NCLAT Allows Exclusion of Time in CIRP Due to COVID-19 Impact

The National Company Law Appellate Tribunal allowed the appeal by the Interim Resolution Professional, setting aside the Adjudicating Authority's order that excluded only 68 days instead of the requested 167 days in the Corporate Insolvency Resolution Process. The Tribunal considered the impact of the COVID-19 pandemic, directing the exclusion of time from 20th March, 2020, to 2nd September, 2020, as recommended by the Committee of Creditors. It instructed the Resolution Professional to proceed promptly with the resolution process and communicated its decision to the Adjudicating Authority for implementation.

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Issues:
1. Appeal against impugned order declining exclusion of days in Corporate Insolvency Resolution Process.

Analysis:
The appeal before the National Company Law Appellate Tribunal was filed by the Interim Resolution Professional against an order passed by the Adjudicating Authority, which allowed exclusion of only 68 days out of the requested 167 days in the Corporate Insolvency Resolution Process period. The Appellant argued that the impugned order was non-speaking and failed to consider the extension of limitation granted by the Hon'ble Apex Court due to the COVID-19 pandemic.

Upon reviewing the matter, the Tribunal noted that the Hon'ble Apex Court's direction on limitation extension applied to various legal proceedings, including the Corporate Insolvency Resolution Process, to address the challenges posed by the lockdown. The Tribunal found that the reasons for seeking exclusion of days were not adequately addressed in the Adjudicating Authority's order, rendering it a non-speaking order that could not be supported.

The Appellant highlighted the continued restrictions and hardships faced due to the lockdown, affecting the functioning of the Interim Resolution Professional and the Corporate Debtor. Considering the spirit of the Apex Court's directives and the difficulties faced, the Tribunal concluded that the exclusion of time from 20th March, 2020, to 2nd September, 2020, as recommended by the Committee of Creditors, was justified to facilitate the Corporate Insolvency Resolution Process.

In its final decision, the Tribunal set aside the impugned order and directed the exclusion of the specified period in the calculation of the Corporate Insolvency Resolution Process timeline. The Resolution Professional was granted the liberty to seek further extensions if necessary, with a mandate to proceed expeditiously with the resolution process. The Tribunal instructed the communication of its order to the Adjudicating Authority for compliance.

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