9911796707
TMI Blog2022 (1) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest and the nature of business of the corporate debtor which admittedly spread over to many parts of the country. It is also an admitted fact that many interested prospective resolution applicants have submitted their plans evincing their interest in the bid process of the corporate debtor. This Tribunal is of the view that the corporate debtor cannot be pushed into liquidation. This Tribunal comes to a resultant conclusion that based on the facts and keeping in view of exceptional circumstances existed, viewing in that perspective and to avoid liquidation as a last resort and to comply with the object of the Code, i. e., maximization of value of asset of the corporate debtor and the law laid down by the hon'ble Supreme Court in the matter of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] , that the outer limit of 330 days can be extended in an exceptional circumstances. Application allowed. - Company Appeal (AT) (CH) (Insolvency) No. 224 of 2021 And I. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which was rejected by the CoC. Thereafter, the appellant herein was appointed as resolution professional on April 23, 2021 issued second round of expression of interest and 7 prospective resolution applicants have been shortlisted and the access to the virtual room data have been shared with them and the CoC is awaiting resolution plans by September 13, 2021. 5. Learned senior counsel for the appellant submitted that on earlier occasion, 150 days was excluded in light of the nationwide lockdown. It is also submitted that the erstwhile resolution professional cited the reasons that caused hindrance for the prospective resolution applicants in travelling to the Southern States of Karnataka, Telangana, Andhra Pradesh, Pondicherry, Tamil Nadu, etc., where the corporate debtor has several functional centers so as to ascertain the assets and health facilities. It is submitted that after taking charge as a resolution professional by the appellant the transition was hit by delays due to testing positive for covid of the staff of the erstwhile resolution professional. As stated supra, 7 bidders were shortlisted after scrutiny and placed before the CoC in the 14th meeting held on July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case to prevent aberration of justice . 10. Learned senior counsel also relied upon the judgment of the hon'ble Supreme Court in P. Mohanraj v. Shah Brothers Ispat P. Ltd. reported in [2021] 14 Comp Cas-OL 1 (SC) ; [2021] SCC Online SC 152 the hon'ble apex court held that liquidation of the corporate debtor should be a matter of last resort and the IBC recognizes a wider public interest in resolving corporate insolvencies and its object is not just recovery of outstanding dues but the revival of the corporate debtor preventing it from a corporate death. 11. Learned senior counsel submitted that as stated supra the corporate debtor is in healthcare industry and more than 200 doctors and 2,000 staffs associated with the corporate debtor have been contributing selflessly during this pandemic period without even receiving salaries on time with the fervent hope that the corporate debtor would be revived. Further the corporate debtor is spread over to 94 centers located in five states and one union territory and the vast ecosystem of vendors, housekeeping, security and other service providers for relying highly on the revival of corporate debtor. 12. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Persons) Regulations, 2016, the said period from May 8, 2021 till June 27, 2021 can be excluded from the CIRP timelines. Further, the present application was filed before this Tribunal on May 25, 2021 and till the date it was pending, i. e., July 30, 2021 can be excluded from the CIRP timelines. Thus, a total of 83 days can be excluded from the CIRP timelines. If the said 83 days are excluded the CIRP in relation to the corporate debtor would come to an end on August 22, 2021. (2) On the basis of the above observations the Adjudicating Authority extended CIR process only up to August 22, 2021 by directing the appellant/applicant to finalize the accounts as per the order dated February 26, 2021. In both the appeals and in the applications the facts are not in dispute. The reasons for delay in completing the CIR process narrated as under. (3) The corporate debtor was admitted by the Adjudicating Authority and initiated CIR process on April 21, 2017 : (i) However, pursuant to a company petition filed by the corporate debtor before the hon'ble High Court of Madras, the hon'ble High Court stayed the CIRP proceedings by order dated May 4, 2017. However, the Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) ASG Hospital P. Ltd., Jodhpur, Rajasthan (ii) i Labs India special situations fund (sub-scheme of i Labs Investments Trust Jubilee Hills, Hyderabad) (iii) Mr. M. K. Rajagopalan, Chennai (iv) Dr. Agarwal's Healthcare Ltd., Chennai (v) Max Vision Eye Hospital P. Ltd., Hyderabad. (vi) GVPR Engineers Ltd., Hyderabad (vii) Consortium of UV Stressed Assets Management P. Ltd., New Delhi. with Suruchi Foods P. Ltd., New Delhi. (viii) JC Founds Assets Reconstruction, Mumbai. (5) It is stated that out of above eight prospective resolution applicants only seven applicants were shortlisted after scrutiny. It is also stated that as per the terms of request for resolution plan (RFRP), the last date for submission of resolution plans is September 13, 2021. It is also stated that the Adjudicating Authority passed the impugned order on August 3, 2021 extending the time only up to August 22, 2021. It is an admitted fact that the corporate debtor is in the healthcare industry and its hospitals/dispensaries are spread over to Southern States of the country having hospitals and centers being run all over the country. It is also not out of place to mention that due to cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time-bound manner, the value of the assets