2021 (5) TMI 898 - Tri - Insolvency and Bankruptcy

Tribunal Rules on Time Extensions in Corporate Insolvency Process: Legal Justification & Evidence Key

The Tribunal considered the application seeking exclusion and extension of time periods in the Corporate Insolvency Resolution Process (CIRP) under the ... Exclusion of time from CIRP process - covid-19 lockdown pandemic situation - HELD THAT:- The prayer of the IRP to exclude to 154 days to continue CIRP till 17/07/2020 has already been allowed by this Bench. So, this prayer of the applicant has become infructuous in view of the order dated 11.02.2021 passed by this Bench. Stay on proceeding not provided - HELD THAT:- Since the proceeding was not stayed by the Hon'ble NCLAT, therefore, the prayer of the applicant to exclude the period commencing from 27.07.2020 to 04.09.2020(39 days) on the ground that Hon'ble NCLAT has stayed the proceeding is not liable to be accepted. Accordingly, this prayer of the applicant/Resolution Professional is hereby rejected. Exclusion of Covid-19 period exclusion for the period beyond 17.07.2020 to 27.07.2020 for the situs of office of RP (as registered with Insolvency and Bankruptcy of India) being in Containment Zone - HELD THAT:- Mere plain reading of the Rule 15 and 153 shows that the time appointed or fixed by or under these rules can be extended but herein the case in hand, the time for completion of the CIRP is not fixed under the NCLT rules rather it is fixed under the IBC, 2016. Section 12 of IBC, 2016 makes a provision for completion of CIRP and in view of second proviso of Section 12 Sub Section 3 of the IBC, 2016, the Insolvency Resolution Process shall mandatorily be completed within the period of 330 days from the insolvency commencement date - this Adjudicating Authority is not empowered to extend or exclude the period under Rule 15 and 153 of the NCLT Rules, 2016 - The period of 11 days commencing from 17.07.2020 to 27.07.2020 is excluded on the ground that the Registered office of The Resolution Professional was situated within the Containment Zone at Vaishali Sector-1, Ghaziabad. Seeking further exclusion of 60 days period for lockdown and Covid-19 Pandemic in view of infection in employees intermittent during the period of lockdown - HELD THAT:- The applicant has failed to produce any document to show that two employees whose Covid-19 reports have been enclosed by the applicant were the employees of the applicant and they played a vital role in completing the CIRP period and in their absence, it could not be possible to proceed further in the CIRP. Therefore, on the ground of infection to the employees during the period of lockdown, the prayer of the applicant to exclude the period of 60 days is not liable to be accepted. Application disposed off. Issues:1. Exclusion of time periods in Corporate Insolvency Resolution Process (CIRP) under IBC, 2016.2. Application for extension of CIRP timeline due to various reasons including Covid-19 pandemic and containment zone restrictions.Issue 1: Exclusion of Time Periods in CIRP:The application filed under Section 60(5) of the IBC, 2016 sought various reliefs, including excluding specific periods from the time limit of 270 days prescribed under the Code to continue the CIRP. The applicant requested exclusions for periods related to the stay of the Corporate Insolvency Resolution Process by the Adjudicating Authority and the Hon'ble NCLAT, as well as the impact of Covid-19 and lockdown periods on the CIRP timeline. The applicant relied on relevant legal provisions and judgments to support the exclusion of these periods.The Tribunal considered each prayer for exclusion of time periods meticulously. The exclusion of 154 days due to the stay of the CoC was already allowed in a previous order, rendering the current prayer infructuous. However, the Tribunal rejected the prayer to exclude the period from 27.07.2020 to 04.09.2020 as the CIRP was not stayed by the Hon'ble NCLAT during that time. The Tribunal also analyzed the impact of Covid-19 and containment zone restrictions on the CIRP timeline, allowing the exclusion of 11 days when the RP's office was in a containment zone but rejecting the exclusion of 60 days due to employee infections during the lockdown period.The Tribunal emphasized that the CIRP timeline is fixed under the IBC, 2016, mandating completion within 330 days from the insolvency commencement date. While considering the applicant's contentions and legal references, the Tribunal carefully assessed each prayer for exclusion, allowing some and rejecting others based on the specific circumstances and legal provisions applicable.Issue 2: Application for Extension of CIRP Timeline:The application also sought an extension of the CIRP timeline due to various reasons, including the impact of Covid-19, containment zone restrictions, and employee infections. The applicant presented arguments supported by legal provisions and notifications to justify the requested extensions. The Tribunal examined the Rules 15 and 153 of the NCLT Rules, 2016, to determine the authority to extend or exclude time periods in the CIRP.The Tribunal rejected the prayer to exclude 60 days for the lockdown period due to insufficient evidence showing the critical role of the infected employees in the CIRP process. While allowing the exclusion of 11 days when the RP's office was in a containment zone, the Tribunal emphasized the specific grounds required to justify exclusions in the CIRP timeline. By carefully analyzing the applicant's submissions and legal framework, the Tribunal made a balanced decision on each prayer for extension or exclusion of time periods in the CIRP.In conclusion, the Tribunal's detailed analysis and decision-making process regarding the exclusion and extension of time periods in the CIRP under the IBC, 2016 demonstrate a thorough consideration of the legal provisions, factual circumstances, and justifications presented in the application. The judgment provides clarity on the criteria for granting such reliefs and highlights the importance of substantiating claims with relevant evidence and legal references in insolvency proceedings.