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Judgment
The present application is filed by RP U/s 60(5)(c) read with section 12 of the Insolvency & Bankruptcy Code, 2016 read with regulation 40 of the IBBI (CIRP) Regulations, 2016 and Rule 11 of the NCLT Rules, 2016 seeking exclusion of period from 18.08.2017 to 08.03.2019 (562 days) that was lost in litigation during the Corporate Insolvency Resolution Process (CIRP) period, for the purpose of calculation of 270 days CIRP period.
Brief fact of the Application is stated as under:
The CIRP of the Corporate Debtor was initiated by this Adjudicating Authority vide its order dated 17.03.2017 by admission of application filed by the Corporate Debtor under section 10 of Insolvency and Bankruptcy Code,2016 and Mr. Dinkar T. Venkatasubramanian was appointed as IRP. Thereafter, the CoC at meeting held on 19.04.2017 resolved to appoint Mr. Mukesh Mohan Gupta as the Resolution Professional which was confirmed by this Adjudicating Authority.
It is further stated by the learned counsel for Resolution Professional that the corporate debtor has received the benefit of 90 days under Section 12 of the Code which was disposed of vide order dated 03.08.2017 in which a period of 90 days from 03.08.2017 was granted for completing the CIRP which was due to expire on 12th December,2017.
Further submitted that that during the CIR Process of the Corporate Debtor, the erstwhile resolution professional of the Corporate Debtor (being Mr. Mukesh Mohan Gupta) vide its decision dated 4 August 2017 rejected the claim of Exim Bank as a financial creditor based on a counter corporate guarantee issued by the Corporate Debtor to Exim Bank and accordingly the Exim Bank on 18 August 2017 filed an application before this Hon'ble Tribunal challenging the said rejection of claim and this Hon'ble Tribunal vide order dated 27 October 2017 held that the erstwhile resolution professional's decision to reject the claim of Exim Bank is not legally sustainable as the same is taken without active consultation with the members of Committee of Creditors. Therefore, this Hon'ble Tribunal directed that a meeting of Committee of Creditors to be called to decide the status of Exim Bank as the Financial Creditor.
Against the said order dated 27 October 2017, Exim Bank filed an appeal before the Hon'ble National Company Law Appellate Tribunal, New Delhi ("NCLAT"), being Company Appeal (AT) (Insolvency) No. 254 of 2017, whereby the Hon'ble NCLAT vide order dated 6 November 2017 directed this Hon'ble Tribunal to decide the question of eligibility of Exim Bank uninfluenced by the opinion of the Resolution Professional and the Committee of Creditors. In pursuance of the above direction, this Hon'ble Tribunal vide its order dated 27 November 2017 upheld the decision of the erstwhile resolution professional rejecting the claim of Exim Bank as a financial creditor of the Corporate Debtor.
The said order of this Hon'ble Tribunal dated 27 November 2017 was challenged by Exim Bank before the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No. 304 of 2017.
During the pendency of the above appeal, the resolution plan of M/s. Atyant Capital India Limited was approved by this Hon'ble Tribunal vide order dated 15 December 2017. However, on account of the pendency of the appeal of Exim Bank, the Hon'ble NCLAT vide order dated 1 February 2018 in Company Appeal (AT) (Insolvency) No. 304 of 2017 directed this Hon'ble Tribunal to not give effect to the resolution plan (approved vide order dated 15 December 2017) without their permission.
Finally, the above issue was settled by the Hon'ble NCLAT vide judgment dated 14 August 2018 whereby the Hon'ble NCLAT recognized the status of Exim Bank as a financial creditor of the Corporate Debtor. Further, the Hon'ble NCLAT inter alia directed the resolution professional of the Corporate Debtor to reconstitute the Committee of Creditors after including Exim Bank as a financial creditor of the Corporate Debtor and thereafter directed the reconsideration of the resolution plans already submitted with respect to the Corporate Debtor. It was made clear by the Hon'ble NCLAT that Committee of Creditors cannot go in for "rebidding" on account of the resolution plans having already been opened. A copy of the Order dated 14 August 2018 of the Hon'ble NCLAT is enclosed herewith as Annexure-4.
Thereafter, pursuant to the directions of the Hon'ble NCLAT vide judgement dated 14 August 2018, this Hon'ble Tribunal vide order dated 6 September 2018 (in an application filed by Exim Bank) took note of the judgement of this Hon'ble NCLAT dated 14 August 2018 and the directions therein. Further, this Hon'ble Tribunal also took note of the fact that the erstwhile resolution professional had resigned and accordingly, at present no resolution professional was appointed for the Corporate Debtor. Accordingly, this Hon'ble Tribunal directed Exim Bank to call for a meeting of the Committee of Creditors (with Exim Bank as a member) and appoint a resolution professional.
Thereafter, the above judgement of the Hon'ble NCLAT dated 14 August 2018 was challenged before the Hon'ble Supreme Court in Civil Appeal No. 9090-9091 of 2018 titled "Atyant Capital India Fund Iv. Resolution Professional, JEKPL Private Limited", whereby the Hon'ble Supreme Court vide order dated 7 September 2018, while issuing notice directed for maintenance of status quo as on the said date. The said civil appeal was thereafter taken up and dismissed by the Hon'ble Supreme Court vide order dated 23 January 2019. A copy of the order dated 7 September 2018 and order dated 23 January 2019 passed by the Hon'ble Supreme Court is annexed herein as Annexure-7 (Colly.).
