R.P. Of Sel Manufacturing Company Ltd vs Committee Of Creditaors Of Sel ...
- CitationCompany Appeal (AT) (Insolvency) No. 1062 of 2019
Ratio decidendi
The rule this decision rests on
Where an interim order of a High Court or the Supreme Court has kept the corporate insolvency resolution process in abeyance or stayed its progress, the period during which the process was so restrained is a ground for excluding time from the statutory period for completion of the resolution process, and the Adjudicating Authority's refusal to exclude that period on that basis is erroneous where the stay has delayed the matter for over a year and the process would otherwise be pushed toward liquidation. Where the period of exclusion is granted, the Appellate Tribunal may, rather than allowing the full period claimed, allow a fixed period sufficient for completion of the resolution process, apportioned among the Resolution Professional and Committee of Creditors for revising or calling fresh plans, the Adjudicating Authority for passing its final order, and a residual period for determining any issues raised by the parties.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
R.P. of SEL Manufacturing Company Ltd. ...Appellant
Versus
Committee of Creditors of SEL Manufacturing Ltd. & Ors. ...Respondents
Present: For Appellant : Mr. Abhinav Vashisth, Senior Advocate with Ms. Anannya ghosh and Mr. Dushyant Manocha, Advocates
For 1st Respondent: Mr. Arun Kathpalia, Senior Advocate with Mr. Santanu Chaturvedi and Mr. Nikhil Mathur, Advocates
For 2nd Respondent : Ms. Purti marwaha and Ms. Henna George, Advocates
ORDER
13.11.2019 The 'Corporate Insolvency Resolution Process' was initiated
against 'SEL Manufacturing Company Limited' (Corporate Debtor) on 11th April,
2018 pursuant to an application under Section 7 of the 'Insolvency and
Bankruptcy Code, 2016 (for short, 'the I&B Code') filed by the 'State Bank of
India'. During the pendency of the case, the 'Promoters' moved before the High
Court of Punjab and Haryana. For certain reasons the matter could not proceed
or has been stayed for one or other order passed by the Hon'ble Punjab and
Haryana High Court and the Hon'ble Supreme Court. For the said reason, at
the instance of 'Committee of Creditors', the 'Resolution Professional' filed an
application before the Adjudicating Authority (National Company Law Tribunal), 2
Chandigarh Bench, Chandigarh for exclusion of more than 100 days. However,
the Adjudicating Authority by impugned order dated 10th October, 2019 having
rejected the prayer, the present appeal has been preferred.
The learned counsel appearing on behalf of the 'Resolution Professional'
submits that a case for exclusion of period is made out in terms of the decision
of this Appellate Tribunal in 'Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech
Pvt. Ltd. & Ors.' decided on 8th May, 2018 and similar period of exclusion has
been passed by the Hon'ble Supreme Court but the Adjudicating Authority failed
to notice the same.
The Respondent (Committee of Creditors) have appeared and supported
the plea taken by the Learned counsel for the 'Resolution Professional'.
The learned Counsel appearing on behalf of the 'Neeraj Saluja' (Promoter)
also appeared and has not disputed the relevant facts, as notice below.
From the record, we find that after admission of the application under
Section 7, 'Neeraj Saluja' (Promoter) moved before this Appellate Tribunal in
'Company Appeal (AT) (Insolvency) No. 226 of 2018'. In the said appeal on 21st
May, 2018 notice was issued and allowed the 'Interim Resolution Professional'
to ensure that a company remains a going concern. No interim order of stay of
'corporate insolvency proceedings' was passed.
Prior to filing of the appeal 'Neeraj Saluja' (Promoter) moved before the
Hon'ble High Court of Punjab and Haryana wherein the interim order was passed
on 1st May, 2018 in CWP No. 9131 of 2018 (O&M) prohibiting the 'Interim
Resolution Professional' to take over the management. Subsequently, the
Hon'ble High Court of Punjab and Haryana allowed the 'Neeraj Saluja' (Promoter)
to avail the alternative remedy and, therefore, the appeal preferred before this
Company Appeal (AT) (Insolvency) No. 1062 of 2019 3
Appellate Tribunal. In the meantime, the interim order was extended by the
Hon'ble High Court of Punjab and Haryana for another one week.
