2021 (1) TMI 105 - Tri - Insolvency and Bankruptcy

Tribunal Extends CIRP Deadline, Emphasizes Stakeholder Value

The Tribunal approved the exclusion of an additional 54 days from the Corporate Insolvency Resolution Process (CIRP) period, citing procedural delays and ... Seeking exclusion of 54 days from CIRP - permission to Resolution Professional to call for CoC meetings to deliberate and vote on the Resolution Plan received from M/s. Earthin Projects Ltd and file necessary application/memos before this Tribunal within 60 days from the date of orders of this Tribunal - HELD THAT:- It is observed that after the initiation of CIRP, a period of 69 days was lost due to various reasons as stated in the application out of which a period of 15 days was already excluded by this Adjudicating Authority on various dates i.e., 27.01.2020 and 04.02.2020, now that the applicant has sought for exclusion of remaining 54 days from CIRP. It is pertinent to note that the judgment of the Hon'ble Supreme Court has held in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. [2019 (11) TMI 731 - SUPREME COURT] where it was held that while leaving the provision otherwise intact, we strike down the work 'mandatorily' as being manifestly arbitrary under Article 14 of the Constitution of India and as being an excessive and unreasonable restriction on the litigant's right to carry on business under Article 19(l)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. Keeping the guidance of the Hon'ble Supreme Court in view and considering the submissions, facts and circumstances of case, interest envisaged by the Prospective Resolution Applicant for resolution of Corporate Debtor and in view of the decision of CoC through email, as well as the economic scenario emerging due to COVID-19 pandemic and it's fall out, this Adjudicating Authority observes that exclusion of time period enabling for completion of CIRP would be in the interest of all stakeholders, to allow the completion of CIRP rather than going for liquidation of the Corporate Debtor which should only be initiated as a last resort - exclusion of period of another 54 days from calculation of CIRP period is approved. This exclusion is granted on having considered the steps already been taken by the RP, approval by the CoC with 74.05% acceptance through email and the current stage of CIRP in the case of the present Corporate Debtor i.e.. M/s. Indu Projects Limited - application disposed off. Issues Involved:1. Request for exclusion of additional 54 days from the Corporate Insolvency Resolution Process (CIRP) period.2. Approval and deliberation on the new Resolution Plan submitted by M/s. Earthin Projects Ltd.Issue-wise Detailed Analysis:1. Request for Exclusion of Additional 54 Days from the CIRP Period:The Applicant, the Resolution Professional (RP), sought the exclusion of 54 days from the CIRP period which ended on 04.02.2020. The RP highlighted that a total of 69 days was lost due to various procedural delays and circumstances beyond control, out of which 15 days had already been excluded by the Adjudicating Authority. The RP argued that the remaining 54 days should also be excluded to enable the completion of the CIRP.The RP referenced the Supreme Court judgment in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors., which allows for the extension of the CIRP period beyond 330 days if it is in the interest of all stakeholders and if the delay is not attributable to the litigants. The RP emphasized that the exclusion of the additional days would help in reviving the Corporate Debtor and maximize value for stakeholders.2. Approval and Deliberation on the New Resolution Plan Submitted by M/s. Earthin Projects Ltd:The RP received a new Resolution Plan from M/s. Earthin Projects Ltd, offering Rs. 345 Crores along with a Letter of Commitment for payment within six months from the date of approval of the Resolution Plan by the Adjudicating Authority. The RP communicated this to the Committee of Creditors (CoC), and members holding 74.05% voting shares approved exploring the new Resolution Plan via email.The RP argued that considering the new Resolution Plan would be in line with the objectives of the Insolvency and Bankruptcy Code (IBC) to revive the Corporate Debtor and avoid liquidation, which would lead to unemployment and economic loss. The RP also cited the NCLT Mumbai Bench judgment in ICICI Bank Vs. Unimark Remedies, which emphasized considering Resolution Plans even if submitted after the stipulated time to uphold the spirit of the IBC.Judgment:The Tribunal observed that the exclusion of the additional 54 days from the CIRP period was justified due to procedural delays and circumstances beyond the control of the RP. The Tribunal referenced the Supreme Court's guidance in the Essar Steel case, which allows for such exclusions to facilitate the completion of the CIRP rather than opting for liquidation.The Tribunal acknowledged the interest shown by the Prospective Resolution Applicant (PRA) and the approval by the CoC members. Given the economic impact of the COVID-19 pandemic and the need to avoid liquidation, the Tribunal approved the exclusion of 54 days from the CIRP period.The Tribunal concluded that the exclusion would be in the interest of all stakeholders and would allow the completion of the CIRP, thus disposing of the application.Conclusion:The Tribunal approved the exclusion of an additional 54 days from the CIRP period, enabling the RP to call for CoC meetings to deliberate and vote on the new Resolution Plan submitted by M/s. Earthin Projects Ltd. This decision aligns with the objectives of the IBC to revive the Corporate Debtor and maximize value for stakeholders.