Harish Taneja vs Unknown

3. The Resolution Professional has stated that he had filed an

application under Section 65 of The Insolvency and Bankruptcy

Code, 2016 (hereinafter called IBC) alongwith Section 12 of the IBC

read with Regulation 40-C of The Insolvency and Bankruptcy

Board of India (Insolvency Resolution Process for Corporate Company Appeal (AT) (Ins) No. 825 of 2021

Page 1 of 9 persons) Regulations, 2016 and Rule 11 of NCLT Rules, 2016

seeking exclusion of period of Covid 19 pandemic along with the

period that had lapsed due to non-availability of records, assets

and books of accounts during the on-going CIRP.

4. The Resolution Professional (RP) has stated in the appeal

that Regulation 40-C of The Insolvency and Bankruptcy Board of

India (Insolvency Resolution Process for Corporate persons)

Regulations, 2016, the following relaxation/exclusion in the

timeline has been provided:-

"Notwithstanding the time-lines contained in these

regulations, but subject to the provisions in the Code, the

period of lockdown imposed by the Central Government in the

wake of Covid-19 outbreak shall not be counted for the

purposes of the time-line for any activity that could not be

completed due to such lockdown, in relation to a corporate

insolvency resolution process."

5. He has further stated that the issue relating to exclusion of

time was discussed in the 5th meeting of the Committee of

Creditors (in short CoC) on 29.8.2020 and the CoC decided as

follows:-

Company Appeal (AT) (Ins) No. 825 of 2021

Page 2 of 9 "The CoC members stated that decision regarding whether to

file an application or not for exclusion is in the powers of the

RP and if the RP thinks fit that the application needs to be

filed then RP should file the application. The same was noted

by CoC."

6. The RP has added that the Hon‟ble NCLAT vide order dated

30.3.2020 had observed as follows:-

"That the period of lockdown ordered by the Central

Government and the State Governments including thee period

as may be extended either in whole or part of the country,

where the registered office of the Corporate Debtor may be

located, shall be excluded for the purpose of counting of the

period for "Resolution Process under Section 12 of the

Insolvency and Bankruptcy Code, 2016, in all cases where

"Corporate Insolvency Resolution Process‟ has been initiated

and pending before any Bench of the National Company Law

Tribunal or in Appeal before this Appellate Tribunal."

"It is further ordered that any interim order/stay order passed

by this Appellate Tribunal in anyone or the other Appeal

under Insolvency and Bankruptcy Code, 2016 shall continue

till next date of hearing, which may be notified later."

Company Appeal (AT) (Ins) No. 825 of 2021

Page 3 of 9

7. The RP has submitted that he faced issues relating to non-

availability of records, assets, and books of accounts of the

Corporate Debtor and also due to on-going Covid-19 pandemic, he

could not take necessary actions from the commencement of CIRP

from 5.11.2019. He further had to file an application under

Section 19 (2) of the IBC on 7.12.2019 and hence this entire period

starting from the commencement of CIRP on 5.11.2019 till the

disposal of the application under Section 19(2) should be excluded

from the time period of CIRP. He has cited the judgment of

Hon‟ble NCLAT in the matter of Quinn Logistics India Ltd. v.

Mack Soft Tech Pvt. Ltd., Comp App. (AT)(INS) No. 185 of

2018, wherein the Hon‟ble NCLAT held that "...it is 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."

8. The RP in person has argued that he had to file an

application under Section 19(2) of the IBC due to non-cooperation

of the erstwhile Director of the Corporate Debtor in transferring

books of accounts, records and assets. There was time span in

this litigation. Furthermore, he could not carry out the designated

dues with relation to the CIRP due to the imposition of „lock down‟

in the on-going Covid-19 pandemic and hence the order of Company Appeal (AT) (Ins) No. 825 of 2021

Page 4 of 9 Adjudicating Authority granting an extension of 90 days w.e.f.

3.5.2020, so as to complete the CIRP in 70 days is not in

accordance with his request for exclusion of time from the period

from commencement of CIRP till the disposal of his application

under Section 19(2) and therefore the Impugned Order should be

set aside and exclusion time period as sought by him be granted

by the Hon‟ble NCLAT.

9. We have perused order dated 29.7.2021 as well as the

grounds stated by the Resolution Professional in the present

appeal and the written submissions.

10. Regulation 40-C of The Insolvency and Bankruptcy Board of

India (Insolvency Resolution Process for Corporate persons)

Regulations, 2016 is as under:-

"40-C. Special provision relating to time-line. -

Notwithstanding the time-lines contained in these regulations,

but subject to the provisions in the Code, the period of

lockdown imposed by the Central Government in the wake of

Covid-19 outbreak shall not be counted for the purposes of the

timeline for any activity that could not be completed due to

such lockdown, in relation to a corporate insolvency resolution

process."

