2021 (4) TMI 803 - AT - Insolvency and Bankruptcy

Extension of CIRP - Resolution plan already approved - HELD THAT - When Resolution Plan is already approved and available, it would not be appropriate to refuse extension of time, in the facts of the matter. The Impugned Order is modified so as to hold that extension is granted to CIRP in the matter of present Corporate Debtor granting exclusion of 221 days from 25th March, 2020 to 31st October, 2020 due to COVID-19 situation and CIRP period is extended upto 29th January, 2021 which includes 90 days extension by NCLT Order dated 11th February, 2020 - appeal disposed off.

Summary

Issues:
1. Extension of CIRP period due to COVID-19 lockdown.
2. Interpretation of the Proviso to Section 12 of the Insolvency and Bankruptcy Code, 2016.
3. Approval of Resolution Plan and pending applications before the Adjudicating Authority.
4. Granting extension of time beyond the statutory limit.

Extension of CIRP period due to COVID-19 lockdown:
The Appellate Tribunal considered the appeal filed by the Resolution Professional seeking an extension of the Corporate Insolvency Resolution Process (CIRP) period due to the COVID-19 situation. The CIRP had commenced on 10th October, 2019, and faced difficulties due to the lockdown imposed on 25th March, 2020. The Resolution Professional sought exclusion of 221 days from 25th March, 2020 to 31st October, 2020, which was partially allowed by the Adjudicating Authority. The Tribunal, considering the circumstances, extended the CIRP period up to 29th January, 2021, inclusive of the 90-day extension previously granted by the NCLT.

Interpretation of the Proviso to Section 12 of the IBC:
The Tribunal referred to the Supreme Court's observation in the case of "Committee of Creditors of Essar Steel India Limited versus Satish Kumar Gupta & Ors." regarding the Proviso to Section 12 of the IBC. The Court highlighted that in exceptional cases where a short period is left for completion of the insolvency resolution process beyond 330 days, and factors beyond the control of litigants contribute to delays, the Adjudicating Authority or Appellate Tribunal may exercise discretion to extend the time limit, keeping stakeholders' interests in mind.

Approval of Resolution Plan and pending applications:
The Resolution Professional had already obtained approval for the Resolution Plan from the Committee of Creditors, with a voting majority of 93.43%. The Tribunal noted that the Resolution Plan was pending approval under Sections 30 and 31 of the IBC, with replies awaited from the Adjudicating Authority. To prevent complications and technical issues later on, the Tribunal found it appropriate to grant the extension of time as requested by the Resolution Professional.

Granting extension of time beyond the statutory limit:
Considering that the Resolution Plan had been approved and the CIRP was ongoing, the Tribunal deemed it necessary to grant the extension of time. In light of the circumstances and reasons presented, the Tribunal modified the Impugned Order to extend the CIRP period up to 29th January, 2021, inclusive of the exclusion of 221 days due to the COVID-19 situation. The appeal was disposed of without costs.

This detailed analysis of the judgment provides insights into the issues addressed by the Appellate Tribunal and the considerations taken into account while delivering the decision.