Appellate Tribunal Upholds Exclusion of Period from CIRP

The Appellate Tribunal dismissed the Appeals, upholding the Adjudicating Authority's decision to exclude the period from 5 May 2020 to 31 October 2020 from the Corporate Insolvency Resolution Process (CIRP). The Tribunal emphasized the commercial wisdom of the Committee of Creditors (CoC) and the limited scope for judicial review of such decisions. The Tribunal found no merit in the Appellant's contentions regarding the Resolution Professional's alleged violations and the interests of stakeholders. The decision of the CoC was deemed not justiciable, and the exclusion of the period was upheld as necessary and appropriate under the circumstances.

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Issues Involved:
1. Exclusion of the period from CIRP due to Covid-19 lockdown.
2. Alleged violation of Regulation 40 C by the Resolution Professional.
3. Commercial wisdom of the Committee of Creditors (CoC).
4. Judicial review of CoC's decisions.
5. Interests of all stakeholders in the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Exclusion of the period from CIRP due to Covid-19 lockdown:
The Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor was initiated on 5 May 2020 during the Covid-19 lockdown. Due to the lockdown, various CIRP activities could not be completed within the prescribed timelines. The CoC resolved to seek an extension by excluding the period from 5 May 2020 to 31 October 2020. The Adjudicating Authority allowed the exclusion under Section 12(2) of the Insolvency and Bankruptcy Code, 2016, and Regulation 40 C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

2. Alleged violation of Regulation 40 C by the Resolution Professional:
The Appellant, a shareholder, contended that the Resolution Professional (RP) violated Regulation 40 C by not considering the interests of all stakeholders and merely seeking an exclusion to complete formalities. The RP was accused of not considering the Corporate Debtor's interests as a going concern or the stakeholders' investments. The RP's actions were deemed unilateral and against the regulation's intended purpose.

3. Commercial wisdom of the Committee of Creditors (CoC):
The CoC, in its commercial wisdom, decided not to extend the timeline for submitting the Resolution Plan or re-issue Form G but to expedite the valuation process and consider the already submitted Resolution Plans. This decision was based on the understanding that the lockdown had impacted potential Resolution Applicants' ability to submit Expressions of Interest (EOI). The CoC's decision was unanimous and not justiciable as per the Supreme Court's precedent in K. Sashidhar v. Indian Overseas Bank.

4. Judicial review of CoC's decisions:
The Supreme Court has held that the commercial wisdom of the CoC is paramount and not subject to judicial review. The CoC's decision to seek exclusion of time from the CIRP was a commercial decision that the Adjudicating Authority or the Appellate Authority cannot question. The decision to exclude the period was based on the CoC's commercial assessment and was therefore upheld.

5. Interests of all stakeholders in the Corporate Debtor:
The Appellant argued that the RP acted solely to recover bad loans and repay creditors without safeguarding the Corporate Debtor's assets or considering the stakeholders' interests. The Appellant also contended that the RP should have sought a complete exclusion of the timeline and activities during the excluded period. However, the CoC's decision to exclude the period was based on a commercial assessment, and the RP's actions were in line with the Code and Regulations.

Conclusion:
The Appellate Tribunal dismissed the Appeals, upholding the Adjudicating Authority's decision to exclude the period from 5 May 2020 to 31 October 2020 from the CIRP. The Tribunal emphasized the commercial wisdom of the CoC and the limited scope for judicial review of such decisions. The Tribunal found no merit in the Appellant's contentions regarding the RP's alleged violations and the interests of stakeholders. The decision of the CoC was deemed not justiciable, and the exclusion of the period was upheld as necessary and appropriate under the circumstances.

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