TaxTMI 
TaxTMI 
2022 (12) TMI 1061
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....te Limited is a private limited company having its registered office at 10th Mile at Mawsmai Village in the Ribhoi district of Meghalaya and is represented by its Director Saurabh Agarwal, whereas the petitioner no. 2 Rohin Kumar Hansaria is the proprietor of a firm namely Steel Sales Corporation having its office at S J Road at Athgaon in Guwahati. Both the petitioners are unsecured financial creditors of the Corporate Debtor RSH Agro Products Limited. 3. At the instance of the Corporate Debtor RSH Agro Products Limited, an insolvency proceeding was initiated under Section 10 of the Insolvency and Bankruptcy Code, 2016 (in short IBC of 2016) before the National Company Law Tribunal (in short NCLT) at Guwahati, resulting in the registration C.P.(IB) No. 18/GB/2021, on the following grounds, as indicated in paragraph 5 of the writ petition : • Non-disbursement of sanctioned limits for the refinery project. • Interest Loss. • Fixed expenditure in Unit-II. • Large quantity of raw materials purchased in anticipation of refinery completion. • Constraint on Profitability faced due to lack of adequate need based Working C....
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....refore, the subsequent extension by the impugned order dated 25.08.2022 would be impermissible in law and would also be beyond the jurisdiction of the NCLT Guwahati Bench. 8. A further contention is raised that as the subsequent extension granted by the impugned order is on an application made under Section 60(5) of the IBC of 2016, it would be impermissible to do so under the law inasmuch as although Section 60(5) of the IBC of 2016 can be invoked notwithstanding the provisions in any other law, but Section 60 (5) of the IBC of 2016 cannot be invoked against the provisions of any of the provisions of IBC of 2016 itself. 9. A contention is also raised that the reasons for granting the subsequent extension as provided in the impugned order dated 25.08.2022, that it was based on a resolution approved by 87.26% of the members of the COC for extension of the CIRP, would also be untenable under the law. 10. Mr. S. Chamaria, learned counsel for the R1-RP by referring to the provisions of the second proviso to Section 12 of the IBC of 2016 submits that the law allows a period of 330 days to the RP, from the date of commencement of the CIRP, to complete the insolvency proceeding. ....
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....o extent time beyond 330 days. Mr. K.N. Choudhury, learned senior counsel by referring to the said proposition submitted that even a subsequent extension beyond the first extension would also be permissible under the law. 13. Heard the learned counsel for the parties. 14. In the conspectus of the facts involved in this matter as narrated above and also considering the rival submissions made, a question for determination would be whether upon an insolvency resolution proceeding being not completed within the period granted which also includes an extension, whether a subsequent extension would be permissible under the law. Further questions for determination would be whether the non-obstante provision in Section 60 (5) also includes the other provisions of the IBC of 2016 and whether irrespective of the provisions of the IBC of 2016 a subsequent extension can be granted on a resolution of approval by a majority of the members of the COC. 15. The first proviso to Section 12 of the IBC of 2016 provides in clear and unambiguous terms that any extension of the period of CIRP shall not be granted more than once. The expression 'shall not be granted more than once' is structured i....
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....at the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not extending ninety days: Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once. [Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty 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: Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2....
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.... be maximum of 330 days including any such extension that may have been granted. 22. Having arrived at the aforesaid conclusion, a further consideration has to be made as to whether the second proviso in any manner has its effect on the first proviso which provides that no extension of the period of CIRP shall be granted more than once. 23. As already held the provision of the first proviso is explicit and unambiguous with the expression 'shall not be granted more than once' to mean that no extension beyond once would be permissible. The second proviso provides that the CIRP is to be completed mandatorily within a period of 330 days including any extension. A conjoint reading of the first proviso and the second proviso does not make it discernible or enables the Court to read between the lines that the provisions that the CIRP would mandatorily have to be completed within a maximum period of 330 days has diluted the provisions of the first proviso in any manner, which otherwise is explicit and unambiguous that no extension beyond once would be granted. The second proviso merely provides that whatever extension would be permissible under the law including the extended period s....
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....ication under Section 10 of the IBC of 2016 was made on 12.08.2021 and therefore, the present proceeding could not have been a proceeding which was pending as on 16.08.2019. 27. As the third proviso refers to a situation where the CIRP process was pending and could not be completed within the total period of 330 days at the time of commencement of the IBC (Amendment) Act, 2019, the said provision cannot be made applicable to a situation where the present proceeding have been initiated after the commencement of the IBC (Amendment) Act, 2019. The third proviso is not a proviso perennial in nature which would have its effect at all point of time beyond the date of the commencement of the IBC (Amendment) Act, 2019. Any interpretation to the contrary would again render the first proviso to be redundant and otiose, hence, would have been unacceptable in law. 28. Mr. KN Choudhury, learned senior counsel also appearing for the R1-RP refers to paragraph 127 of the judgment of the Supreme Court rendered in Essar Steel India Ltd (supra) , wherein it was provided that ordinarily the word 'mandatorily' appearing in the second proviso to Section 12 was held to be arbitrary under Article 14....
