Liquidation timeline extended by excluding stay-affected and lockdown period from computation of the one-year process.
Where liquidation could not be completed within the prescribed one-year period because of a stay order, pending workmen and employee proceedings, and Covid-19 lockdown restrictions, the Tribunal permitted the liquidator to continue the process beyond that period. It also accepted that the affected interval could be excluded from computation of the liquidation timeline, relying on the practical ibility of completing liquidation during the restraint period and the later regulatory amendment recognising lockdown-related exclusion. The period from 20 February 2020 to 30 November 2020 was therefore kept out of the one-year computation, extending the effective time available for completion of liquidation.
Issues: (i) Whether the liquidator should be permitted to continue the liquidation process beyond the one-year period prescribed under the liquidation regulations. (ii) Whether the period affected by the stay order and the Covid-19 lockdown should be excluded from computation of the liquidation timeline.
Issue (i): Whether the liquidator should be permitted to continue the liquidation process beyond the one-year period prescribed under the liquidation regulations.
Analysis: The application was supported by a report explaining the causes for non-completion within the prescribed time. The delay was attributed to the stay operating during part of the relevant period, pending proceedings relating to workmen and employees, and the practical impediments caused by the nationwide lockdown. The liquidation regulations permit an application for additional time where liquidation cannot be completed within one year and require reasons to be placed before the Adjudicating Authority.
Conclusion: The liquidator was permitted to continue with the liquidation process.
Issue (ii): Whether the period affected by the stay order and the Covid-19 lockdown should be excluded from computation of the liquidation timeline.
Analysis: The Tribunal accepted that the liquidation process could not be completed during the period when the High Court stay operated and when lockdown restrictions prevented the liquidator from effectively carrying out the liquidation tasks. The later regulatory amendment excluding lockdown time from computation for tasks that could not be completed due to such lockdown also supported exclusion of the relevant period from the prescribed timeline.
Conclusion: The period from 20 February 2020 to 30 November 2020 was excluded from computation of the one-year liquidation period.
Final Conclusion: The liquidation process was allowed to proceed with the relevant intervening period kept out of the statutory time computation, thereby extending the effective time available for completion of liquidation.
Ratio Decidendi: Where liquidation cannot be completed within the prescribed period because of judicial restraint and lockdown-related impediments, the Adjudicating Authority may permit continuation and exclude the affected period from computation of the liquidation timeline.
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