2018 (6) TMI 904 - AT - Insolvency and Bankruptcy

Counting the period of corporate insolvency resolution process - period of counting the total period of 180 days 90 days (total 270 days) - Held that - If an application is filed by the Resolution Professional or the Committee of Creditors or any aggrieved person for justified reasons, it is always open to the Adjudicating Authority/Appellate Tribunal to exclude certain period for the purpose of counting the total period of 270 days, if the facts and circumstances justify exclusion, in unforeseen circumstances. In the present case, as the corporate insolvency resolution process remained stayed for 166 days due to the interim order passed by the Adjudicating Authority on 15th September, 2017 which was vacated on 28th February, 2018, we hold that the Committee of Creditors / Resolution Professional rightly requested the Adjudicating Authority to exclude the period of 166 days for the purpose of counting the total period of 270 days. Considering the stage of corporate insolvency resolution process, we direct the Adjudicating Authority to exclude 166 days for the purpose of counting the period of corporate insolvency resolution process and thereby allow the Resolution professional / Committee of Creditors further 166 days with immediate effect (i.e. 8th May, 2018) to complete the corporate insolvency resolution process.

Issues:
1. Modification of order dated 27th April, 2018 by the Adjudicating Authority
2. Exclusion of period from 15th September, 2017 to 28th February, 2018 for counting the total period of 180 days + 90 days
3. Delay in corporate insolvency resolution process due to interim orders

Analysis:
1. The appellant, a Financial Creditor, appealed for the modification of an order passed by the Adjudicating Authority, seeking an extension of the Corporate Insolvency Resolution Process (CIRP) period till 15.05.2018 due to pending applications and interim orders causing delays. The appellant requested the exclusion of the period from 15th September, 2017 to 28th February, 2018 for the total 270-day period calculation.

2. The appellant highlighted that the CIRP process was stalled for about 166 days due to interim orders, preventing Committee of Creditors' meetings and hindering progress. A detailed time chart was presented to demonstrate the delays at various stages of the resolution process, emphasizing the need to exclude the period in question for accurate calculation.

3. Referring to previous judgments, the Appellate Tribunal emphasized the importance of justifying exclusions in the CIRP period for unforeseen circumstances. The Tribunal cited legal provisions allowing extensions beyond 180 days if warranted by the situation, ensuring a fair resolution process. It was noted that exclusion could be granted for reasons such as court stays, non-functioning Resolution Professionals, or delayed proceedings due to legal actions.

4. Considering the circumstances and the significant delay caused by interim orders, the Tribunal directed the Adjudicating Authority to exclude the 166-day period from the CIRP calculation. This exclusion granted the Resolution Professional and Committee of Creditors an additional 166 days, starting from 8th May, 2018, to complete the resolution process effectively.

5. Ultimately, the Tribunal modified the Adjudicating Authority's order from 27th April, 2018, in line with the appellant's request for exclusion and extension, ensuring a fair and just resolution process. The appeal was disposed of with the specified observations, providing clarity on the CIRP timeline and necessary exclusions for a comprehensive resolution process.

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