A To Z Barter Pvt. Ltd vs Inox Leisure Ltd. & Anr

(Arising out of Order dated (10.12.2019) passed by the (National Company Law Tribunal) New Delhi Court - III in CA 862/CIII/ND/2019 in (IB)643(ND)2018]

IN THE MATTER OF:

Ashish Chaturvedi Ex-Director A to Z Barter Pvt. Ltd. Regd. Office : C-14, Mansarover Garden New Delhi - 110 015 ...Appellant

Versus

1.Inox Leisure Ltd. ABS Towers, Old Padra Road Vadodara - 390 007 ...Respondent No.1

2.Anoop Kumar Goyal IBBI/IPA-001/IP-P00563/2017-18/11039 Interim Resolution Professional A to Z Barter Pvt. Ltd. C-14, Mansarover Garden New Delhi - 110 015 ...Respondent No.2

3.A to Z Barter Pvt. Ltd. C-14, Mansarover Garden New Delhi - 110 015 ...Respondent No.3

Present:

For Appellant: Mr. Manoj Kumar Garg, Mr. Ashutosh kr. Singh

And Mr.SidharthaPatra, Advocates.

For Respondents: Mr.Saransh Kumar, Advocate (R-1).

Mr. Anoop Kumar Goyal (Resolution Professional) (R2)

JUDGMENT

VENUGOPAL M.J. 2

1. The Appellant (Ex-Director of the A to Z Barter Pvt. Ltd ) has filed the instant

Company Appeal being aggrieved against the order dated 10.12.2019 in CA-

862/C-III/ND/2019 passed by the Adjudicating Authority ('National

Company Law Tribunal') New Delhi Bench - III.

2. The Adjudicating Authority ('National Company Law Tribunal') New Delhi

Bench -III while passing the impugned order dated 10.12.2019 had observed

the following:

"Resolution Professional viz. Mr. Anup Kumar Goyal

is present. The Operational Creditor along with

counsel is present. The Resolution Professional

prayed for exclusion of the period of time from the

date of the initial order dated 12.12.2018 till date on

the ground that the order has not been communicated

to him by the concerned and he came to know about

the order very late due to which he has filed the

present Application. It is further submitted that the

Operational Creditor be directed to deposit an amount

of Rs. Two Lakhs with the Applicant/IRP.

As seen from order dated 05.01.2018, it has been

provided under Para 11 of the said order that a copy

of the order shall be communicated to the IRP as well

as to the Corporate Debtor by the Registry which has

not been don due to inadvertness. Therefore, the

Application is allowed. The period of 370 days is

hereby excluded from the maximum period of CIR 3

Process by extending 180 days with effect from the

date of passing of this order with the direction to the

Operational Creditor to deposit of Rs. 2.50 lakhs with

the IRP within a week's time. Therefore, within three

days the IRP will make public announcement."

And resultantly disposed of the Application.

3. The Learned Counsel for the Appellant submits that the 'Adjudicating

Authority' passed impugned order dated 10.12.2019 by overlooking

essential facts of the case and wrongly allowed the application filed by

the 'Insolvency Resolution Professional' for exclusion of time.

4. The Learned Counsel for the Appellant contends that the 'Adjudicating

Authority' had failed to appreciate the pertinent fact that the

Respondent Company/Operational Creditor had full knowledge of the

impugned order dated 05.12.2018 for initiation of the 'Corporate

Insolvency Resolution Process' of the 3rd Respondent Company.

5. The Learned Counsel for the Appellant takes stand that the email

communication was sent on 12.11.2019 after lapse of eleven month

and Seven days to the 'Insolvency Resolution Professional' for his

appointment, after lapse of the period of 180 days for completion of the

'Corporate Insolvency Resolution Process'.

6. It is represented on behalf of the Appellant that even if it is assumed

for a moment that the 'Insolvency Resolution Professional had no

knowledge for his appointment prior to the email communications

made by the 1st Respondent Company, then it is for the said Company 4

to communicate the order dated 05.12.2018 to the 'Insolvency

Resolution Professional' within the period of Limitation and if it was not

made, then point out the exceptional grounds in this regard before the

'Adjudicating Authority' for the delayed communication sent to the

'Insolvency Resolution Professional', since the 1st Respondent Company

had not deposited Rs.Two Lakhs to the 'Insolvency Resolution

Professional', pursuant to the order dated 05.12.2018.