After the order of this Appellate Tribunal allowing the 'Interim Resolution
Professional' to function 'Neeraj Saluja' (Promoter) moved before the Hon'ble High
Court of Punjab and Haryana in CWP 15685 - 2018. In the said case, the Hon'ble
High Court passed the interim order on 22nd June, 2018, relevant of which reads
as follows:
"The present writ petition raises important question
of law and vires of Banking Regulations Act and RBI
instructions and circulars therein and keeping in
view interest of workers and the banks, it is directed
that corporate insolvency resolution process (CIRP)
against respondent companies is kept in abeyance,
the earlier board of directors of the respondent
companies shall operate their bank accounts and
bank operations as before initiation of CIRP to
protect the interest of the bank consortium. It is
directed that the Board of Directors will route all
future revenues of the said respondent companies
only through Trust and Retention Accounts. The
salaries and vendors will be paid promptly through
TRA account without delay. It is further directed that
the petitioner will file undertaking on affidavit that
the companies will not dispose off any immovable
Company Appeal (AT) (Insolvency) No. 1062 of 2019 4
property without permission of the court within three
working days.
Notice of motion returnable by 07.09.2018."
Subsequently, the said writ petition was transferred to Hon'ble Supreme
Court of India and was tagged with another writ petition i.e. W.P. (C) No. 802 of
2018 which was pending before the Hon'ble Supreme Court. The case was
renumbered as 'Transfer Petition (c) No. 1116 of 2018 wherein the Hon'ble
Supreme Court passed an interim order on 13th July, 2018, which reads as
under :
"Upon hearing the counsel the court made the following
ORDER
Issue notice.
Interim protection granted by the High Court vide its order dated 22.06.2018 to continue, in the meantime.
Tag with W.P. (C) No. 802 of 2018."
The interim order was allowed to be continued by the Hon'ble Supreme
Court by order dated 29th December, 2018. Finally, the Transfer Case (Civil) No.
16 of 2019 was withdrawn by 'Dhiraj Saluja' another 'Promoter" on 6th
September, 2019 and the said case was dismissed as withdrawn. In the result
the interim order should be vacated.
Though the aforesaid facts were noticed by the Adjudicating Authority and
not disputed by the learned counsel appearing on behalf of the 'Promoter', the
Company Appeal (AT) (Insolvency) No. 1062 of 2019 5
impugned order rejecting the period of exclusion which may result into
'Liquidation'.
Taking into consideration the fact that the matter was pending before the
Hon'ble High Court of Punjab and Haryana and before the Hon'ble Supreme
Court for about more than one year and because of interim order of stay, the
matter could not proceed, we hold that it is a fit case for exclusion of certain
period.
For the reason aforesaid instead of granting the total period of exclusion
we allow 90 days period of exclusion for completion of the resolution process. 90
days period will be counted from the date of issuance of the certified copy of this
order. Out of 90 days, 60 days' time is allowed to the 'Resolution Professional'
and 'Committee of Creditors, who may call for the fresh plan or revised plan from
eligible 'Resolution Applicant' and will consider the same and pass appropriate
order and will place the matter before the Adjudicating Authority. The
Adjudicating Authority is allowed approximately 10 days' time to pass final order.
Total process is to be completed within 70 days. Rest 20 days will be for
determination, if any, issue raised by any one or other party.
The Appeal is allowed with aforesaid observations and directions.
[Justice S.J. Mukhopadhaya] Chairperson
[Justice Venugopal M.] Member (Judicial)
/ns/sk
Company Appeal (AT) (Insolvency) No. 1062 of 2019
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