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2022 (1) TMI 717
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....ary, Sr. Advocate along with Mr. Nikhil Kumar Verma, Mr. Mansumyer Singh and Mr. Rahul Sharma, Advocates. For the Respondent No. 2: Mr. Vijay Nair, Mr. Manoranjan Sharma, Ms. Sakshi Kapoor, Advocates. For IRP:Mr. Sandeep Chandna, Advocate. JUDGEMENT [ Per; Shreesha Merla, Member (T) ] 1. Challenge in this Company Appeal (AT) (Insolvency) No. 619 of 2021 is to the Impugned Order dated 03.08.2021 passed by the Learned Adjudicating Authority (National Company Law Tribunal, New Delhi, Court-III) in I.A. 3146/2021 U/s 11 in IB-1600/(ND)/2018, whereby and whereunder the Learned Adjudicating Authority has excluded 87 days from the calculation of 180 days exercising its powers under Rule 11 of the NCLT Rules, 2016, on an Application preferred by the IRP. By the Impugned Order, the Learned Adjudicating Authority has observed as follows: "This is an Application filed under Rule 11 of the NCLT Rules, 2016 read with Regulation 40 (c) of the IBBI (CIRP) Regulations, 2016 for seeking exclusion of 87 days from the calculation of 180 days as provided by Section 12 of Insolvency & Bankruptcy Code, 2016. The Counsel for the Insolvency Resolution Professional, in the ....
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....f Settlement was arrived at on 14 January 2021 between the first respondent and second respondent; and (v) The agenda to the notice (page 62 of the paper book) would indicate that the claim of the appellant to the extent as acknowledged has been quantified at Rs. 840 crores (representing 44% of the dues), while the claim which is due to the second respondent is quantified at Rs. 297 crores (representing 15.4% of the dues). 2. Mr Shyam Divan has submitted that having due regard to the provisions of Section 12A of the Insolvency and Bankruptcy Code 2016, once the application has been admitted under Sections 7, 9 or 10, as the case may be, withdrawal of the application can be made by the applicant with the approval of a 90% voting share of the Committee of Creditors, in such manner as may be prescribed. Regulation 30A provides for the manner in which the withdrawal can take place. Section 12A was enforced with effect from 6 June 2018. Regulation 30A has been enforced with effect from 25 July 2019. 3. Apart from the above provisions, reliance has also been placed on Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, un....
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.... Ors.' (2019) 2 SCC 1 para 73 to 75 in support of his case. It is clear from Regulation 340 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, (hereinafter referred to as the 'Regulations') that it is the CoC which has to instruct the IRP to file an Application for extension of time period for the CIRP and the IRP shall do so upon receiving the CoC's instructions. The commercial wisdom of the CoC is non-justiciable and judicial intervention is not permitted as per the ratio laid down by the Hon'ble Supreme Court in 'K Sashidhar' Vs. 'Indian Overseas Bank' (2019) 12 SCC 150. The IRP is the facilitator of the CIRP and cannot go against the instructions of the CoC as observed by the Hon'ble Supreme Court in 'Swiss Ribbons (P) Ltd.' Vs. 'Union of India' (2019) 4 SCC 17, para 91. The definition sought to be drawn by the IRP between 'extension' and 'exclusion' is without any basis. In both the cases, the time period for the IRP increases and therefore the CoC's approval is required. The contention of the IRP that the CoC's approval is not required for seeking exclusion of time is onl....
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....the Application for exclusion of the time period of CIRP and does not take away the right of the IRP/RP for filing an Application before the Adjudicating Authority to meet the ends of justice and keep the 'Corporate Debtor' alive and as a 'going concern'. In support of his contention, reliance is placed on decision of this Tribunal in 'Sudip Bhattacharya, Resolution Professional of Reliance Naval and Engineering Ltd.', Company Appeal (AT) (Insolvency) No. 858 of 2020, in which this Tribunal has excluded the period of lockdown with effect from 25th March 2020 till 31st August 2020 while computing the period of CIRP. The IRP could not work properly due to the lockdown imposed by the Govt. of Delhi and Govt. of Haryana from 19.04.20201 to 07.06.2021 and the IRP herein and his whole family tested positive and recovered only in end of May, 2021. Though the Appellant Counsel raised an objection during the hearing, the Adjudicating Authority took a view on the basis of the grounds mentioned, seeking exclusion and decided to allow the Application to keep the 'Corporate Debtor' as the 'going concern'. Regulation 40C of the CIRP Regulations in spirit also applies to the per....
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.... (No. of Voters - 04) 14.648 (No. of Voters - 05) Not approved Assessment: 5. The brief point which falls for consideration in this Appeal is whether the approval of the CoC under Section 12(2) of the Code is mandatory for seeking 'exclusion of time" even if it is sought on grounds of lockdown/time lost during the period of any 'Stay'/Status Quo /or for any other reason. It is the case of the Appellant that be it exclusion or extension, Section 12(2) i.e., approval of 66% of Voting Shares of the Members of the CoC is mandatory and that the act of the IRP in going ahead with the filing of the Application before the Adjudicating Authority seeking exclusion of the period of 87 days, even if it is on the ground of lockdown, is against the provisions of the Code. 6. In the Minutes of the 3rd CoC Meeting held on 07.07.2021 one of the matters to be discussed and listed in the Agenda was "filing of Application/s before the NCLT for exclusion/extension of timelines". The relevant Agenda item is reproduced as here under: "1. Filing of application/s before the Hon'ble NCLT for exclusion/extension of timelines. The IRP informed the CoC that the extra-ordina....
