Quinn Logistics India Pvt. Ltd vs Mack Soft Tech Pvt. Ltd

Present: For Appellant : Mr. Arun Kathpalia, Senior Advocate assisted by Mr. Rudreshwar Singh, Mr. Swapnil Gupta, Mr. Ujjal Banerjee and Ms. Ankita Sinha, Advocates

For 1st Respondent : Mr. Abhijeet Sinha, Mr. Niraj Kumar and Mr. Shashank Agarwal, Advocates

For 2nd Respondent: Ms. Ranjana Ray and Mr. Pervinder, Advocates JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

The appellant - "Financial Creditor" has preferred this appal for

modification of order dated 27th April, 2018 passed by the Adjudicating Authority

(National Company Law Tribunal), Hyderabad Bench, Hyderabad in C.P. (IB) No.

97/7/HDB/2017 relevant portion of which reads as follows :

"In CP (IB) 97/7/HDB/2017 as stated supra, several

applications are pending for adjudication by this

Authority. There is no scope of adjudicating all the above

applications before the expiry of 270 days. Therefore,

taking into consideration the decisions stated supra relied

upon by the Learned Senior Counsel for the Financial

creditors and the fact that CIRP could not be taken up

nearly about 160 days because of various interim orders

passed by this Authority and in view of the pendency of

above said applications for adjudicating, there is an urgent

need to pass interim order to extend the CIRP period

atleast till the next date of hearing. All the Counsels

appearing for all the parties represented that it would be

convenient for them to advance their arguments for final

hearing of pending applications only on 15.05.2018 but

Company Appeal (AT) (Insolvency) No. 185 of 2018

2 not before that date. Hence, the CIRP period is extended

till 15.05.2018. The Learned Senior Counsel appearing

for the Financial Creditors made a statement that in case

the CIRP is extended for a considerable period, they have

no objection to accept the Expression of Interest (EOI)

submitted by the Resolution Applicants even after the

expiry of the date fixed for receiving EOI.

This Interim Order is passed in CA 93/2018 extending the

CIRP period till 15.05.2018, subject to the orders of the

Hon'ble NCLAT in the Appeal pending before it. Registry

is directed to list all the pending Applications including

CA93/2018 for final hearing on 15.05.2018."

2. Further prayer has been made to direct the Adjudicating Authority to

exclude the period from 15th September, 2017 to 28th February, 2018 for

counting the total period of 180 days + 90 days (total 270 days) as 'corporate

insolvency resolution process' could not proceed during the aforesaid period on

account of interim directions passed by the Adjudicating Authority.

3. Learned counsel appearing on behalf of the appellant submitted that for

about 166 days, the 'corporate insolvency resolution process' remained stayed

due to interim order passed by the Adjudicating Authority. In view of interim

order no meeting of 'Committee of Creditors' could take place during the

pendency of C.A. No. 197 of 2017 which was filed by one of the Director of the

'Corporate Debtor' challenging the constitution of 'Committee of Creditors'. The

Company Appeal (AT) (Insolvency) No. 185 of 2018

3 order of stay was vacated only on 28th February, 2018 whereinafter further

'corporate insolvency resolution process' could proceed.

4. The appellant has brought on record the time chart to suggest the delay,

as took place as follows:

S.NO. DATE STAGE DAYS

A. Between 11.08.2017 - Initiation of CIRP, Order 10 days 21.08.2017 copy made available.

B. Between 23.08.2017 - IRP took charge, CoC 22 days 15.09.2017 constituted

C. Between 15.09.2017 - Interim Stay of the 166 days 28.02.2018 proceedings of the First CoC; followed by change of Resolution Professional and further stay on CoC meetings D. Between 29.02.2017 - Vacation of Stay, 57 days 27.04.2018 Invitation of EOIs. EoI period needs to be extended as some applicants have come forward beyond time and only one EoI received in time. E. 27.04.2018 Ld. Adjudicating - Authority fails to exclude time spent in litigation

Company Appeal (AT) (Insolvency) No. 185 of 2018

4 from CIRP period as a result there is further uncertainty in CIRP.

5. Learned counsel appearing on behalf of the 'Resolution Professional' also

requested to exclude the period of 166 days for the purpose of counting the total

period of resolution process.

6. 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.

Company Appeal (AT) (Insolvency) No. 185 of 2018

5 (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 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

Company Appeal (AT) (Insolvency) No. 185 of 2018

6 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 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

Company Appeal (AT) (Insolvency) No. 185 of 2018

7 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 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

Company Appeal (AT) (Insolvency) No. 185 of 2018

8 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 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:-

Company Appeal (AT) (Insolvency) No. 185 of 2018

9

(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.

Company Appeal (AT) (Insolvency) No. 185 of 2018

10

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

the corporate insolvency resolution process.

12. The impugned order dated 27th April, 2018 passed by the Adjudicating

Authority, Hyderabad Bench in CA No. 93 of 2018 in CP (IB) No.

97/7/HDB/2017 stands modified to the extent above. The appeal stands

disposed of with the aforesaid observations.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial) New Delhi 8th May, 2018

/ns/

Company Appeal (AT) (Insolvency) No. 185 of 2018

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