2017 (11) TMI 424 - Tri - Insolvency and Bankruptcy

Court dismisses Promoter/Director's extension request for Insolvency Resolution Process. Only Resolution Professional can seek extension.

Santosh Dhiraj Pathak, Promoter (Gujarat Oleo Chem ltd. Versus Anil Goel, RP and Ors.

The court dismissed the application by a Promoter/Director seeking an extension of time for the completion of the Insolvency Resolution Process for a ... Extension of time for completion of the Insolvency Resolution Process - Whether the Applicant, being Promoter/Director of the Corporate Debtor Company is entitled to file this Application under Section 60(5)(c) read with Section 12 of the IB Code and Rule 11 of the NCLT Rules and Whether time can be extended for completion of the Corporate Insolvency Resolution Process? - Held that:- Sub-section (2) of Section 12 of the Code clearly lays down that it is only the Resolution Professional who can file an Application to the Adjudicating Authority to extend the duration of Corporate Insolvency Resolution Process beyond 180 days on the basis of Resolution passed at a meeting of the Committee of Creditors by a vote of 75 per cent of the voting shares. As we efer to the Fourth Meeting of the Committee of Creditors of Gujarat Oleo Chem Limited held on 19th day of September, 2017. In Agenda No.4 of the said Resolution, it is mentioned that the Resolution which has been proposed by the Promoter was discussed in the Meeting and resolved not to accept the Resolution Plan put forward by the Promoter/Director and asked the Promoter/Director to propose an improved Plan within 30 days. On Agenda No.3, the Committee of Creditors resolved that Mr. Anil Goel, Resolution Professional is instructed to file an Application before the National Company Law Tribunal, Ahmedabad under Section 12(2) of the IB Code for approval of extension of the duration of Corporate Insolvency Resolution Process. But, no such Application is filed by the Resolution Professional, Mr. Anil Goel so far. This Application filed by the Promoter/Director is not in accordance Section 12(2) of the Code and not in accordance with the Resolution on Agenda No.3 of the 4th Meeting of the Committee of Creditors held on 19th September, 2017. Thus as Applicant is not qualified under Section 12 of the Code, the jurisdictional function of this Adjudicating Authority under Section 60(5)(c) of the Code cannot be invoked by the Applicant Promoter/Director. Issues:Extension of time for completion of the Insolvency Resolution Process under Section 60 sub-section (5) Clause (c) read with Section 12 of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the National Company Law Tribunal Rules.Analysis:The Applicant, a Promoter/Director, sought an extension of time for the completion of the Insolvency Resolution Process for a Corporate Debtor. The Committee of Creditors had agreed to provide additional time for the Applicant to submit a revised settlement, but no resolution was passed seeking an extension of time under Section 12 of the Code. The Resolution Professional was supposed to file an application for the extension based on the Committee of Creditors' decision, but no such action was taken. The Applicant's filing was found to be not in accordance with the Code and the Committee's resolution, rendering it not maintainable.The key issues for determination were whether the Applicant, as a Promoter/Director, could file the application under Section 60(5)(c) read with Section 12 of the Code and whether time could be extended for the completion of the Corporate Insolvency Resolution Process. Section 12(2) of the Code specifies that only the Resolution Professional can seek an extension beyond 180 days based on a 75% vote of the Committee of Creditors. The Committee had discussed the Applicant's proposed plan but did not accept it, instructing the Resolution Professional to file for an extension, which was not done. The Applicant's application did not meet the requirements of Section 12(2) and the Committee's decision, leading to its dismissal.Regarding Section 60(5)(c) of the Code, the Adjudicating Authority has jurisdiction to decide on matters related to the Insolvency Resolution. However, in cases like extension of the resolution period, governed by Section 12, the procedural aspects of the Code must be followed. Since the Applicant did not qualify under Section 12, the Adjudicating Authority could not entertain the application. Consequently, the application by the Applicant, a Promoter/Director, was deemed not maintainable and was dismissed.