Company Appeal (AT) (Ins) No. 825 of 2021

Page 5 of 9 Section 19 (2) of the IBC reads as hereunder:-

"Where any personnel of the corporate debtor, its promoter or any other person required to assist or co-operate with the interim resolution professional does not assist or co- operate, the interim resolution professional may make an application to the Adjudicating Authority for necessary directions."

11. Section 12 specify the time limit for completion of CIRP.

According to Section 12(1) and Section 12(2), the CIRP has to be

ordinarily completed within a period of 180 days from the date of

admission of the application to initiate the CIRP. Section 19(20

entitle the Resolution Professional to file an application to extend

the period of CIRP beyond 180 days, if instructed to do so by a

resolution passed at a meeting of the CoC by a vote of 66% of the

voting share.

12. Sub section 3 of section 12 empowers the Adjudicating

Authority to extend the duration of CIRP beyond 180 days upto a

period which shall not be more than 90 days.

13. It is quite clear from the averments made in the appeal that

the Resolution Professional could not receive necessary

cooperation from the erstwhile director of the Corporate Debtor,

and consequently he had to file an application under Section 19(2)

before the Adjudicating Authority, which was decided by the

Adjudicating Authority. The resolution of CoC relating to filing of Company Appeal (AT) (Ins) No. 825 of 2021

Page 6 of 9 application for exclusion of the time period in the 5th meeting of

CoC held on 29.8.2020 did not approve the request of the

Resolution profession for filing of application for exclusion of time

period, but left it to the wisdom of Resolution Professional. The

CIRP is a time bound process and once the process is initiated, the

clock starts ticking. It cannot be allowed to remain unending

process. IBC provides that if the CIRP does not lead to satisfactory

resolution of the Corporate Debtor in the timeline specified in

section 12 of the IBC, necessary consequences relating to

Corporate Debtor such as liquidation should follow. It is,

therefore, duty of the Resolution Profession to bring such agenda,

as may be necessary before CoC for decision. In the instant

matter, this does not seem to have been done. On the contrary,

the Resolution Professional waited after filing of IA No. 933/2021,

Thus the entire CIRP was kept handing.

14. The time period provided under IBC for completion of CIRP is

180 days as per section 12. If the CIRP is not completed within

this time period, an explicit extension order is to be sought from

the Adjudicating Authority, which can be of maximum of 90 days.

From the averments made by the Resolution Profession and the

arguments submitted before us, we do not find that after the

expiry of 180 days from the date of commencement of CIRP, the Company Appeal (AT) (Ins) No. 825 of 2021

Page 7 of 9 Resolution Professional obtained approval of the CoC to file an

application for extension of CIRP. Moreover, he never filed any

application for extension of CIRP and waited for a decision on his

section 19(2) application. Section 19(2) application was neither for

exclusion of time period nor for extension of time period. We are of

the very clear opinion that since the Resolution Professional could

not receive any order in action with section 19(2) application, he

should have filed an application for extension of CIRP as required

under section 12, after a lapse of 180 days from the

commencement of CIRP, after due approval of CoC. All this is

requirement under Law, which cannot be lost sight of, and the

Resolution Professional has been remiss in carrying out his

responsibilities as per provisions of IBC. In such a situation, we

find that he is seeking extension of time period of CIRP in the garb

of "exclusion of time period" which cannot be permitted.

15. The Resolution Professional‟s Learned Counsel has cited the

order of Hon‟ble NCLAT in CA(AT)(Ins) No. 331/2021 to claim that

exclusion of time spent in judicial intervention was allowed to be

excluded, along with time lost on imposition of Covid-19 lockdown

and time spent in filing Appeal. The facts of this case are different

whereas in the present case the Resolution Professional has not, in

his averments, provided sufficient justification for exclusion, Company Appeal (AT) (Ins) No. 825 of 2021

Page 8 of 9 neither did he seek the approval of CoC regarding such exclusion

of time period.

16. We thus find that the Resolution Professional took necessary

action with alacrity and alertness and is now seeking exclusion of

time, even though there is no averment, which can justify

exclusion of time, such that it leads to proper resolution of the

Corporate Debtor.

17. We do not think it appropriate to interfere with the

Impugned Order. The Resolution Professional has not provided

necessary and satisfactory reasons and justification for exclusion

of the prayed time period in the CIRP. The appeal is, therefore,

dismissed at the admission stage.

(Justice M. Venugopal) Acting Chairperson

(V.P. Singh) Member (Technical)

(Dr. Alok Srivastava) Member (Technical)

New Delhi

29th October, 2021

/aks/

Company Appeal (AT) (Ins) No. 825 of 2021

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