2020 (11) TMI 674 - Tri - Insolvency and Bankruptcy

Exclusion of lockdown period w.e.f. 25.03.2020 to 30.06.2020 from the CIRP period - Section 60(5) of the IBC Code, 2016 read with Regulation 40(C) of the IBBI (IRP for Corporate Persons) Regulations, 2016 and read with Rule 11 of NCLT Rules, 2016 - HELD THAT - The Hon'ble Supreme Court of India in Suo Motu Writ Petition (Civil) No(s). 3/2020 in Re cognizance for extension of Limitation, vide order dated 23.03.2020, 2020 (5) TMI 418 - SC ORDER observed as under - This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State). The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 has held Special provision relating to time-line Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 held that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. In the circumstances and for the reasons mentioned in the application and in view of the orders of the Hon'ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, the instant application is allowed.

Summary

Issues Involved:
Exclusion of lockdown period from the Corporate Insolvency Resolution Process (CIRP) period under the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Issue of Urgent Hearing (IA No. 326/2020):
The applicant filed IA No. 326/2020 seeking an urgent hearing of IA No. 327/2020. The Tribunal allowed IA No. 326/2020, leading to the hearing of IA No. 327/2020.

2. Exclusion of Lockdown Period (IA No. 327/2020):
The Resolution Professional of M/s. Txlene Forge Private Limited filed IA No. 327/2020 under Section 60(5) of the IBC Code, 2016, seeking exclusion of the lockdown period from the CIRP period. The lockdown due to the Covid-19 pandemic hindered the resolution process, necessitating the exclusion of the lockdown period from 25.03.2020 to 30.06.2020.

3. Legal Precedents and Orders:
The judgment referred to the observations of the Hon'ble Supreme Court of India and the National Company Law Appellate Tribunal regarding the extension of limitation and the impact of the Covid-19 pandemic on legal proceedings. The orders highlighted the need to mitigate hardships faced by stakeholders and ensure compliance with legal timelines during the pandemic.

4. Regulations by Insolvency and Bankruptcy Board of India:
The judgment discussed the insertion of Regulation 40C and Regulation 47A by the Insolvency and Bankruptcy Board of India, which exempted the lockdown period from the timeline calculations for activities related to corporate insolvency resolution process and liquidation process, respectively.

5. Decision and Disposal of IA No. 327/2020:
Considering the circumstances, legal orders, and regulatory provisions, the Tribunal allowed IA No. 327/2020, excluding the period from 25.03.2020 to 30.06.2020 from the CIRP period. IA No. 327/2020 was disposed of accordingly, ensuring compliance with the relevant legal framework and mitigating the impact of the lockdown on the resolution process.

In conclusion, the judgment addressed the crucial issue of excluding the lockdown period from the CIRP timeline, emphasizing the legal precedents, regulatory provisions, and orders that guided the decision-making process. The detailed analysis provided a comprehensive overview of the factors considered by the Tribunal in reaching a decision that balanced legal compliance with the practical challenges posed by the Covid-19 pandemic.