7. The other plea of the Appellant is that the impugned order dated

10.12.2019 was passed by the 'Adjudicating Authority' without

providing any opportunity of 'Hearing' to the 3rd Respondent Company

and as such impugned order is not valid one in the eye of law.

8. The Learned Counsel for the Appellant points out that the 'Adjudicating

Authority' had failed to appreciate the judgment of the Hon'ble Supreme

Court in Committee of Creditors of Essar Steel India Limited through

Authorised Signatory v. Satish Kumar Gupta & Ors. (Civil Appeal No.

8766-67/2019) dated 15.11.2019, wherein it was clarified that in an

exceptional cases, the 'Adjudicating Authority' can extend time on an

'Application' filed by the 'Insolvency Resolution Professional' if

instructed by the 'Committee of Creditors' etc.

9. The Learned Counsel for the Appellant refers to the judgment of this

Tribunal in CA(AT) (Insolvency) No. 185 of 2018 in Quinn Logistics India

Pvt. Ltd v.Mack Soft Tech Pvt. Ltd and ors., dated 08.05.2018, wherein

at para 6 to 11 it is observed as under:

5

"Similar question fell for consideration before this

Appellate Tribunal in "Quantum Limited

(Corporate Debtor) vs. Indus Finance Corporation

Limited - Company Appeal (AT) (Insolvency) No.

35of 2018" wherein this Appellate Tribunal

observed as follows:

"3. 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. 6

(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. 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 7

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.

(5) 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.

(6). For the aforesaid reasons, we set aside the

impugned order dated 18th December, 2017 and

extend the period of resolution process for another 8

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. Now the Adjudicating

Authority will proceed in accordance with law."

7. In "Amar Remedies Ltd. (Through the

Resolution Professional) vs. IDBI Bank Ltd. &Ors.

- Company appeal (AT) (Insolvency) No. 59 of

2018" taking into consideration the justification of

extension of the period, this Appellate Tribunal by

judgment dated 5th March, 2018 extended the

period for resolution process for another 90 days

from the date of the order passed by the Appellate

Tribunal. There are other cases wherein similar

orders were passed, namely "M/s. Shilpi Cable

Technologies vs. Macquarie Bank Ltd. - I.A. No.

30 of 2018 in Company Appeal (AT) (Insolvency)

No. 101 of 2017". Therein taking into

consideration the fact that the Hon'ble Supreme

Court has set aside the order passed by this

Appellate Tribunal and restored the corporate

insolvency resolution process as was initiated by 9

the Adjudicating Authority, passed the following

order:-

4. We have heard learned counsel appearing on

behalf of the 'Insolvency Resolution Professional'

and learned counsel appearing on behalf of the

Respondent Macquarie Bank Limited

('Operational Creditor') and perused the decision

of the Hon'ble Supreme Court in "Macquarie Bank

Limited Vs. Shilpi Cable Technologies Ltd." Taking

into consideration the fact that because of the

order passed by this Appellate Tribunal on 1st

August, 2017, the 'Resolution Professional' could

not function. Now, pursuant to the Hon'ble

Supreme Court order as the 'Resolution

Professional' has resumed the office on 3rd

January, 2018 and allowed to function pursuant

to this Appellate Tribunal's interim order dated

15th January, 2018, we hold that the period from

1st August, 2017 to 14th January, 2018 will not

be counted for the purpose of counting total period

of 180 days for completing the 'Resolution

Process'. In case the 'Resolution Process' is not

completed within 180 days, even after excluding 10

the period aforesaid, it will be open to the

'Committee of Creditors'/ 'Resolution

Professional' to request the Adjudicating

Authority for more time."

