2024 (2) TMI 1093 - AT - Insolvency and Bankruptcy

CIRP - Validity of extension of 90 days was calculated Retrospectively from 10.05.2023 rendering the very extension practically an infructuous one - It is the stand of the Appellant that the Resolution Professional had no actual or constructive knowledge of the Retrospective Calculation , on 27.07.2023, until the order was uploaded on 11.08.2023 - HELD THAT - This Tribunal points out that the Petitioner/Appellant had mentioned that he is approaching the Adjudicating Authority/Tribunal praying for an extension of 90 days to complete the CIRP of the Corporate Debtor. As per Section 12(3) of the I B Code, 2016, on receipt of an application u/s 12(2) of the Code, if the Insolvency Resolution Process remained pending on the date of the commencement of the I B Code(Amendment) Act, 2019, such Resolution Process must be completed within a period of 90 days from the date of commencement. This Tribunal taking note of the fact that the sole COC Member has passed a Resolution to extend further period of 90 days from the last date of CIRP dated 10.05.2023, in view of the categorical and candid averment that for a better negotiation , evaluation and discussion on the Resolution Plan received from the Resolution Applicant and submission of the same to the Adjudicating Authority/Tribunal the Interim Resolution Professional has proposed to extend the CIRP period for a further period of 90 days from the date of approval of the instant IA, and considering the totality of the entire conspectus of the facts and circumstances surrounding the instant case, this Tribunal comes to an inevitable and irresistible conclusion that the Adjudicating Authority/Tribunal had committed an error in not granting the exclusion for the period from 09.05.2023 to 27.07.2023 viz. the period spent in pursuing the IA (IB)1235/CHE/2023, the exclusion period would have enabled the Petitioner/Appellant to pursue the Expression of Interest received and made efforts to revive the Corporate Debtor through a Resolution Plan and in furtherance of substantial cause of justice and to prevent an aberration of justice, the observation made by the Adjudicating Authority/Tribunal in the impugned order dated 27.07.2023 in IA that the CIRP is extended for a further period of 90 days with effect from 10.05.2023 is set aside because of the fact that the period of pendency of proceeding before the Adjudicating Authority/Tribunal shall be excluded when calculating the CIRP period. Likewise, the period of pendency of instant Comp App is ordered to be excluded and the extension of CIRP period of 90 days is granted by this Tribunal from the date of the disposal of the instant Appeal, as per Section 12(2) of the I B Code, 2016. Consequently, the instant Appeal succeeds.

Summary

Issues Involved:
1. Extension of Corporate Insolvency Resolution Process (CIRP) timeline.
2. Calculation of CIRP extension period.
3. Exclusion of pendency period from CIRP calculation.

Summary:

1. Extension of Corporate Insolvency Resolution Process (CIRP) Timeline:
The Appellant, the Resolution Professional of the Corporate Debtor, filed an application seeking an extension of the CIRP timeline by 90 days as per Section 12(2) of the Insolvency and Bankruptcy Code (IBC), 2016, read with Regulation 40 of the Insolvency and Bankruptcy Board of India (IBBI) Regulations, 2016. The Adjudicating Authority/NCLT, Special Bench, Chennai, allowed this extension, but calculated it retrospectively from 10.05.2023, which rendered the extension practically infructuous.

2. Calculation of CIRP Extension Period:
The Appellant contended that the Adjudicating Authority/Tribunal erred in granting the extension from the last date of CIRP (10.05.2023) and not excluding the period from 09.05.2023 (date of filing the application) to 27.07.2023 (date of order). The Appellant argued that the extension should be calculated from the date of the disposal of the application, and the period spent in hearing and disposing of the application should be excluded from the CIRP timeline.

3. Exclusion of Pendency Period from CIRP Calculation:
The Appellant referred to the Supreme Court judgment in 'Committee of Creditors of Essar Steel V Satish Kumar Gupta', which emphasized that the time taken in legal proceedings should not harm the litigants. The Appellant argued that the period of pendency of the application (09.05.2023 to 27.07.2023) should be excluded from the CIRP calculation. The Tribunal agreed that the exclusion of the pendency period was necessary to prevent injustice and enable the Resolution Professional to pursue the Expression of Interest received and revive the Corporate Debtor through a Resolution Plan.

Disposition:
The Tribunal set aside the impugned order dated 27.07.2023, which directed the CIRP extension period to run retrospectively from 10.05.2023. The Tribunal granted the exclusion for the period from 09.05.2023 to 27.07.2023 and ordered that the extension of the CIRP period of 90 days, as per Section 12(2) of the IBC, 2016, be granted from the date of disposal of the instant Appeal. Consequently, the Appeal was allowed with no costs.