2021 (6) TMI 274 - Tri - Insolvency and Bankruptcy

Tribunal Denies Extension Beyond CIRP Limit; Emphasizes Exceptional Circumstances

R. Tarkeshwar Narayan Versus Horizon Buildcon Pvt. Ltd.

The Tribunal dismissed the application for extending the Corporate Insolvency Resolution Process (CIRP) period by another 60 days beyond the statutory ... Seeking extension for 40 days beyond the period of 330 days - Resolution Plan was pending for consideration before the CoC - section 60(5) and section 12 of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The CoC was directed to consider the Resolution Plan within the extended period of time but from the averments made in the application and the submissions made by the Ld. Counsel on behalf the Resolution Professional, it is seen that the Resolution Plan has not been considered by the CoC as yet and on the similar grounds, the extension of another 60 days beyond 370 days of CIRP period has been prayed by the Resolution Professional. That only after considering the submission of the Resolution Professional that a Resolution Plan was pending for consideration before the CoC, we had granted extension for 40 days beyond the period of 330 days. But on the basis of the averments made in the application and submissions made by the Ld. Counsel, it is seen that the Resolution Plan can only be placed before the CoC, once the application for claim of the Indian Overseas Bank is decided by this Adjudicating Authority. Since the applicant through the COC has failed to consider the Resolution Plan pending for consideration within the extended period of 40 days and also could not provide the cogent reasons for not complying with the direction, we are not inclined to extend the CIRP period by another 60 days beyond the period of 370 days. Application dismissed. Issues Involved:1. Extension of Corporate Insolvency Resolution Process (CIRP) period beyond the statutory limit.2. Exclusion of the period consumed in legal proceedings for CIRP calculation.3. Consideration and approval of the Resolution Plan by the Committee of Creditors (CoC).4. Pending adjudication of the claim of Indian Overseas Bank as secured or unsecured.Detailed Analysis:1. Extension of CIRP Period Beyond the Statutory Limit:The Resolution Professional (RP) of Horizon Buildcon Pvt. Ltd. filed an application under Section 60(5) and Section 12 of the Insolvency & Bankruptcy Code, 2016, seeking directions for extending the CIRP period. The application was similar to a previous one (IA No. 5173/2020) where the Adjudicating Authority had granted a 40-day extension beyond the 330-day period. The RP requested an additional 60 days beyond the 370 days to consider the pending Resolution Plan. The Tribunal noted that the RP had failed to explain why the CoC did not consider the Resolution Plan within the previously extended period. It was observed that the RP acted suo moto to delay the process, waiting for the adjudication of the Indian Overseas Bank's claim. The Tribunal emphasized that the general rule is to complete the CIRP within 330 days, including extensions and legal proceedings, and only in exceptional circumstances can this period be extended. Consequently, the Tribunal dismissed the application for further extension.2. Exclusion of the Period Consumed in Legal Proceedings for CIRP Calculation:The RP sought exclusion of the period from 21.10.2020 to 09.11.2020 and 12.01.2021 to 03.02.2021 from the CIRP calculation, arguing that these periods were spent in legal proceedings. The Adjudicating Authority initially rejected this request, stating that exclusion on the grounds of legal proceedings is not permissible under the second proviso of Section 12(3) of the IBC. However, upon appeal, the NCLAT allowed the exclusion of these periods, recognizing that the time taken in legal proceedings should not harm the litigant if the Tribunal itself cannot take up the case within the requisite period. This decision was based on the principle that the period of judicial intervention should be excluded to render the extension productive.3. Consideration and Approval of the Resolution Plan by the CoC:The RP apprised the CoC of discrepancies in the Resolution Plan received from the Prospective Resolution Applicant and requested modifications. Despite multiple meetings, the CoC could not finalize the plan due to pending objections and typographical errors. The RP highlighted that the claim of Indian Overseas Bank, treated as unsecured by the Resolution Applicant, made the plan non-compliant with Section 30(2) of the Code. The CoC instructed the RP to seek a further 60-day extension to resolve these issues. However, the Tribunal noted that the RP and CoC failed to consider the Resolution Plan within the extended period and did not provide cogent reasons for the delay. Therefore, the request for an additional extension was denied.4. Pending Adjudication of the Claim of Indian Overseas Bank as Secured or Unsecured:The claim of Indian Overseas Bank being secured or unsecured was pending adjudication before the Adjudicating Authority. This issue significantly impacted the feasibility, viability, and distribution under the Resolution Plan. The CoC argued that a conscious decision on the plan could only be made after resolving this claim. The Tribunal observed that the RP had delayed the process by waiting for this adjudication without any stay from the Authority. The Tribunal emphasized that in the absence of a stay, the process should proceed according to the law, and the RP's inaction was unjustified.Conclusion:The Tribunal dismissed the application for extending the CIRP period by another 60 days beyond 370 days, citing the failure of the RP and CoC to consider the Resolution Plan within the previously extended period and the lack of cogent reasons for the delay. The Tribunal reiterated that extensions beyond 330 days are only permissible in exceptional circumstances, which were not demonstrated in this case.