Ramchandra D. Choudhary, R.P Of ... vs Committee Of Creditors Of Maharashtra ...

(Arising out of Order dated 27th May, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai in MA 1870, 1874 & 1875/2019 and 1873 of 2018 in C.P. (IB)- 1767/(MB)/2017)

IN THE MATTER OF:

Ramchandra D. Choudhary Resolution Professional of Maharashtra Shetkari Sugar Limited ...Appellant

Vs.

Committee of Creditors of Maharashtra Shetkari Sugar Limited ...Respondent

Present: For Appellant: - Mr. Shivanshu Kumar, Ms. Bhawna Jhorar and Mr. Vikky Dang, Advocates.

For Respondent:- None

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

The 'Resolution Professional' of 'Maharashtra Shetkari Sugar

Limited'- ('Corporate Debtor') filed application seeking exclusion of 145

days, i.e. the period between 30th August, 2018 to 23rd January, 2019,

covering the period between the date of order of admission and the actual

date on which the 'Resolution Professional' took charge for completing

the 'Corporate Insolvency Resolution Process' to count the total period of

270 days.

2

2. The Adjudicating Authority (National Company Law Tribunal),

Mumbai Bench, Mumbai, by order dated 27th May, 2019 rejected the

prayer on the ground that after change of the 'Interim Resolution

Professional' till the new 'Resolution Professional' was appointed, 'Interim

Resolution Professional' was looking after the work of the 'Resolution

Professional', therefore, there was no justification for the exclusion of the

period as 'Interim Resolution Professional' was discharging his duties as

'Resolution Professional' for completion of the 'Corporate Insolvency

Resolution Process'.

3. According to the Appellant, in the 2nd Meeting of the 'Committee of

Creditors' held on 25th October, 2018 it was decided to replace Mr. R.K.

Bhuta the then 'Interim Resolution Professional' with Mr. Ramchandra

D. Choudhary as 'Resolution Professional', but due to lack of co-operation

from the suspended management of the Company, the 'Resolution

Professional' could not take over the charge of the management of the

'Corporate Debtor'.

4. For the said reason, the 'Resolution Professional' filed I.A. No. 1349

of 2018 before the Adjudicating Authority on 9th November, 2018 seeking

directions against the suspended Directors of the 'Corporate Debtor' for

extending their assistance in managing the affairs of the 'Corporate

Debtor' and to provide necessary information. However, no such

documents were handed over nor the management of the 'Corporate

Debtor' and subsequently, pursuant to the decision of the 'Committee of

Company Appeal (AT) (Insolvency) No. 633 of 2019 3

Creditors' dated 19th December, 2018, the suspended Board of Director

Mr. Abhijit Deshmukh attended the meeting and reluctantly agreed to co-

operate with the 'Interim Resolution Professional' in terms with the

directions of the Adjudicating Authority and Mr. Ramchandra D.

Choudhary was allowed to continue as 'Resolution Professional'.

5. On 16th January, 2019, the 'Interim Resolution Professional' placed

his resignation before the 'Committee of Creditors' and explained them

the circumstances about this ongoing assignment. After due

consideration of the facts, the resignation of Mr. R.K. Bhuta was accepted

and Mr. Ramchandra D. Choudhary was allowed to continue as

'Resolution Professional'.

6. On 5th Meeting of the 'Committee of Creditors' held on 6th February,

2019, it was observed that due to very less period of notice 'Expression

of Interest' and completion of all formalities under the 'I&B Code' and as

the 'Resolution Professional' was handed over the charge of the

management much later, the 'Committee of Creditors' asked for exclusion

of the period of 145 days. However, the same has been rejected.

7. Learned counsel for the Appellant- 'Resolution Professional'

submitted that the Adjudicating Authority noticed the decision of this

Appellate Tribunal in "Quinn Logistics India Pvt. Ltd. v. Mack Soft

Tech Pvt. Ltd. & Ors.─ Company Appeal (AT) (Insolvency) No. 185 of

2018", at page 44, but failed to appreciate that this Appellate Tribunal

Company Appeal (AT) (Insolvency) No. 633 of 2019 4

kept it open and made it clear that any other circumstances which justify

the exclusion of a certain period can be taken into account. In the present

case, it is stated that the erstwhile 'Resolution Professional' did not

function for 145 days due to non-cooperation by the suspended Board of

Directors. It is submitted that the period of 145 days is to be excluded as

decided by the 'Committee of Creditors' so that they may consider the two

'Resolution Plans' pending consideration and can save the company from

liquidation.

8. Notice was issued on Respondent- 'Committee of Creditors' as also

the Promoters of the 'Corporate Debtor'. But in spite of service of notice,

nobody appeared.

9. In the present case, the Adjudicating Authority noticed that the

'Interim Resolution Professional' could not function because of non-

cooperation of the Promoters of the 'Corporate Debtor'. The records were

not supplied to him nor the management was handed over. It was handed

over much later i.e after 145 days and there being short time, 'Expression

of Interest' etc. were called for much later.

10. Though the aforesaid fact has been noticed, the Adjudicating

Authority on mere ground that the 'Interim Resolution Professional'

continued in place of 'Resolution Professional', rejected the claim for

exclusion of the period which was not justified. The Adjudicating

Company Appeal (AT) (Insolvency) No. 633 of 2019 5

Authority has failed to notice that the Promoters did not supply records

nor the management was handed over to 'Resolution Professional'.

11. Learned counsel for the 'Resolution Professional' submitted that

there are two 'Resolution Plans' which are pending consideration before

the 'Committee of Creditors'. If 270 days is counted and the period as

sought for is not excluded, they have to file application under Section 33

for liquidation.

12. Reliance has been placed on decision of this Appellate Tribunal in

"Quinn Logistics India Pvt. Ltd. v. Mack Soft Tech Pvt. Ltd. & Ors.─

Company Appeal (AT) (Insolvency) No. 185 of 2018", wherein this

Appellate Tribunal observed:

"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:-

(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.

Company Appeal (AT) (Insolvency) No. 633 of 2019 6

(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. 633 of 2019 7

13. In the present case, we find that the Promoters had neither handed

over the records nor the management of the 'Corporate Debtor' to the

'Interim Resolution Professional' who continued for 145 days in spite of

his replacement by the 'Resolution Professional', the 'Interim Resolution

Professional' subsequently resigned because of non-cooperation from the

Promoters.

14. The aforesaid facts have not been denied by the Promoters. In the

facts and circumstances of the case, while we set aside the impugned

order dated 27th May, 2019 passed by the Adjudicating Authority and

exclude 90 days for the purpose of counting the period of 'Corporate

Insolvency Resolution Process' of 270 days in place of 145 days to enable

the 'Resolution Professional'/ 'Committee of Creditors' to complete the

'Corporate Insolvency Resolution Process' at an early date preferably

within 45 days.

The appeal is allowed with aforesaid observations. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI 24th July, 2019

AR

Company Appeal (AT) (Insolvency) No. 633 of 2019