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....stay' granted. Regulation 40C of Regulations is detailed as hereunder: "40C. Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process" 9. It is seen from the aforesaid Regulation that subject to the provisions of the Code, for the period of lockdown (imposed by the Central Government in the wake of COVID-19 outbreak), can be excluded for the purpose of timeline for any activity that could not be completed during such lockdown. 10. The period of 180 days of the 'Corporate Debtor'/R-3 expired on 09.06.2021. For better understanding of the case, the calculation of 87 days is detailed as hereunder: S. No. Date Event Period 1. 21.12.2020 CIRP commenced - 2. 18.01.2021 Interim stay of this Tribunal in an Appeal filed by Mr. Raj Singh Gehlot. - 3. 23.02.2021 The Hon"ble Apex Court vacated the stay filed by the Appella....
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.... days had already been excluded from the CIRP period of 180 days by the Adjudicating Authority vide Impugned Order. This Tribunal in 'Bhim Sain Goyal' Vs. 'The American Swan Lifestyle Co. Pvt. Ltd (Under CIRP)' Company Appeal (AT) (Insolvency) No. 1067 of 2020, held as follows: "We set aside the impugned order and while allowing the prayer direct exclusion of time w.e.f 20th March, 2020 to 2nd September, 2020 in reckoning of the ordinary Corporate Insolvency Resolution Process period viz. 180 days. Beyond that, if an occasion arises for seeking extension of time based on cogent reasons, the Resolution Professional shall be at liberty to seek the same from the Adjudicating Authority. The appeal is accordingly allowed with direction to the Appellant - Interim Resolution Professional to carry forward the Corporate Insolvency Resolution Process with expedition." 13. Paragraph 73 and 75 of 'Arcelormittal India Private Limited' (Supra) relied upon by the Appellant is detailed as hereunder: "73. The time-limit for completion of the insolvency resolution process is laid down in Section 12. A period of 180 days from the date of admission of the application is given by S....
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....itional' period of time given to one to meet one end; and dictionary meaning of 'exclusion' is an instance of leaving something or someone out, barring, keeping out, eliminate, rule out, facing out etc. The 'extension of 87 days' would necessarily mean 180+87 days and 'exclusion of 87 days' would essentially mean 180-87 days and therefore we are of the view that there is a clear distinction between the words 'extension' and 'exclusion' and the Adjudicating Authority has rightly relied on Regulation 40C of the Regulations to keep the Company a 'going concern'. We are also conscious of the fact that the Appellant itself constituted approximately 42% Voting Share and it was dissented by 42% of the CoC Members; that substantial period of 37 days was spent on account of the 'Status Quo'; that the Application is filed under Rule 11 of the NCLT Rules, 2016, whereunder the Adjudicating Authority used its discretionary powers. 16. The contention of the Learned Counsel for the Appellant that the IRP had concealed voting of the Members of the CoC before the Adjudicating Authority is untenable as the Adjudicating Authority has heard both the sides and there is no denial regarding the argume....
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.... that the present IRP/first Respondent continued to perform his functions under Section 16(5) of the Code. It is not in dispute that in the 1st CoC Meeting held on 18.03.2021, 6 out of the 9 Members of the CoC present at the Meeting voted in favour of the first Respondent to appoint him as RP of the 'Corporate Debtor'. In the 2nd CoC Meeting held on 07.04.2021, 7 out of the 9 Members of the CoC voted in favour of the first Respondent to appoint him as the Resolution Professional of the Corporate Debtor. But it is seen that the first Respondent was neither appointed as the RP nor was he replaced. Hence, he has been continuing as the RP as per the provisions of Section 16(5) of the Code. The resolution for appointment of the IRP as the RP was not approved and the other resolutions for the appointment of another Insolvency Professional, nominated by the Applicant, RP was also put to vote, but was not approved as it could not receive the requisite majority of 66%. Sections 22 and 27 of the Code lay down pre-requisites for replacing the IRP. We find it relevant to reproduce the said Sections: "22. Appointment of Resolution Professional- (1) The first meeting of the committee of....
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....ional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form.] (3) The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority. (4) The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a resolution professional shall be appointed in the same manner as laid down in section 16. (5) Where any disciplinary proceedings are pending against the proposed resolution professional under sub-section (3), the resolution professional appointed under section 22 shall continue till the appointment of another resolution professional under this section." 19. Keeping in view the facts and circumstances of the case and the provisions of the Code, we are of the considered view that appointment of an IRP is clearly provided under Section 22 and the replacement of IRP under Section 27 and therefore, we dispose of this Application with a direction to the CoC to proceed in accordance with law. We hold that there is no provision under t....