8. One or other Adjudicating Authority including

Adjudicating Authority (Hyderabad Bench),

Hyderabad, (Kolkata Bench), Kolkata and

(Ahmedabad Bench), Ahmedabad have also

passed the order excluding such period taking

into consideration the facts and circumstances of

each case. 9. From the decisions aforesaid, it is

clear that if an application is filed by the

'Resolution Professional' or the 'Committee of

Creditors' or 'any aggrieved person' for justified

reasons, it is always open to the Adjudicating

Authority/Appellate Tribunal to 'exclude certain

period' for the purpose of counting the total period

of 270 days, if the facts and circumstances justify

exclusion, in unforeseen circumstances. 10. For

example, for following good grounds and

unforeseen circumstances, the intervening period

can be excluded for counting of the total period of

270 days of resolution process:-

11

(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.

12

(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.

11. In the present case, as the corporate

insolvency resolution process remained stayed for

166 days due to the interim order passed by the

Adjudicating Authority on 15th September, 2017

which was vacated on 28th February, 2018, we

hold that the 'Committee of Creditors' /

'Resolution Professional' rightly requested the

Adjudicating Authority to exclude the period of

166 days for the purpose of counting the total

period of 270 days. Taking into consideration the

stand taken by the parties and the stage of

corporate insolvency resolution process, we direct

the Adjudicating Authority to exclude 166 days

for the purpose of counting the period of corporate

insolvency resolution process and thereby allow

the Resolution professional / Committee of

Creditors further 166 days with immediate effect 13

(i.e. 8th May, 2018) to complete the corporate

insolvency resolution process."

10. The Learned Counsel for the Appellant projects an argument that the

'Adjudicating Authority cannot extend time period beyond 330 days as

specified under the Second provision to Section 12(3) of the 'Insolvency

and Bankruptcy Code, 2016' (inserted on 16.08.2019 pursuant to the

'Insolvency and Bankruptcy Code (Amendment) Act, 2019) and it was

mentioned in the Second Proviso to 12(3) of the Code 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 period of

Corporate Insolvency Resolution Process') and the time taken in legal

proceedings in relation to such Resolution Process of the 'Corporate

Debtor'.

11. The Learned Counsel for the Appellant submits that because of the fact

that the legal proceedings commenced from 01.06.2018 by the 1st

Respondent/Operational Creditor by filing the Insolvency Application

against the 3rd Respondent/Applicant before the 'Adjudicating

Authority', three hundred thirty days including Legal proceedings in

relation to Resolution process cannot be extended by 'National

Company Law Tribunal' beyond 25.04.2019, viz, three hundred thirty

days as mandated in Second proviso to Section 12(3) of the 'Insolvency

and Bankruptcy Code, 2016'.

14

12. The Learned Counsel for the Appellant contends that the 'Insolvency

Resolution Professional' had not started any 'Corporate Insolvency

Resolution Process' based on the order passed by the 'Adjudicating

Authority dated 05.12.2018 and his status was not changed from 'IRP'

to 'RP' by the 'Adjudicating Authority and, therefore, the ingredient of

Section 12(2) of the IBC, 2016 is not applicable, because of the reason

that 'Resolution Professional can only file an Application before the

'Adjudicating Authority for extension of CIRP beyond one Hundred and

Eighty days.

13. The Learned Counsel for the Appellant by adverting to Section 12 of the

IBC, 2016 puts forth a plea that the 'Adjudicating Authority' has no

power in this section to extend the time of maximum of 90 days beyond

the expiry of 180 days for completion of CIRP, if CIRP has not

commenced by the 'Insolvency Resolution Professional' duly appointed

by the 'Adjudicating Authority' as per its order dated 05.12.2018.

14. Per contra, it is the specific case of the 2nd Respondent/IRP is that

neither the Registry of the 'Adjudicating Authority' nor any other person

had informed the IRP about passing of the order dated 05.12.2018 or

commencement of 'CIRP' within the time period as mentioned in the

order and hence he was unaware of the passing of the aforesaid order

and could not start functioning as IRP of Corporate Debtor.

