On August 9, 2019, in State Bank of India v. M/s. Manibhadra Polycot & Ors., Civil Appeal Nos. 4656-4657 of 2019, the Supreme Court has set aside an order passed by the National Company Law Appellate Tribunal ('NCLAT') whereby the NCLAT had excluded a period of 21 days from being counted as part of the 270 days' period which was otherwise over in the case. These 21 days were divided into 3 groups as under:
|Reason for exclusion||Dates||No. of days taken|
|The Order of the Adjudicating Authority was not received by the Resolution Profession||CIRP Order Date: 17th
IRP took charge: 23rd November, 2017
|The COC did not allow the working (I)RP to conduct the CIRP by restricting him to publish an EOI mentioning that the same would be done by the coming RP, the order for which was awaited.||Mail from Largest FC
restraining IRP to Publish EOI: 6th March, 2018
Date of new RP taking charge: 17th March, 2018
|The voting on the Resolution Plan was stayed by NCLAT pursuant to the filing of the MA by the Dissenting Financial Creditors.||Stay on E-voting by the
NCLT: 8th August, 2018
Stay vacated by the NCLT: 10th August, 2018
The Supreme Court, however, set aside the exclusion in relation to the first two clusters by holding that the same cannot be excluded for the reason that they are not incurred in any litigation process. In relation to the facts of the case, the Supreme Court further held that even assuming that the last cluster, namely 3 days between 08.08.2018 and 10.08.2018 are to be excluded, the Resolution plan so submitted on 08.05.2019 would still be beyond the mandatory period laid down in the Insolvency and Bankruptcy Code, 2016. As such, the order of the NCLAT was set aside.
It is relevant to note that vide its aforesaid order, the Supreme Court declined to exclude the period between the actual date of admission and the date on which the Resolution Professional got knowledge of the order of admission, which may have huge ramifications. There have been innumerable cases whereby the Adjudicating Authorities have excluded the time period on account of delay in communication of the order of admission to the Resolution Professional. This delay may not necessarily be on account of any negligence or fault attributable to the Resolution Professional. There have been cases where due to lack of infrastructure of the Adjudicating Authorities, the orders are not communicated even by the Registries of the Adjudicating Authorities.
Even as regards the second reason for exclusion that the Committee of Creditors did not allow the working RP at that time to publish the invitation calling for EOI for the reason that the same would be done by the RP (who was proposed to be appointed), the pendency of order for confirmation of Resolution Professional indicates that the delay herein was due to pendency of an adjudicatory process. Therefore, this aspect also deserves to have a relook.
In such circumstances, it is imperative that the position in this regard be further clarified so that the time period on account of justifiable reasons be excluded from CIRP and the resolution of the corporate debtor is not hampered.
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