2018 (2) TMI 2001 - AT - Insolvency and Bankruptcy

Appellate Tribunal Extends Corporate Insolvency Resolution Process, Emphasizes Timely Completion

Amit Basia & Anr. Versus Anant Overseas Ltd. & Anr.

The Appellate Tribunal allowed the appeal by Shareholders/Directors, setting aside the Adjudicating Authority's order and extending the Corporate ... Application for clarification preferred by the Resolution Professional - direction to Resolution Professional to complete the Corporate Insolvency Resolution Process within extended 90 days period from the 181st day of the resolution process - HELD THAT:- Similar issue fell for consideration before this Appellate Tribunal in QUANTUM LIMITED (CORPORATE DEBTOR) VERSUS INDUS FINANCE CORPORATION LIMITED [2018 (2) TMI 1721 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that Adjudicating Authority has not hold that the subject matter of the case do not justify to extend the period. It has not been rejected on the ground that the committee of creditors or resolution professional has not justified their performance during the 180 days. In such circumstances, it was duty on the part of the Adjudicating Authority to extend the period to find out whether a suitable resolution plan is to be approved instead of going for liquidation, which is the last recourse on failure of resolution process. It is declared that the 90 days of extended period be counted w.e.f. 16th January, 2018 i.e. the date on which the Adjudicating Authority passed order for extension of 90 days period. The period between 181st day and the date of passing of the order by the Adjudicating Authority i.e. 16th January, 2018 shall not be counted for any other purpose and is to be excluded for counting the extended period - appeal allowed. Issues:1. Extension of period for Corporate Insolvency Resolution Process beyond 180 days.2. Clarification on counting the extended period from the relevant date.Issue 1: Extension of period for Corporate Insolvency Resolution Process beyond 180 daysThe Appellate Tribunal heard an appeal by Appellants Shareholders/Directors against an order passed by the Adjudicating Authority, which dismissed the application for clarification by the Resolution Professional and directed the completion of the Corporate Insolvency Resolution Process within an extended 90-day period. The Committee of Creditors had requested the extension as the resolution process was not completed in 180 days due to various reasons. The Adjudicating Authority extended the period for another 90 days, leading to a subsequent application for clarification regarding the starting point for counting the 90 days. The Appellants argued that the time taken by the Adjudicating Authority should not be counted towards the extended period, a plea supported by the Respondent - Resolution Professional. The Appellate Tribunal referred to a previous case and highlighted that the resolution professional can file for an extension only if instructed by a resolution passed by the committee of creditors with a 75% vote. It emphasized that if such a resolution is passed within 180 days, the Adjudicating Authority can extend the period up to 90 days beyond the 180th day to ensure completion of the resolution process. The Tribunal set aside the impugned order and extended the resolution process for another 90 days, excluding the period between the 181st day and the date of the order for all purposes.Issue 2: Clarification on counting the extended period from the relevant dateThe Appellate Tribunal ruled in favor of the appellants, setting aside the order of clarification and declaring that the 90-day extended period should be counted from the date the Adjudicating Authority passed the order for extension. It specified that the period between the 181st day and the date of the Adjudicating Authority's order should not be counted for any other purpose and must be excluded when calculating the extended period. The appeal was allowed with these observations, and no costs were imposed. The decision was based on the interpretation of relevant provisions of the Insolvency and Bankruptcy Code, emphasizing the importance of allowing sufficient time for the resolution process and avoiding liquidation as a last resort in case of failure to resolve the matter.This comprehensive analysis of the judgment highlights the key legal issues addressed by the Appellate Tribunal regarding the extension of the Corporate Insolvency Resolution Process and the clarification on counting the extended period, providing a detailed insight into the reasoning and decision-making process of the Tribunal.