15. The 2nd Respondent/IRP in his 'Application before the 'Adjudicating

Authority' had proceeded to mention that on 12.11.2019 he has 15

received an email from the 'Operational Creditor' whereby he was

informed that he was appointed as IRP by order dated 05.12.2018 and

that the Operational Creditor further informed him that they wanted

to revive the 'Insolvency Proceedings' against the 'Corporate Debtor' and

required his willingness and eligibility to act as 'IRP', and that he

confirmed his eligibility and willingness to act as 'IRP' and required the

Operational Creditor to deposit a sum of Rs. 2,00,000/- as per direction

of the Tribunal and furnished a declaration regarding his eligibility.

16. In the present case, it comes to be known that on receipt of the email

dated 12.11.2019, the 'Operational Creditor' had informed the 2nd

Respondent/Applicant that even though it was ready to deposit the

amount, because of delay, a fresh order from the 'Adjudicating

Authority' was required, and hence, the 2nd Respondent/Applicant had

filed an 'Application' seeking fresh direction for the commencement of

'Corporate Insolvency Resolution Process' and certain order in

permitting him to commence functioning as IRP in the present mandate

and further that a mandate of 180 days for concluding CIRP may be

granted.

17. It is to be noted that 'Speedy' is the gist for an effective, efficacious

functioning of the Bankruptcy Code. As per Section 12(3) of the Code,

the time period of 'CIRP is not to be extended more than once. It is to

be borne in mind by the concerned authorities to adhere to the model 16

timeframe envisaged in Regulation 40(A) of IBBI (CIRP for corporate

person) Regulations 2016 as far as possible. In an extraordinary

circumstance(s), the 'Adjudicating Authority' can extend the 'Corporate

Insolvency Resolution Process' beyond the time limit adumbrated in

Section 12(3) of the Code. The extension of time can be only on an

application made by the Insolvency Resolution Professional on the

basis of 'Committee of Creditors' as mentioned in sub-Section 2 and 3

of Section 12 of the IBC, 2016.

18. Section 60(5) of the IBC jurisdiction upon the 'Adjudicating Authority'

to determine a 'Question of priorities' or any question of Law or Facts,

arising out of or in relation to the Insolvency Resolution based on the

issue involved in a given case. An Adjudicating Authority is to adhere

to the procedural aspect mentioned in numerous sections of the Code.

To put it precisely, an Adjudicating Authority as per Section 60(5) of

the Code is empowered to deal with the claims pertaining to the

'Insolvency Resolution Process' (including the priorities issue) can find

a solution. As regards any legal proceedings not pertaining to the

purview of Section 60(5) of the Code, 2016, the Code permits a

'Resolution Professional' to institute proceedings at the behest of

Corporate Debtor in other Foras/Courts, in terms of the ingredients of

Section 25(2) (b) of the I&B Code.

19. The 'Insolvency Resolution Professional being a creature of the I&B

Code is certainly entitled to project an application before an 17

'Adjudicating Authority' relating to the hardships/difficulties, he

faces/faced during the 'Resolution Process'.

20. A glance of the impugned order dated 10.12.2019 indicates that the

order of the 'Adjudicating Authority' dated 05.12.2018 was not

communicated to the IRP as well as to the 'Corporate Debtor by the

office of the Adjudicating Authority (NCLT III New Delhi), due to

inadvertence.

21. In this connection, this Tribunal relatively pointed out that 'Maxim',

'Actus', 'Curiae', 'Neminem', 'Gravabit' i.e. Act of the Court shall harm

no Home-Sapien. Owing to an inadvertent omission on the part of the

'Registry' of the 'Adjudicating Authority', the order dated 05.01.2018 of

the said Authority was not communicated to the 'IRP' as well as to the

Corporate Debtor. In this backdrop the 'Adjudicating Authority' (NCLT,

New Delhi Bench -III) had rightly allowed the Application i.e. CA-

862/C-III/ND/2019 filed by the 2nd Respondent by passing the

impugned order dated 10.12.2019, which is free from any legal

infirmities.

22. In fine, the present Appeal fails and the same is dismissed, but without

costs.

[Justice Venugopal M.] Member (Judicial) 18

[V.P.Singh] Member (Judicial)

New Delhi

10th February, 2020

SS/