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Judgment
The appellant has filed this appeal against the order dated 17.3.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench Court III) in I.A. No. 410 of 2021 in CP(IB) No. 775(MB)/2019 assailing the permission granted by the Adjudicating Authority for exclusion of a period of 146 days pursuant to the stay granted by the Hon'ble NCLAT in Company Appeal (AT)(INS) 376/2020 from 04.03.2020 till 27.07.2020.
The parties were heard today. The Learned Counsel for Appellant has stated that the Adjudicating Authority has erred by wrongly interpreting the order of Hon'ble NCLAT given on 4.3.2020 in CA (AT)(INS) 376/2020 (pp 16-18, Appeal Paperbook), wherein it was held as follows:-
"As the Appellant states that he wants to settle with the Respondent No. 1, if the COC has yet not been constituted by IRP, COC may not be constituted till the next date."
He has argued that this order is not a direction by the Hon'ble NCLAT, but only a statement made by the Appellant before the Hon'ble NCLAT and hence it does not mean that a stay was granted in the constitution of CoC. To further buttress his contention, the Ld. Counsel of Appellant has brought to our attention the paragraph immediately following the aforesaid paragraph in the Order dated 4.3.2020, wherein the Hon'ble NCLAT has given directions for handing over the assets and records of the Corporate Debtor to Interim Resolution Professional and taking necessary actions for maintaining the Corporate Debtor as a 'going concern'. He has claimed that the directions of the NCLAT are only contained in this paragraph, and the paragraph immediately preceding this paragraph (which is reproduced above)just records the statement of the Appellant and does not contain any order concerning stay to constitution of CoC.
The Learned Counsel for Appellant has thus argued that the exclusion of time period from 4.3.2020 till 27.7.2020 in the CIRP period permitted by the Adjudicating Authority has been given erroneously which was not intended in the Order dated 4.3.2020 of Hon'ble NCLAT.
We have perused the replies submitted by the Respondent Nos. 1, 2 and 3 as well as written submissions of the parties.
Respondent Nos. 1 and 3 have submitted in their reply-affidavit that the order dated 4.3.2020 of Hon'ble NCLAT in CA (AT)(INS) 376/2020 are amply clear, wherein direction was given to the Resolution Professional to desist from constituting the COC (if not done so till then) so that the Appellant could give effect to the settlement proposal. He has added that the stay order would be clear if we peruse the order dated 23.7.2020 in CA (AT)(INS) No. 376/2020 (pp. 20-21 of Appeal Paperbook), which is as follows:-
"It is open to the Resolution Professional of 2nd Respondent to constitute the 'Committee of Creditors' and to proceed further in accordance with Law."
Respondents Nos. 1 and 3 have claimed that by careful reading of the orders given by Hon'ble NCLAT on 4.3.2020 and 23.7.2020, it is clear that the order dated 23.7.2020 permitted the Resolution Professional to go ahead and constitute the COC and proceed in the Corporate Insolvency Resolution Process (CIRP) in accordance with law as there was a stay granted earlier for constitution of CoC. Therefore, exclusion of the time period of 146 days as granted by the Adjudicating Authority vide order dated 17.3.2021 in IA No. 410 of 2021 is proper and legal.
A reading of the portion relating to stay in constitution of CoC in order dated 4.3.2020 (pg. 17, Appeal) makes it amply clear that the Appellant had stated that he is in the process of settling the matter with the Respondent ICICI Bank Ltd. and hence a stay was granted on the constitution of CoC so that it could finalise the settlement.
It is useful to also peruse the paragraph which relates to directions for maintaining corporate debtor as 'going concern', in the order dated 4.3.2020:-
"The Appellant/Promoters/Directors of the 'Corporate Debtor' are directed to handover the assets and records of the 'Corporate Debtor' to the 'Interim Resolution Professional' immediately (if not yet handed over). The 'Interim Resolution Professional'/RP will ensure that the Company remains a going concern and will take assistance of the (suspended0 Board of Directors and the officers/Director/employees. The persons who are working will perform their duties including the paid Directors. The person who is authorised to sign the bank cheques may sign cheques only after authorisation of the 'Interim Resolution Professional' with counter signature of the 'Interim Resolution Professional/RP at the back side of the cheques. Only in such case, the Bank shall release the payment. The 'Interim Resolution Professional' will place this order before the Banks, in which accounts of 'Corporate Debtor' are maintained. The Bank Account(s) of the Corporate Debtor be allowed to be operated through IRP/RP for day-to-day functioning of the Company such as for payment of Current Bills of the Suppliers, Salaries and Wages of the employees'/workmen, electricity bills etc."
As can be seen, this paragraph contains directions for keeping the Corporate Debtor as a 'going concern'. Therefore, we do not find any strength in the argument of the Ld. Counsel of Appellant that the orders/directors are only contained in this paragraph which is reproduced above and it does not contain reference to stay for constitution of CoC.
Another point of the Respondents is that later, by order dated 23.7.2020, the Hon'ble NCLAT gave permission to Resolution Professional to constitute the CoC which implies that there was a stay order in operation. We find this argument logical and worthy of favourable consideration.
Respondent No. 1 (Resolution Professional) has submitted that the IRP received the order dated 23.7.2020 of Hon'ble NCLAT on 27.7.2020 from ICICI Bank, which is member of the CoC. Thereafter, as per directions contained in this order, the IRP constituted the CoC on 29.7.2020.
Thus, we are of the clear opinion that the order passed by the Adjudicating Authority in I.A. No. 410 of 2021 in CP(IB) No.775(MB)/2019 regarding exclusion of period from 4.3.2020 till 27.7.2020 (146 days) pursuant to the stay imposed by Hon'ble NCLAT in CA (AT)(INS) No. 376/2020is in accordance with law and requires no intervention.
The appeal is, therefore, dismissed. No orders as to costs.