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2019 (11) TMI 316 - SC - Insolvency and BankruptcyInitiation of CIRP - Exclusion of period from 17th September, 2018 till 4th June, 2019 for the purpose of counting 270 days Corporate Resolution Process period - power of the NCLT or NCLAT, as the case may be, to exclude any period from the statutory period in exercise of inherent powers sans any express provision in the I B Code in that regard - HELD THAT - The inevitable fall out of accepting the stand taken by the appellants would be to set aside the impugned judgment and relegate the parties to a situation where the only option would be to proceed with the liquidation process concerning JIL under Chapter III of Part II of the I B Code, on the premise that no resolution plan has been received before the expiry of the Insolvency Resolution Process under Section 12 of the I B Code or being a case of rejection of the resolution plan under Section 31 of the I B Code. In the present case, there is unanimity amongst all the parties appearing before this Court including the resolution applicant that liquidation of JIL must be eschewed and instead an attempt be made to salvage the situation by finding out some viable arrangement which would subserve the interests of all concerned. We are of the considered opinion that we need to and must exercise our plenary powers to make an attempt to revive the corporate debtor (AIL), lest it is exposed to liquidation process under Chapter III of Part II of the I B Code - the IRP is directed to complete the CIRP within 90 days from today. In the first 45 days, it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively, who were the final bidders and had submitted resolution plan on the earlier occasion and place the revised plan(s) before the CoC, if so required, after negotiations and submit report to the adjudicating authority NCLT within such time. In the second phase of 45 days commencing from 21st December, 2019, margin is provided for removing any difficulty and to pass appropriate orders thereon by the Adjudicating Authority. Appeal disposed off.
Issues Involved:
1. Exclusion of time period from the Corporate Insolvency Resolution Process (CIRP) timeline. 2. Authority of NCLAT to exclude time from the statutory period of CIRP. 3. Rejection and resubmission of resolution plans after the statutory period. 4. The impact of legislative changes on the CIRP process. 5. The role of the Supreme Court under Article 142 of the Constitution in the CIRP process. Detailed Analysis: 1. Exclusion of Time Period from CIRP Timeline: The primary issue revolves around whether the period from 17th September 2018 to 4th June 2019 should be excluded from the 270-day CIRP timeline. The NCLAT, in its judgment, decided to exclude 90 days from the CIRP timeline, considering the extraordinary situation where there were no regulations on how the voting share of allottees (home buyers) would be counted. This decision was based on the precedent set in "Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech Pvt. Ltd." and supported by the Supreme Court in "Arcelormittal India Private Limited vs. Satish Kumar Gupta." 2. Authority of NCLAT to Exclude Time from the Statutory Period of CIRP: The NCLAT justified its authority to exclude certain periods from the CIRP timeline under unforeseen circumstances. The Supreme Court, while addressing this issue, noted that the exclusion was necessary due to the extraordinary situation and lack of clarity in the law, which caused delays in the decision-making process of the Committee of Creditors (CoC). 3. Rejection and Resubmission of Resolution Plans: The NCLAT allowed for the submission of revised resolution plans from the two final bidders (Suraksha Realty and NBCC) despite their earlier rejection by the CoC. The Supreme Court supported this decision, emphasizing the need to avoid liquidation and to find a viable solution for the stakeholders, especially the home buyers. The Court directed the Interim Resolution Professional (IRP) to invite revised resolution plans from the two bidders and submit them to the CoC for consideration. 4. Impact of Legislative Changes on CIRP Process: The Supreme Court acknowledged the recent amendments to the Insolvency and Bankruptcy Code (IBC), which included provisions for restructuring the corporate debtor and the introduction of Section 12A, allowing for the withdrawal of an application with the approval of 90% voting share of the CoC. These changes were considered while deciding to extend the CIRP period and allow the submission of revised resolution plans. 5. Role of the Supreme Court under Article 142 of the Constitution: The Supreme Court exercised its plenary powers under Article 142 to ensure substantial justice for all stakeholders. The Court decided to extend the CIRP period by 90 days from the date of the order, allowing the IRP to invite revised resolution plans from the two final bidders and complete the process within the extended timeline. The Court emphasized that this decision was made in the exceptional circumstances of this case and should not be treated as a precedent. Conclusion: The Supreme Court, considering the extraordinary situation and the interests of the stakeholders, especially the home buyers, directed the IRP to complete the CIRP within 90 days from the date of the order. The Court allowed the submission of revised resolution plans from Suraksha Realty and NBCC and emphasized that this decision was made under exceptional circumstances and should not be treated as a precedent. The Court's decision aimed to avoid liquidation and provide a viable solution for all stakeholders.
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