TaxTMI 
TaxTMI 
2022 (1) TMI 398
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....ational Company Law Tribunal, Division Bench-1, Chennai) contending that the "Adjudicating Authority" did not consider the reliefs sought in I. A. No. 510 of 2021 in C. A. No. 1 of 2021 filed by the appellant herein. Aggrieved by the same, the present appeal is filed praying this Bench to set aside the above impugned order and allow the reliefs as prayed for. 2. Learned senior counsel for the appellant submitted that the appellant is the resolution professional of the corporate debtor, namely, Vasan Health Care P. Ltd., preferred the instant appeal and contended that the appellant filed an application under sections 12 and 60(5) of the Code read with regulations 40A and 40C of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, seeking exclusion of 165 days and for extension of CIRP period by another 15 days constituting a total of 180 days. 3. Learned senior counsel for the appellant submitted that the hon'ble Adjudicating Authority failed to appreciate the exceptional circumstances under which the entire CIR process of the corporate debtor has taken place. The process has not been a continuous one right from ....
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....tted that the learned Adjudicating Authority failed to observe the timelines prescribed under section 12 of the Insolvency and Bankruptcy Code, 2016 was held to be directory and not mandatory in nature where the hon'ble Supreme Court in the above decision struck down the word "mandatorily" from the proviso as the word "mandatorily" is manifestly arbitrary as per article 14 of the Constitution of India and an unreasonable restrictions on the rights of the litigants to carry on business under article 19(1)(g) of the Constitution of India. 8. Learned senior counsel also relied upon the judgment of this Tribunal in Vivek Raheja, Resolution Professional, In re in Company Appeal (AT) (Insolvency) No. 331 of 2021, National Company Law Appellate Tribunal, New Delhi. This Tribunal observed thus "the Adjudicating Authority ought to have considered the situation as exceptional circumstances for the reason of prevailing pandemic in the country and the CIR process was still at nascent stage" and noted that the CIR process can be extended beyond a period of 330 days. This hon'ble Tribunal had further observed that "the hon'ble Supreme Court in a number of cases clearly held that the....
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....d 224 of 2021 filed by the committee of creditors and resolution professional involve similar pleadings/grounds and sought similar relief. Further, in both the appeals the appellants have challenged to the order passed by the Adjudicating Authority (National Company Law Tribunal, Chennai) dated August 3, 2021 which is impugned in both the appeals. 16. Further, the applications filed by Max Vision Eye Hospitals P. Ltd., ASG Hospitals P. Ltd., are with regard to consider their resolution plans submitted by them contending that their plans have been submitted in accordance with the timelines of CIRP/RFRP. 17. Though the applications are different, the bone of contention in all those applications are similar. Taking into consideration all the pleadings in the appeals/applications and to avoid multiplicity of pleadings, and to decide the common issue involved in the appeals and applications, this Tribunal passing the following : Judgment/order Analysis/appraisal (1) In the impugned order the learned Adjudicating Authority observed at paragraph 19 as under (page . . .) : "As to the facts of the present case, already two time exclusion has been sought and given for to the applic....
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..... Upon an application being I. A. No. 515 of 2020 seeking exclusion of a period of 150 days, the Adjudicating Authority vide its order dated August 6, 2020 excluded period of 150 days in view of nationwide lockdown announced by Central Government. (iv) It is also seen that some other developments have taken place with respect to the corporate debtor, i. e., change of resolution professional and the new resolution professional took charge with effect from April 23, 2021 pursuant to a 11th CoC held on March 12, 2021. (v) The committee of creditors discussed in its 12th CoC dated May 21, 2021 with regard to several issues and asked the resolution professional to take necessary steps for further exclusion/extension of CIR period by another 6 months with effect from June 1, 2021. The reasons for seeking extension/exclusion are that improvement in operations and revenue collections of the corporate debtor, strong interest shown by prospective resolution applicants in the same line of business to submit fresh competitive bids, livelihood of about 2,000 direct employees and their families spread over about 100 centers located in five states and Union Territories, continuation of more t....
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....low the same in true spirit in achieving its object. In the preamble of the code the statement of objects and reasons, namely : "2. The objective of the Insolvency and Bankruptcy Code, 2016 is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons to promise entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the priority of payment of Government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected therewith or incidental thereto. An effective legal framework for timely resolution of insolvency and bankruptcy would support development of credit markets and encourage entrepreneurship. It would also improve ease of doing business, and facilitate more investments leading to higher economic growth and development." (7) The hon'ble Supreme Court in the case of Swiss Ribbons P. Ltd. v. Union of India reported in [2019] 213 Comp Cas 198 (SC) ; [2019] 4 SCC 17. While deciding the constitutional validity of various provisions of the Ins....