of such persons will deplete. Therefore, maximisation of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the per sons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic main stream, it is able to repay its debts, which, in turn, enhances the via bility of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme-workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate debtor who is in the red by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads overall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licants, provided the time is extended with respect to CIR process period. From the perusal of the applications filed by the prospective resolution applicants for intervening/impleading themselves before this Bench, it is evident that the applicants are very much interested in participating bid process of the corporate debtor. Having submitted the resolution plans by the prospective resolution applicants, the situation does not arise for pushing the corporate debtor into liquidation. As held by the hon'ble Supreme Court the liquidation is a last resort provided there are no prospective resolution applicants. (9) Further, in the Code (IBC, 2016) the timeline for completion of insolvency resolution process as envisaged in section 12 of the Code. As per sub-section (1) of section 12 of the Code, the corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process. However, as per sub-section (2) the resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond 180 days, if instructed to do so by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IRP to end by a certain date-without any exception thereto-may well be an excessive interference with a litigant's fundamental rights to non-arbitrary treatment under article 14 and an excessive arbitrary and therefore unreasonable restriction on a litigant's fundamental right to carry on business under article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down the pro vision in its entirety. However, that would then throw the baby out with the bath water, inasmuch as the time taken in legal proceedings is certainly an important factor which causes delay and which has made previous statutory experiments fail as we have seen from Madras Petrochem Ltd. v. Board for Industrial and Financial Recon struction [2016] 194 Comp Cas 594 (SC) ; [2016] 4 SCC 1 ; [2016] 2 SCC (Civ) 478. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidation, struck down the word mandatorily for completion of CIR process within 330 days and extended the time beyond 330 days in exceptional cases and the power is given to the Tribunal, i. e., the Adjudicating Authority and also this Appellate Tribunal. The judgment of the hon'ble Supreme Court is law of the land and bound by this Appel late Tribunal and all other Tribunals. (15) This Tribunal is of the view that the instant case, the appellants have shown exceptional circumstances in not completing the CIR process within the time and it is unequivocal that it received resolution plans from prospective resolution applicants pursuant to a second expression of interest and the corporate debtor cannot be pushed into liquidation by not extending the time. Therefore, this Tribunal is of the considered opinion that it is a fit case to extend the time by November 30, 2021 for completion of CIR process as prayed for by the appellants. (16) It is apt to mention that based upon the judgment of the hon'ble Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta [2020] 219 Comp Cas 97 (SC) ; [2020] 8 SCC 531, this Tribunal also passed judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of the corporate debtor must be completed within a period of 330 days from the date of commencement of insolvency (including the extension and time consume in legal proceedings). However, the exercise of power by the Adjudicating Authority to extend the time period in negation of statutory provision of the Insolvency and Bankruptcy Code, 2016 may be desirable in an exceptional/extraordinary circumstance given is by exercising sound 'judicial discretion' with a view to find a suitable 'resolution plan' to prevent an aberration of justice . Finding : (19) Before parting with the main judgment, this Tribunal intend to give a finding on the application filed by the Maxi vision Eye Hospital bearing I. A. No. 456 of 2021 seeking for intervention to assist this Tribunal in adjudicating the appeals and contended that the applicant filed the resolution plan on August 21, 2020 before the last date, i. e., August 22, 2021 within the period prescribed under the Code and before the CIR process directed to be completed by August 22, 2021. However, the applicant in I. A. No. 497 of 2021, i. e., Dr. Agarwal's Health Care Ltd., submitted that the applicant submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Swiss Ribbons P. Ltd. v. Union of India [2019] 213 Comp Cas 198 (SC) ; [2019] 4 SCC 17 and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta [2020] 219 Comp Cas 97 (SC) ; [2020] 8 SCC 531, that the outer limit of 330 days can be extended in an exceptional circumstances, this Tribunal is sets aside the order of the Adjudicating Authority dated August 3, 2021 with the following direction/order : (i) The reliefs sought in I. A. No. 510/CHE/2021 in C. A. No. 1 of 2017 filed by the resolution professional of the corporate debtor before the Adjudicating Authority, Chennai Bench is hereby allowed by setting aside the order of the Adjudicating Authority dated August 3, 2021. (ii) The time is extended till November 30, 2021 for completing the CIR process. (iii) The time spent in filing these appeals before this Tribunal, i. e., from August 18, 2021 to November 25, 2021 is also excluded. (23) With the above directions the company appeals bearing No. C. A. (AT) (CH) (Insolvency) No. 224 of 2021 is allowed. No order as to costs. (24) In view of the above judgment, no separate orders are necessary in the applications filed by the applicants/interveners. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
