2021 (6) TMI 902 - AT - Insolvency and Bankruptcy

Appellate Tribunal sets aside Paragraphs 24 & 25 in appeal ruling on Covid-19 exclusion

Kumud Shekhar, Resolution Professional Versus Mr. Akshay Kumar Soni

The Appellate Tribunal allowed the appeal filed by the Resolution Professional against the Impugned Order, setting aside Paragraphs 24 and 25. The ... Validity of order of Adjudicating authority (NCLT) observations against the IRP to refer the matter to IBBI. - HELD THAT:- Adjudicating Authority proceeded on the basis that if the Admission Order has been put on the website, it was responsibility of the parties. Learned Counsel submits that even if it is said to be responsibility of the parties, and their Counsel, the IRP had no reason to check the website of the Adjudicating Authority if any such Application is filed or admitted. The parties to the Application were the Financial Creditor and the Corporate Debtor and the Admission Order had appointed the IRP. Unless the Order was communicated, he would not know. Section 7 (7) of IBC required the Adjudicating Authority to communicate Order of Admission to Financial Creditor & Corporate Debtor within 7 days. The Adjudicating Authority has not observed that the Registry had conveyed the Admission Order to the IRP. When this is so, it would not be appropriate to make IRP face reference as has been ordered. It appears to us that the observations and reference were uncalled for. Going through the Impugned Order, it relies more on uploading of the Order on website, rather than finding if or not the Order was actually communicated to parties and IRP. Admission Order para 11 even mentioned e-mail address of IRP. Communication could have been sent even on e-mail. For such reasons mentioned above, we set aside Paragraphs 24 and 25 of the Impugned Order. Appeal allowed. Issues:Appeal against Impugned Order dated 1st February, 2021 in I.A.-5641/ND/2020 in CP (IB)-1491(ND)/2019; Exclusion of days due to Covid-19 pandemic; Observations against the Insolvency Resolution Professional (IRP) to refer the matter to Insolvency and Bankruptcy Board of India (IBBI).Analysis:The appeal was filed by the Resolution Professional against the Impugned Order, claiming that the Adjudicating Authority did not allow the exclusion of 322 days as requested due to the Covid-19 pandemic. The Appellant also objected to the observations made against the IRP to refer the matter to IBBI. The Adjudicating Authority had initially directed the Admission order to be communicated to the parties involved, including the IRP. The IRP claimed lack of information regarding the Admission of Corporate Insolvency Resolution Process (CIRP) until a later date.The Adjudicating Authority's Impugned Order highlighted the responsibility of parties to keep track of orders pronounced in their cases. The Order emphasized that once uploaded on the website, the order is deemed to have been communicated to all parties. The IRP's conduct was questioned for not initiating the CIR Process until a specific date, leading to a reference to IBBI for necessary action. However, the Adjudicating Authority failed to confirm if the order was actually communicated to the IRP or the Financial Creditor.The Appellant argued that the Adjudicating Authority solely relied on the order's website upload without ensuring actual communication to the parties. The Financial Creditor did not appear to have followed up on the Application, as evidenced by the lack of representation by the Corporate Debtor in the ex-parte order. The Appellant further highlighted the subsequent selection of a new Resolution Professional by the Committee of Creditors (CoC) and pending orders for the replacement.Ultimately, the Appellate Tribunal set aside Paragraphs 24 and 25 of the Impugned Order, ruling in favor of the Appellant. The Appeal was allowed, and the mentioned paragraphs were disposed of accordingly. The decision focused on the lack of proper communication and the unfair expectations placed on the IRP in the given circumstances.