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NCLAT case:

Quantum Limited

(Corporate Debtor) .......... Appellant
Indus Finance Corporation Limited ............ Respondent

Facts:

This appeal was preferred by the Corporate Debtor through Resolution Professional against order dated 18th December 2017 passed by AA, Mumbai Bench. By impugned order the AA has rejected the application for extension of time on the ground that there is no provision to file such application after expiry of 180 days of the CIRP  

On the application moved by the Resolution Professional seeking extension of CIRP period for another 90 days under section 12(2) of the IBC 2016.

It has been notice by Bench that this application has been filed on 30th Nov 2017 on a resolution dated 24th Nov 2017 passed by CoC seeking extension of time. By the time this application was moved by the Resolution Professional 180 days of CIRP was complete by 25th Nov 2017.

NCLT Observations:

On visiting the provision of law, Members have noticed that this application shall be filed by the Resolution Professional for extension of CIRP period before Completion of CIRP period but this application has been filed after expiry of the original period of 180 days of CIRP.

If at all this application is allowed it will be nothing but revival of CIRP period which was completed on 25th Nov 2017.

Since there is no provision for revival of CIRP period to provide another 90 days' extension as mentioned under Section 12(2) of the IBC especially when earlier 180 days period is complete, by the time application has been filed before Adjudicating Authority, The members strongly believe that it will become nothing but exercise of jurisdiction beyond the powers conferred upon this Bench under Section 12 of the Code.

Since it is a Tribunal created by this Code itself, this Adjudicating Authority has to be governed by the provisions of this Code. There can't be any doubt to say that extension can't be construed as revival, revival can be after expiry of period, whereas extension has to be given before expiry of original period.

'Since speed and time lines are hallmark of this Code and there being no provision either for condonation or revival under any of the Provisions of this Code, we are of the view that this Adjudicating Authority is devoid of jurisdiction to revive the CIRP period already completed by 25.11.2017, i.e. by the time this application has come before this Bench, therefore, we don't find any merit in this application, whereby this application is hereby dismissed.'

Arguments presented by Learned counsel appeared on behalf of the Resolution Professional:

Learned counsel for the Resolution Professional submits that sub-section (2) of Section 12 do not mandate that the application for extension of the time should be filed before completion of 180 days.

It can be filed, if instructed to do so by a resolution passed in a meeting of the committee of creditors by a vote of seventy-five per cent of the voting share, within 180 days. (In present case the Resolution Professional passed a resolution for extension of the CIRP within 180 days)

Section 12 prescribes the ‘time limit for completion of insolvency resolution process', which reads as follows:

12. Time-limit for completion of insolvency resolution  process -

(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.

(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of seventy-five per cent of the voting shares.

(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that 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 exceeding ninety days:

Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once.'

4. From sub-section (2) of Section 12, it is clear that resolution professional can file an application to the Adjudicating Authority for extension of the period of the corporate insolvency resolution process, only if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of 75% of the voting shares.

Learned council appeared on behalf of the Resolution Professional Observation:

The provision does not stipulate that such application is to be filed before the Adjudicating Authority within 180 days. If within 180 days including the last day i.e. 180th day, a resolution is passed by the committee of creditors by a majority vote of 75% of the voting shares, instructing the resolution professional to file an application for extension of period in such case, in the interest of justice and to ensure that the resolution process is completed following all the procedures time should be allowed by the Adjudicating Authority who is empowered to extend such period up to 90 days beyond 180th day.

In the present case, the Adjudicating Authority has not hold that the subject matter of the case do not justify to extend the period. It has not been rejected on the ground that the committee of creditors or resolution professional has not justified their performance during the 180 days.

In such circumstances, it was duty on the part of the Adjudicating Authority to extend the period to find out whether a suitable resolution plan is to be approved instead of going for liquidation, which is the last recourse on failure of resolution process.

NCLAT conclusion:

For the aforesaid reasons, we set aside the impugned order and extend the period of resolution process for another 90 days to be counted from today. The period between 181st day and passing of this order shall not be counted for any purpose and is to be excluded for all purpose.

Key Observation:

Section 60(6)- In case of Essar Steel India Limited NCLT relied on aforesaid section wherein the NCLT Ahmedabad Bench mentioned that irrespective of the provision of the Limitation Act the time prescribed for filing legal proceeding by or against Corporate Debtor is to be excluded for which an order of moratorium has been made.

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