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TMI Blog2024 (12) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the law laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory vs. Satish Kumar Gupta Ors [ 2019 (11) TMI 731 - SUPREME COURT ], period of CIRP could have been extended even beyond 330 days. There can be no dispute to the proposition laid down by the Hon ble Supreme Court in the above case. However, for extension of period beyond 330 days there has to be valid reason. The present is a case where in CIRP no substantial progress has been made nor completion of Resolution Process was insight. The most important fact to be considered is that the application which was filed by the Appellant was for recall of the order dated 13.12.2023 passed by the Adjudicating Authority refusing exclusion of the period and directing the liquidation of the corporate debtor. On looking into the grounds which are available for a recall of the judgment and the grounds which were raised by the Appellant, they does not fall within any of the grounds on which recall could have been directed - the Adjudicating Authority did not commit any error in rejecting application filed by the Appellant for recall of the liquidation order. Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany Appeal (AT) (Insolvency) No.2246 of 2024 has been filed by the Appellant challenging the order dated 21.11.2024 passed in IA (IB) No.301/CB/2024 which was filed by the Appellant seeking direction to the liquidator not to conduct the sale of the properties and to set aside the sale notice dated 24.05.2024 (24.10.2024). The Adjudicating Authority has directed that the liquidator may continue the forthcoming auction process which will be subject to decision of NCLAT in pending appeal. IA was directed to be listed on 19.12.2024. Aggrieved by the said order dated 21.11.2024, this Appeal has been filed. 4. Brief facts of the case necessary to be noticed for deciding these Appeals are:- 4.1. The Corporate Debtor- Srabani Constructions Pvt. Ltd. took financial facilities from Indian Overseas Bank in the year 2011. Since 2015, Corporate Debtor committed default. In the year 2017, seven OTS proposals were submitted by the corporate debtor to the bank which could not be finalised. The Financial Creditor filed an application under Section 7 being CP (IB) No.199/CB/2020 against the Corporate Debtor. The Corporate Debtor from 22.01.2020 to 07.09.2023 submitted 9 OTS proposals and also dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional and the date on which application was filed. CoC although decided to replace the Resolution Professional on 22.03.2023 however, the application was filed on 06.07.2023 before the Adjudicating Authority which could be allowed only on 09.10.2023. When the decision was taken to replace the Resolution Professional, CIRP did not proceed at all. It is submitted that the application IA (IB) No.93/CB/2024 filed by the Appellant to recall the order dated 13.12.2023 ought to have been allowed. Adjudicating Authority failed to notice relevant facts and further liquidation order was passed on suppression of material facts and misrepresentation without giving notice to the suspended director. It is submitted that the liquidation order deserves to be recalled and Adjudicating Authority erroneously rejected the application. It is further submitted that when OTS proposal was under consideration and bank has intimated the Appellant to deposit Rs.61 Lakhs, there was no occasion to direct liquidation. Appellant could have cleared the entire debt and saved the corporate debtor. It is further submitted that when this Tribunal passed an interim order in the present appeal on 03.05.2024, liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of filing of the application (30.11.2023). Adjudicating Authority heard the application and by the order dated 13.12.2023 after noticing the relevant facts refused to extend the period. It was noticed by the Adjudicating Authority that already 365 days have expired. In paragraphs 5 and 6, Adjudicating Authority has made following observations: - 5. The corporate debtor was admitted into CIRP on 29.11.2022 this application for exclusion is filed on 01.12.2023 after expiry one year. In between L.A.No.200/CB/2023 was file for removal of resolution professional. In the mean while no time extension application was filed after the expiry of initial CIRP period of 180 days on 28.05.2023. Now the applicant wants to exclude the period from 22.03.2023 to 01.12.2023 for 252 days at one stroke. The only reasons attributed is the erstwhile Resolution professional not carried out the work properly. In the present application the present stage of CIRP is not mentioned, what was the work till date carried out also not furnished and also unable to furnish during the course of argument. From the submission it appears that the applicant wants to start the CIRP as fresh from the beginning. In the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on business under Article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down the provision 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 a 131 important factor which causes delay, and which has made previous statutory experiments 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 comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the order dated 13.12.2023 passed by the Adjudicating Authority refusing exclusion of the period and directing the liquidation of the corporate debtor. In paragraphs 12 while directing for liquidation, following has been observed by the Adjudicating Authority: 12. From the above citations it is clear that the CIRP must be completed within a period of 330 days from the date of commencement of Insolvency, in exceptional cases beyond 330 days short period can be extended for approval of resolution plan. In our case there is neither any resolution plan is pending, not even published form 'G'. In our case the applicant has not made out 'exceptional circumstances 'for an extension of beyond 330 days. In this case till the date of filing this application already 365 days expired. In order to grant exclusion or extension beyond 330 days, the RP or the COC is required to show that there is a high prospect that he may receive a resolution plan. No such positive, viable, prospective were placed before us. Thus, as to the facts of the present case the applicant has not substantiated any exceptional circumstances to order exclusion of period from CIRP. This application to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (the Adjudicating Authority) to entertain or dispose of any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under the IBC. Further, Rule 11 of the NCLT Rules, 2016 preserves the inherent power of the Tribunal. Therefore, even in absence of a specific provision empowering the Tribunal to recall its order, the Tribunal has power to recall its order. However, such power is to be exercised sparingly, and not as a tool to re-hear the matter. Ordinarily, an application for recall of an order is maintainable on limited grounds, inter alia, where (a) the order is without jurisdiction; (b) the party aggrieved with the order is not served with notice of the proceedings in which the order under recall has been passed; and (c) the order has been obtained by misrepresentation of facts or by playing fraud upon the Court /Tribunal resulting in gross failure of justice. 12. When we look into the grounds which are available for a recall of the judgment and the grounds which were raised by the Appellant, they does not fall within any of the grounds on which reca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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