COVID-19 lockdown periods may be excluded from the insolvency resolution timeline, but internal administration delays cannot

Pandemic-related lockdown and restriction periods affecting insolvency proceedings may be excluded from the corporate insolvency resolution process period where the request is bona fide and supported by relevant government restrictions and higher-court limitation orders. Time spent on confirmation and replacement of the resolution professional, and the period sought for extension of Form G, remains part of the corporate insolvency resolution process period and is not excluded on that basis. The application was therefore allowed only to the extent of excluding the COVID-19 restriction periods, with the remaining exclusion claims rejected.

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Issues: (i) Whether the period during which restrictions and lockdowns were imposed on account of the COVID-19 pandemic could be excluded from the corporate insolvency resolution process period. (ii) Whether the time taken for confirmation and replacement of the resolution professional, and the extension sought for Form G, could be excluded from the corporate insolvency resolution process period.

Issue (i): Whether the period during which restrictions and lockdowns were imposed on account of the COVID-19 pandemic could be excluded from the corporate insolvency resolution process period.

Analysis: The exclusion claimed was based on restrictions imposed by the Noida Police, the Government of Uttar Pradesh and the Government of Delhi during the relevant period. The request was supported by the Supreme Court orders extending limitation during the pandemic and by the appellate tribunal's order excluding lockdown periods for the purpose of counting the resolution process period. The Tribunal accepted that the exclusion sought on account of pandemic-related restrictions was bona fide.

Conclusion: The exclusion of the specified COVID-19 restriction and lockdown periods from the corporate insolvency resolution process period was allowed.

Issue (ii): Whether the time taken for confirmation and replacement of the resolution professional, and the extension sought for Form G, could be excluded from the corporate insolvency resolution process period.

Analysis: The Tribunal held that the intervening period relating to confirmation and replacement of the resolution professional, as well as the time sought for extension of Form G, formed part of the corporate insolvency resolution process period and could not be carved out by way of exclusion.

Conclusion: The exclusion sought for the period relating to confirmation and replacement of the resolution professional and for extension of Form G was rejected.

Final Conclusion: The application was allowed only to the extent of excluding the pandemic-related restriction periods, while the remaining exclusion claims were declined.

Ratio Decidendi: Time periods lost due to bona fide COVID-19 lockdown and restriction measures affecting the conduct of insolvency proceedings may be excluded from the corporate insolvency resolution process period, but periods inherently attributable to internal insolvency administration, such as replacement of the resolution professional, are not excludable on that ground.

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