2021 (9) TMI 1206 - AT - Insolvency and Bankruptcy

Tribunal Upholds Exclusion of 146-Day Period in CIRP Stay Ruling

The Tribunal upheld the Adjudicating Authority's decision to exclude a 146-day period in the Corporate Insolvency Resolution Process (CIRP), finding it ... Permission for exclusion of a period of 146 days pursuant to the stay granted by the Hon’ble NCLAT - stay was granted on the constitution of CoC so that it could finalise the settlement - HELD THAT:- There aredirections for keeping the Corporate Debtor as a ‘going concern’. Therefore, there are no strength in the argument of the Ld. Counsel of Appellant that the orders/directors are only contained in this paragraph which is reproduced above and it does not contain reference to stay for constitution of CoC. Respondent No. 1 (Resolution Professional) has submitted that the IRP received the order dated 23.7.2020 of Hon’ble NCLAT on 27.7.2020 from ICICI Bank, which is member of the CoC. Thereafter, as per directions contained in this order, the IRP constituted the CoC on 29.7.2020 - the order passed by the Adjudicating Authority regarding exclusion of period from 4.3.2020 till 27.7.2020 (146 days) pursuant to the stay imposed by Hon’ble NCLAT is in accordance with law and requires no intervention. Appeal dismissed. Issues:1. Interpretation of the order of the Hon'ble NCLAT regarding exclusion of a period in the Corporate Insolvency Resolution Process (CIRP).2. Dispute over the stay granted by the Hon'ble NCLAT on the constitution of the Committee of Creditors (CoC).3. Validity of the exclusion of the time period by the Adjudicating Authority in the CIRP.Analysis:1. The appeal was filed against the Adjudicating Authority's order permitting the exclusion of a 146-day period in the CIRP based on a stay granted by the Hon'ble NCLAT. The Appellant argued that the order was misinterpreted as a stay on the constitution of CoC, emphasizing that it was merely a statement made by the Appellant and not a direction by the NCLAT.2. The Respondents contended that the orders of the Hon'ble NCLAT clearly indicated a stay on constituting the CoC to allow for settlement discussions. They highlighted subsequent directions that permitted the Resolution Professional to proceed with constituting the CoC, implying that the initial stay was lifted. The Respondents argued that the exclusion of the time period was justified based on these orders.3. The Tribunal examined the orders of the Hon'ble NCLAT and found that the stay on constituting the CoC was temporary to facilitate settlement discussions. Subsequent directions allowed for the CoC's constitution, indicating the end of the stay period. The Tribunal concluded that the exclusion of the 146-day period by the Adjudicating Authority was lawful and aligned with the NCLAT's orders, dismissing the appeal and upholding the exclusion decision without any costs imposed.This detailed analysis of the judgment highlights the key issues of interpretation, stay on CoC constitution, and the validity of the exclusion decision, providing a comprehensive overview of the legal arguments and conclusions reached by the Tribunal.