Subsequent to the above, the Applicant herein was appointed as the Resolution Professional by the Committee of Creditors and thereafter such appointment was confirmed by this Hon'ble Tribunal vide order dated 8 March 2019. Thereafter, the Resolution Professional called for a meeting of the Committee of Creditors on 29 March 2019 to inter alia discuss evaluate the existing resolution applicants i.e. M/s. Atyant Capital India Limited and Hindustan Oil Exploration Co. Limited. At the said meeting, on account of the fact that the CIR Process of the Corporate Debtor had been marred by litigations resulting in ambiguities and uncertainties and on account of the fact that while the Hon'ble NCLAT has directed the "re-constituted" Committee of Creditors to consider/ re-consider the resolution plans of existing resolution applicants which are in accordance with Section 30(2) of the Code i.e. M/s. Atyant Capital India Limited and Hindustan Oil Exploration Co. Limited, and while the statutorily prescribed period of the CIR Process has already expired, the members of the Committee of Creditors inter alia decided to authorize the Resolution Professional to file an application before this Hon'ble Tribunal for exclusion of time period consumed in litigation in order the conduct and conclude the CIR process in a manner to maximize the value of the Corporate Debtor. (A copy of the minutes of meeting of the CoC dated 29.03.2019 is annexed)
It is to be noted that in view of the NCLAT order 14 August 2018 which stands confirmed by the Hon'ble Supreme Court, the reconstituted Committee of Creditors which is inclusive Exim Bank will have to look into the feasibility and viability of the resolution plans of decisions afresh, it will only be reasonable to exclude the period which has been spent on determining the eligibility of Exim Bank as a Financial Creditor and / or the time during which no resolution professional was in place for the Corporate Debtor, which would be the period from 18 August 2017 to 8 March 2019 while calculating 270 days to allow the Committee of Creditors to appropriately consider the feasibility and viability of the resolution plans of M/s. Atyant Capital India Limited and Hindustan Oil Exploration Co. Limited, in adherence with the directions of the Hon'ble NCLAT.
Applicant/Resolution Professional stated that he along with the Committee of Creditors intend to achieve an effective resolution of the Corporate Debtor within the period of 270 days after excluding the aforesaid period. Further stated that a period from 18 August 2017 i.e date of appeal before Hon'ble NCLAT till the date of order of this bench for reconstituting the CoC i.e 08.03.2019, should be excluded for the purpose of calculating CIR process period in respect of the Corporate Debtor.
On this application this Authority ordered notices to the members of Committee of Creditors (COC) & Suspended Directors of the Corporate Debtor requiring them to file reply, if any.
The Suspended Managing Director of the Corporate Debtor Mr. Girish Tandon filed affidavit stating 'no objection' for the exclusion of 65 days from 270 days period. Both the financial creditors i.e. Bank of Baroda and J.M. Financial Assets Reconstruction Company Ltd. that constitute (43.5543%) & (51.7297%) of voting strength in COC also filed their affidavit stating 'no objection' for exclusion of 65 days from 270 days period.
The Resolution Applicant filed CA No.114/2019 requesting this Authority to exclude the litigation period from the period of 270 days on the ground of pendency of appeal before Appellate forum.
Ld. Counsel appearing on behalf of RP relying on the judgment of Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No.185 of 2018 in the matter of Quinn Logistics India Pvt. Ltd. v/s Mack Soft Tech Pvt. Ltd. & ors. and contended that considering the circumstances that exist in this case justify the exclusion of above mentioned days.
In this context it is necessary to refer para 10 of the above referred judgment, which is as under:
For example, for following good ground and unforeseen circumstances, the intervening period can be excluded for counting of the total period of 270 days of resolution process: -
(i)If the corporate insolvency resolution process is stayed by a court of law or the Adjudicating Authority or the Appellate Tribunal or the Hon'ble Supreme Court.
(ii)If no 'Resolution Professional' is functioning for one or other reason during the corporate insolvency resolution process, such as removal.
(iii)The period between the date of order of admission/moratorium is passed and the actual date on which the 'Resolution Professional' takes charge for completing the corporate insolvency resolution process.
(iv)On hearing a case, if order is reserved by the Adjudicating Authority or the Appellate Tribunal or the Hon'ble Supreme Court and finally pass order enabling the 'Resolution Professional' to complete the corporate insolvency resolution process.
(v)If the corporate insolvency resolution process is set aside by the Appellate Tribunal or order of the Appellate Tribunal is reversed by the Hon'ble Supreme Court and corporate insolvency resolution process is restored.
(vi)Any other circumstances which justifies exclusion of certain period.
However, after exclusion of the period, if further period is allowed the total number of days cannot exceed 270 days which is the maximum time limit prescribed under the Code.
Ld. Counsel appearing for RP also referred to the judgment of Hon'ble Supreme Court of India in ArcelorMittal India Private Limited v/s Satish Kumar Gupta and Ors., wherein para 83, it is observed that, "the period of time taken in litigation ought to be excluded".
It is stated in the application that main intend to exclude this period is to allow committee of creditors to appropriately consider the feasibility and viability of the resolution plan submitted by prospective Resolution Applicant and bring a viable resolution plan for the corporate debtor and safeguard the corporate debtor from liquidation
In view of the decisions relied upon and the above said factual situation, this Authority is of the considered view that the circumstances justify the exclusion of 567 days from the CIRP period which was lost in litigation.
In the result, CA No.114/2019 is disposed of excluding 567 days from the CIRP period.