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Judgment
O R D E R
29.02.2024: This appeal is directed against the order dated 27.09.2023 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench – IV) by which an application bearing I.A. No. 5165/ND/2023 filed by the RP under Section 60(5) of the Code for extension of CIRP by 30 days from 24.09.2023 has been disposed of by granting 15 days’ time to the RP w.e.f. 25.09.2023 for the completion of CIRP with a further direction that in case of failure, the RP shall file an application for liquidation of the Corporate Debtor.
At the time of preliminary hearing dated 12.12.2023, the Adjudicating Authority was directed not to proceed with the application for liquidation which had already been filed by the RP i.e. I.A. No. 5498 of 2023 because the CIRP could not be completed within the prescribed period of 15 days.
Counsel for the PRA has submitted that the resolution plan has been submitted to the CoC and only an addendum is to be submitted. Counsel for the CoC has submitted that as soon as the addendum is submitted by the PRA, the resolution plan shall be considered within the time prescribed by this Court. At the same time, Counsel for the Appellant has referred to a decision of the Hon’ble Supreme Court rendered in the case of CoC of Essar Steel India Limited through Authorised Signatory Vs. Satish Kumar Gupta &Ors., (2020) 8 SCC 531 to contend that though CIRP of the CD must be completed within the outer limit of 330 days from the insolvency commencement date including extensions and the time taken in legal proceedings but in a given case, the adjudicating authority and the appellate authority under the Code can extend the time for a short period for the completion of the CIRP beyond 330 days in the interest of all stakeholders and also to put back the CD on its feet instead of being sent into liquidation. Para 127 of the said judgment is reproduced as under:-
“Both these judgments have been followed in Neeraj Kumar Sainy v. State of Uttar Pradesh (2017) 14 SCC 136 at paragraphs 29 and 32. Given the fact that the time taken in legal proceedings cannot possibly harm a litigant if the Tribunal itself cannot take up the litigant’s case within the requisite period for no fault of the litigant, a provision which mandatorily requires the CIRP to end by a certain date - without any exception thereto - may well be an excessive interference with a litigant’s fundamental right to non-arbitrary treatment under Article 14 and an excessive, arbitrary and therefore unreasonable restriction on a litigant’s fundamental right to carry on business under Article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down 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 (supra). 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, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate 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 reason 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.”
We have heard Counsel for the parties and after perusal of the record are of the opinion that this is one such case in which the period of completion of CIRP can be extended so that the Corporate Debtor may not be pushed into liquidation. It is needless to mention that the Corporate Debtor had already been granted an extension as noticed in the impugned order but still the Adjudicating Authority had been magnanimous in granting 15 days’ time for completion of the CIRP w.e.f. 25.09.2023, however, the said order was stayed by this court vide its order dated 12.12.2023 directing the Adjudicating Authority not to proceed with the application for liquidation which has already been filed by the RP in compliance of the impugned order. Since, PRA has already filed the resolution plan and only an addendum has to be given to which the CoC has to react, therefore, it would be just and expedient if some more time is granted for the purpose of completion of CIRP by giving last opportunity to the PRA to file the addendum by 04.03.2024 and the CoC to take into consideration the resolution plan up to 21.03.2024. It is made clear that this is final arrangement made by this Court for the purpose of completion of CIRP, in case, the CIRP is not completed within prescribed period, the application filed by the RP for liquidation shall be considered and decided by the Adjudicating Authority in accordance with law. With these observations, the present appeal is disposed of.