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Judgment
Hemant Kumar Sarangi, Member (T)
The present Application, being CA No. 272/2019 is preferred by M/s. Shinhan Bank the (“the Financial Creditorâ€). Another CA No. 529/2019
has been filled by the Resolution Professional Ms. Kiran Martin Golla, with similar prayers. The two CA’s are therefore being disposed of by a
common order,
Under the said application the following reliefs have been prayed for:-
In CA 272/2019 by Shinhan Bank following prayers have been prayed for:
a. Pass an order declaring that the 6th Meeting of the Committee of Creditors held on 19.01.2019 is illegal, void and non-est;
b. Pass an order excluding the period of 25 days from 01.06.2018 to 26.06.2018 from counting towards the period of Corporate Insolvency Process on
account of the fact that the Interim Resolution Professional only took charge of the Corporate Debtor from 26.06.2018; and/or
c. Pass an order excluding the period of 58 days from 13.08.2018 to 09.10.2018 on account of the fact that this Hon’ble Court has held the
meetings during this period i.e., 13.08.2018, 29.08.2018, 12.09.2018 and 29.09.2018 as non-est and resolutions passed therein as nullified; and/or
d. Pass an order excluding the period from 10.10.2018 till the order dated 10.10.2018 passed in CA 88/2018 is vacated from counting towards the
period of Corporate Insolvency Process on account of the fact that during this period this Hon’ble Authority had stayed the Resolution Process;
and/or
e. Pass an order extending the period of the Corporate Insolvency Resolution Process by a period of 90 days beyond 180 days; and/or
f. Pass any such other orders that may be deemed fit in the facts and circumstances of the present case.
In CA 529/2019 by RP Ms. Kiran Martin Golla following reliefs have been prayed for:
a. Exclusion of approximately 434days being the period between 27.07.2018(i.e. the date after 1st meeting of Committee of Creditors) till 02.10.2019
(i.e. the date of receipt of certified true copy of order of appointment of Applicant) from the calculation of 180 days, wherein owing the acts beyond
the control of Applicant and Corporate Debtor, herein or such number of days as this Hon’ble Tribunal seems fit.
b. Pass such order as this Hon’ble Tribunal seems fit in facts and circumstances of this case.
While dealing with CA 272/19, which is filed in time we analyse the background of the case. That from the record, it is evident that one M/s Vaiva
Metals & Alloys Pvt. Ltd. had approached this Hon’ble Tribunal with an application under section 9 of the IBC, 2016. Vide judgment dated
01.06.2018, this Hon’ble Tribunal had admitted the said application and appointed Mr. Rajesh Parakh as the Interim Resolution Professional
(IRP).
By the order of C.A. No.88/2018, dated 18.09.2019, filed by M/s. Shinhan Bank, being the FC, this bench removed the IRP Mr. Rajesh Parakh as
prayed by the Applicant in the said C.A. and confirmed the appointment of Ms. Kiran Martin Golla, as the RP on the basis of prayers made in the said
C.A.
It is a matter of record that, this bench vide its order dated 10.10.2018, stayed the CoC meetings till further orders, as CA. No. 88/2018 was filed by
M/s Shinhan Bank, being the Financial Creditor, seeking directions with respect to formation of CoC. It is also a matter of record that vide order dated
09.07.2019, in CA 184/2018, passed by this bench, the CoC meetings held on 13.08.2018, 29.08.2018, 12.09.2018 and 29.09.2018 being 2nd, 3rd, 4th,
and 5th CoC Meetings were declared non-est and any resolutions passed in such meetings were also nullified by the said order. Further RP was
directed to take steps to reconstitute the CoC and hold the meeting to proceed with CIRP and to take all further steps promptly.
The Applicant has made a specific prayer at Prayer no. (A) regarding the 6th CoC Meeting dated 10.01.2019 and submits that, the IRP Mr. Parakh
had called for the 6th CoC Meeting on 10.01.2019, and but did not intimate the same to the Applicant. Therefore, the 6th CoC meeting was
reconvened on 19.01.2019 during this meeting the Applicant voted in favour of exclusion of certain periods and extension of the CIRP, however, the
remaining private individuals on the CoC, voted against the same. As per the order dated 09.07.2019 passed in CA 184/2018, since the private
individuals who were part of the Committee of Creditors are not Financial Creditors and accordingly, this Bench has declared the 2nd, 3rd, 4th and 5th
CoC Meetings as non-est. on the same ground, it is humbly submitted that the 6th Meeting of the CoC held on 19.01.2019, wherein these private
individuals voted against extension of CIRP and against exclusion of time from CIRP, is also required to be declared as non-est. This prayer No. (A)
regarding the 6th CoC meeting dated 10.01.2019 is allowed on the same grounds as passed in this bench’s order dated 09.07.2019in CA 184/2018,
and the 6th CoC meeting held on 10.01.2019 is held as non-est.
While as the CA 529/19 is filed by RP for exclusion of 434 days from CIRP we deal with both applications and consider the same together.
Considering the present case is admitted more time is required to be granted to conduct CIRP in its true spirit.
It is a matter of record that a period of 180 of the CIRP ended on 28.11.2018, the period of 270 days ended on 26.02.2019 and the period of 330
days expired on 27.04.2019. Also, in the present case it is pertinent to note that since the period of 330 days has already lapsed on 27.04.2019 and the
present CA was preferred by the applicant only on 16.08.2019, that is after a long delay.
In relation to the application of the applicant for exclusion of certain periods from the declaration of the CIRP, it is pertinent to mention here that by
the relevant amendment in section 12 of the Insolvency & Bankruptcy Code, 2016 in sub-section (3), after the proviso, the following provisos have
been inserted, namely:-
“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, 2019.â€
In deciding the current C.A.’s 272 & 529 of 2019, this court places reliance of the judgement of the Hon’ble Supreme Court in the matter
of “Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta, Civil Appeal No. 8766-67/2019"", whereby the Hon’ble Apex
court has held as follows;
“79… while leaving the provision otherwise intact, the term “mandatorily†is struck down as being manifestly arbitrary under
Article 14 of the Constitution of India and as being 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 CIRP must be completed within the
outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. If the delay or
a large part thereof is attributable to the tardy process of the AA and/ or the NCLAT itself, it may be open in such cases for the AA and/or
NCLAT to extend time beyond 330 daysâ€
“….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 excluded, 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 corporate debtor is to be driven into liquidationâ€
Also, similar view has been taken by the Hon’ble Apex Court in the matte of “Jaiprakash Associates Ltd. & Anr. Vs. IDBI Bank Ltd. & Anr.
Civil Appeal No. 6486 of 2019â€, wherein the Hon’ble Apex Court has granted an extension of 90 days period from the date of its order, instead
of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.
Respectfully following the ruling by the Hon’ble Supreme Court, and in view of the unique facts & circumstances of this case, this bench is of the
view that in the interest of justice an extension of 90 days may be granted to the RP in this case, from the date of this order, to complete CIRP and
find a successful Resolution Applicant and finalise a suitable Resolution Plan, failing which the Corporate Debtor shall be sent into liquidation and no
prayer for any further extension will be granted.
In the interest of justice an extension of 90 days is granted to the RP in this case, from the date of this order, to complete CIRP and find a
successful Resolution Applicant and finalise a suitable Resolution Plan
Both the CA’s stand disposed of with the above order.
Copy of order be supplied to parties.