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....a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters/ those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor's assets from further dilution and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can through its entre preneurial skills, resuscitate the corporate debtor to achieve all these ends." (8) The hon'ble Supreme Court while upholding the provisions of the I and B Code, 2016 held supra that one of the objects of the Code is for maximization of value of the assets of the corporate debtor. Further, the hon'ble Supreme Court also held....
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....g 90 days. However, a proviso was inserted by Act 26 of 2019 to sub-section (3) of section 12 with effect from August 16, 2019 whereby the proviso reads as under : "Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of 330 days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor." (12) From the above proviso of sub-section (3) of section 12 the total period prescribed, i. e., 330 days and the said proviso made it as "mandatory" to complete the CIR process. (13) However, the hon'ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta reported in [2020] 219 Comp Cas 97 (SC) ; [2020] 8 SCC 531, the hon'ble Supreme Court struck down the word mandatorily from the proviso to sub-section (3) of section 12 in paragraph 127 and held as under : "Both these judgments in Atma Ram Mittal v. Ishwar Singh Punia [1988] 4 SCC 284 and Sarah Mathew v. Institute of Cardio Vascular ....
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....thority and/or Appellate Tribunal the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appel late Tribunal itself, it may be open in such cases for the Adjudicating Authority and//or Appellate Tribunal to extend time beyond 330 days. Likewise, even under the newly added proviso to section 12, if by rea son of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded there again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to further extend time keeping the aforesaid parameters in mind. It is only in such exceptional cases that time can be extended, the general rule being that 330 days is the outer limit within which resolution of the stressed assets of the corporate debtor must take place beyond which the corporate debtor is to be driven into liquidation." (14) The hon'ble Supreme Court while striking down the word "mandatorily" held further that the Tribunal (Adjudicating Authority) or the Appellate Tribunal may extend time beyond 330 days. However, the hon'ble Supreme Court held that it is only in such e....
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.... implications imperiling the legitimate interest of all stake holders and inevitable conclusion would be to push the 'corporate debtor' into liquidation which has to be avoided at all costs". (17) Further, this Tribunal (National Company Law Appellate Tribunal) in the matter of Vivek Raheja, Resolution Professional, In re in Company Appeal (AT) (Insolvency) No. 331 of 2021, dated May 4, 2021 held at paragraph 11 : "From the judgment of the hon'ble Supreme Court that the Adjudicating Authority and/or this Tribunal may extend time beyond 330 days in exceptional cases. The appellant had shown the exceptional circumstances one is the imposition of lockdown and pendency of the judicial proceedings before the Adjudicating Authority. Apart from the above, the hon'ble Supreme Court in a number of cases, clearly held that the liquidation is the last resort". (18) Further this Tribunal (National Company Law Appellate Tribunal) in the matter of Ravi Sankar Devarakonda v. Committee of Creditors of Meenakshi Energy Ltd. [2021] 226 Comp Cas 408 (NCLAT) in Company Appeal (AT) (CH) (Insolvency) No. 15 of 2021 held at paragraph 15 (page 413) : "Bearing in mind the word 'ma....
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....the issue which is not before this Tribunal. (20) From the above analysis, it is unequivocal that the appellants have shown exceptional circumstances, i. e., pendency of judicial proceedings before the hon'ble courts, imposition of nationwide lockdown, change of RP, calling fresh expression of interest and the nature of business of the corporate debtor which admittedly spread over to many parts of the country. It is also an admitted fact that many interested prospective resolution applicants have submitted their plans evincing their interest in the bid process of the corporate debtor. This Tribunal is of the view that the corporate debtor cannot be pushed into liquidation. Further, the hon'ble Supreme Court held that the liquidation is the last resort. (21) In view of the aforesaid reasons, the appellants have made out a prima facie case praying this Bench to extend the time for completing the CIR process till November 30, 2021 as prayed in I. A. No. 510/CHE/2021 in C. A. No. 1 of 2017 filed by the resolution professional before the Adjudicating Authority. However, the Adjudicating Authority by the impugned order dated August 3, 2021 extended the time only up to August ....