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.... the provision in its entirety. However, that would then throw the baby out with the bath water, inasmuch as the time taken in legal proceedings is certainly an important factor which causes delay, and which has made previous statutory experiments fail as we have seen from Madras Petrochem [Madras Petrochem Ltd. v. BIFR, (2016) 4 SCC 1 : (2016) 2 SCC (Civ) 478]. Thus, while leaving the provision otherwise intact, we strike down the word "mandatorily" as being manifestly arbitrary under Article 14 of the Constitution of India and as being an excessive and unreasonable restriction on the litigant's right to carry on business under Article 19(1) (g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days....
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....e from the records as to what resolution plan is in place which if implemented would lead to a situation where the R2 corporate debtor would be put back on its feet instead of being sent into liquidation. The minutes of the 14th meeting of the COC of R2 corporate debtor dated 12.08.2022 is produced before the Court, the relevant portion of which is extracted as below: The RP called that the revised resolution plans submitted by both the resolution applicants were circulated to all the participants of the meeting. The RP asked the CoC members if they want to have further discussion on the plan or if the discussions are concluded the plans can be put for voting by the CoC members. The representative of PNB stated that they need some more time for taking decisions on the resolution plans. As there are various issues related to the land of the CD, the issues are being considered and the bank is taking legal opinion on the matter. Moreover, the decision on the approval of the plan shall be taken by the head office through the concerned committee authorised for taking such decisions. The RP stated further time cannot be allowed as CIRP period will be over by 20....
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.....2021 between the CD and NK Agro & Food and NK Power & Infrastructure Pvt Ltd. c) Shall maintain the time schedule to implement the plan and to complete the project to make it economically viable and financially sound. 33. Another provision of the resolution plan at clause 12(D) under the heading control and supervision is extracted as below:- 12(D) Control & Supervision (i) The New Company Management shall define organisation structure, policies, procedures, records and methods of reporting that are necessary to collectively ensure that the financial and non-financial operations of the Corporate Debtor is conducted in an orderly and efficient manner to achieve the Corporate Debtor's objectives. (ii) Assessing and containing the risks faced by the Corporate Debtor to acceptable level. (iii) Preventing and correcting irregularities. (iv) Safeguarding assets against the loss/misuse. (v) Ensuring financial and other records are complete in all respects and accurately and reliably reflect the conduct of the Corporate Debtor. (vi) Preventing the misuse or appropriation of resources. (vii) Resources are a....
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....ts judgment in Essar Steel India Ltd Committee of creditors (supra) would be applicable in the facts and circumstance of the present case so as to arrive at a conclusion that an extension for the CIRP can be granted by referring to paragraph 127 of the judgment in Essar Steel India Ltd Committee of creditors (supra). 36. Further, the resolution plan also does not make it discernible that only a short period is left for completion of the CIRP process to bring the corporate debtor back to its feet. All that the resolution plan placed before the Court indicates is that it is an attempt by another entity to take over the corporate debtor in the form of a lease/rent without there being any indication that only a short period is left for completion of the CIRP process. 37. A further issue is raised is that the application made by the R1-RP before the NCLT was under section 60(5) of the IBC of 2016. Section 60(5) of the IBC of 2016 is extracted below:- "Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceedin....
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....J(1) would also include even the provisions of the Industrial Disputes Act itself. The Supreme Court expressed its view that it would be difficult to agree to such a proposition by further providing that the section nowhere provides that the provision of the Chapter concerned shall have effect notwithstanding anything inconsistent contained in any other chapter of the Industrial Disputes Act as well as any other law. The relevant provision of the judgment of the Supreme Court is extracted:- "The submission of learned counsel for the appellants in this connection was to the effect that 'any other law' as provided in Section 25-J(1) would include even the Industrial Disputes Act, specially the provisions contained that the provision of Chapter V-A shall have effect notwithstanding anything inconsistent contained in any other chapter of the Industrial Disputes Act as well as in any other law." 41. Accordingly, section 60(5) of the IBC of 2016 would now have to be understood that an application under section 60 (5) to be maintainable notwithstanding anything contained in any other law would not also mean notwithstanding anything contained in the other provisions of the IBC ....