolution Process (CIRP) beyond the statutory period. 2. Interpretation of Section 12 of the Insolvency and Bankruptcy Code (IBC) 2016. 3. Locus standi of the Resolution Professional to file the appeal. Summary: 1. Jurisdiction of NCLT to Extend CIRP: The core issue was whether the NCLT had the jurisdiction to extend the CIRP beyond the statutory period prescribed under Section 12 of the IBC 2016. The learned Single Judge held that the provisions of Section 33 of the IBC 2016 were mandatory, and the NCLT had no jurisdiction to extend the limitation for completion of the CIRP beyond the statutory period. 2. Interpretation of Section 12 of IBC 2016: Section 12 of the IBC 2016 mandates that the CIRP must be completed within 180 days from the date of admission of the application, with a possible extension of up to 90 days, not exceeding a total of 330 days. The appellant argued that the word "mandatorily" in the second proviso to Section 12(3) was struck down by the Supreme Court in the case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors. The appellant contended that this allowed the NCLT to grant extensions beyond 330 days under Section 60(5) of the IBC 2016 read with Rule 11 of the NCLT Rules 2016. However, the court found that the NCLT's order extending the CIRP by 30 days did not reflect that the extension was granted because the CIRP was nearing completion and would result in a positive outcome for the Corporate Debtor. 3. Locus Standi of the Resolution Professional: The respondent challenged the locus standi of the Resolution Professional to file the appeal, arguing that the Resolution Professional should act as an independent facilitator and not in a partisan manner. The court decided to address the merits of the appeal rather than dismissing it on the ground of locus standi, noting that the Resolution Professional was impleaded as a party respondent in the writ petition. Conclusion: The court affirmed the view of the learned Single Judge that Section 60(5) of the IBC 2016 does not override the provisions of Section 12 of the Code. The order dated 25.08.2022 by the NCLT, Guwahati Bench, granting a 30-day extension, was found to be in gross ignorance of the mandate of the first proviso to Section 12(3) of the IBC 2016. Consequently, the writ appeal was dismissed as devoid of merit, upholding the judgment dated 22.12.2022 by the learned Single Judge, which set aside the NCLT's extension order.
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