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TMI Blog2021 (6) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... rd Respondent M/s. Kamachi Industries Limited. c. For such further and other reliefs as this Hon'ble Tribunal may deem fit in the facts and circumstances of the case. 2. In the typed set annexed along with the Application, it is evident that the Corporate Insolvency Resolution Process (CIRP) of R3 was initiated on 19.02.2020 based on an Application filed by State Bank of India as a Financial Creditor which petition stood admitted. 3. Further, R1 herein was appointed as Interim Resolution Professional (IRP) of R3 Company by this Tribunal vide the said Order dated 19.02.2020. At the threshold stage itself, it is required to note that in an Appeal which has been filed in Company Appeal (AT) (INS) No. 328 of 2020 before the Hon'ble NCLAT, the Hon'ble NCLAT had chosen to pass an Order dated 25.02.2020. A perusal of the said Order shows that no stay of the Order passed by this Tribunal on 19.02.2020 has been granted by the Hon'ble NCLAT. On the other hand, the Appellant promoters of R3 had been directed to hand over the assets and records of R3 Corporate Debtor to the IRP to immediately hand over the same if not already done and the IRP has been directed to ensure tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, the benefit of Regulation 40C vide Notification dated 20.04.2020 should be extended to the Applicant as well in relation to settlement. 7. Ld. Senior Counsel for the Applicant persuaded this Tribunal that in relation to the Application certain important questions of law are required to be decided inter-alia as to whether the failure on the part of the IRP/R1 to act within the timelines would render the proceedings and process a nullity and as to whether R1 in the absence of leave or permission from this Tribunal can carry on the activities contrary to the timeline stipulated under the Code/Regulation. Further question of law raised is as to whether the benefit of insertion of Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016 would be available to R3 Company and also cover the proceedings that are pending against R3 Company before this Tribunal. In the circumstances, whether the CIRP which was initiated vide Order dated 19.02.2020 by this Tribunal is required to be suspended. 8. A Counter Affidavit has also been filed by R1 in response to the Application filed by the Applicant. On the part of R2 Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 when the Petition was admitted by this Tribunal. 12. In view of no independent existence of R3, a contention is sought to be raised by R2 that there is a misjoinder of parties as R3 can be only represented by the IRP/R1. In relation to Section 10A of the IBC, 2016 it is pointed out that it applies only to new cases to be initiated and it is wrong to state that Section 10A suspends initiation of CIRP but on the other hand only stops filing of Application for initiation of fresh CIRP of the Corporate Debtor that too for a period of six months. It is also stated that the Corporate Debtor has to undergo CIRP only because of events that happened prior to the pandemic and that the pandemic cannot improve the case of the Petitioner/Applicant in any manner. 13. In relation to the expiry of timelines of the CIRP on 16.08.2020 it is stated by R2 in its submission that the RP has taken out an application seeking for extension of CIRP before this Tribunal. 14. In relation to the proposal pending before R2 for settlement as projected by the Applicant, it is stated that no such proposal is pending. 15. It is also brought to the notice of this Tribunal by R2 through its submission that in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriments fail as we have seen from Madras Petrochem (supra). Thus, while leaving the provision otherwise intact, we strike down the word "mandatorily" as being manifestly arbitrary under Article 14 of the Constitution of India and as being an excessive and unreasonable restriction on the litigant's right to carry on business under Article 19(1)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in M/s. Siemens Gamesa Renewable Power Pvt. Ltd. -vs- Ramesh Kymal in IA/395/2020 in IBA/215/2020 dated 09th July, 2020 and which stood upheld both by the Hon'ble NCLAT as well as subsequently by the Hon'ble Supreme Court and in the circumstances Section 10A of IBC, 2016 will not be of any help to the Applicant. It must also be noted that by virtue of Explanation contained to the said Section 10A of IBC, 2016 it has been expressly clarified that the provisions of Section 10A shall not apply to any default committed under Sections 7, 9 and 10 of IBC, 2016 before 25th March, 2020. 20. As already stated in the earlier portion of the Order in relation to Section 12 of IBC, 2016 wherein it was enacted that the CIRP should be completed within a period of 330 days mandatorily, the Hon'ble Supreme Court has held the same to be in effect directory. In the circumstances, any Regulation framed by virtue of the provisions of Section 12 of IBC, 2016 by the Insolvency and Bankruptcy Board of India can also be only a guideline and cannot be considered as a mandatory timeline as sought to be given colour of by the Applicant in the instant Application. 21. Under the directions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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