Nitesh Sagarmal Jain Vs. Prithvi Ferro Alloys Private Limited - Exclusion of Covid19 Lockdown period & Delayed filing of Claim.

NCLT Kolkata (11.06.2020) in Nitesh Sagarmal Jain Vs. Prithvi Ferro Alloys Private Limited [I.A. No. …./KB/2020 in CP (IB) No. 140/KB/2019] held that;

• That lockdown was implemented in India owing to Covid-19 pandemic from 25th March 2020 and subsequently on 20th April 2020, Regulation 40C was introduced in CIRP Regulations thereby the RP can exclude the period of lockdown from the timelines prescribed for the completion of the CIRP if he chooses. 

• Since I am satisfied that no resolution plan was so far approved and that there were no deliberate delays or latches on the side of the applicant for the belated submission of the claim, it appears to me that this application requires consideration.

Excerpts of the order; 

# 1. Mr. Nitesh Sagarmal Jain, representing M/s Bhairav Metals in capacity as its Partner (hereinafter “Applicant”) filed this application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter “Code”) read with relevant Regulations and Rules 11 and 14 of National Company Law Tribunal Rules, 2016, challenging the order of rejection of the claim submitted by the applicant. The applicant contents that his office is located in Mumbai, and the order of admission was not brought to his notice in time and that immediately knowing the initiation of CIRP he had submitted the claim but rejected by the RP twice and hence filed this application praying for issuing direction to the RP to accept the claim of the Applicant and not to reject it merely on technical grounds such as delayed filing.

# 2. It is submitted that CIRP has not completed and no resolution plan was approved and hence prayed for an early hearing of the application through video conference. The explanation for the early consideration of this application before lifting of the lockdown being satisfactorily explained, this application is listed on today for hearing after giving notice to both sides and directing the respondent to submit a brief written defence. The respondent submitted written defence submitting that after the commencement of CIRP, public announcement was done by him in the news papers in Kolkata on 11th August 2019 since the Registered Office is situated at Kolkata, in the news papers in Nagpur, Maharashtra namely Indian Express (English) on 11th August 2019 and in Lok Satta (Marathi daily) on 11th August 2019 since the plant of the CD is situated near Nagpur. The advertisement was also uploaded by him on the IBBI website. Since as per Regulation 12(2) of the CIRP regulations, the RP cannot accept any claim submitted by the creditor after 90 days from the CIRP Commencement date he rejected the claim. The applicant lodged its claim beyond 90 days and hence there is no illegality crept on the side of the RP.

# 5. The Ld Pr.CS further submits that the RP made public announcement under Section 13 of the Code the newspapers published in Kolkata, whereas the Applicant resides in Mumbai and therefore the publication was not brought to the notice of the applicant and hence the delay. According to him the applicant found about this process under the Code sometime on 2nd February 2020 and it took all necessary steps expediently. It filed its claim by email through its advocate with the RP of the CD on 7th February 2020. The RP referring to Regulation 12(2) of CIRP Regulations replied through email on 11th February 2020 and declined to accept the claim on the ground of delayed submission. The Applicant’s advocate on 12th February 2020 again wrote to RP of CD for admission of claim relying on the order of The Hon'ble NCLT, Principal Bench in Edelweiss Asset Reconstruction Co. Pvt. Ltd. Vs. Adel Landmarks Ltd., dated 06.06.2019, however not considered and declined the application on 13th February, 2020 and hence this application.

# 6. The Ld. Counsel Mr. Rahul Auddy for the RP submits that RP was not empowered to receive the claim submitted to him beyond 90 days as per section 12(2) of the Code, and that the RP have taken all possible steps at his end to ensure public notice about the initiation of CIRP of the CD and invitation of claims. However, he did not oppose this application and submit that if the Adjudicating Authority is satisfied that there was reasonable cause in the delayed filing of the claim and directs the RP to consider the claim of the Applicant, the RP shall abide by such directions.

# 7. From the foregoing submissions on both sides it is understood that the order of admission was passed in the case in hand on 8th August,2019. The extended period of CIRP was expired on 3rd May 2020 in the midst of lock down. That lockdown was implemented in India owing to Covid-19 pandemic from 25th March 2020 and subsequently on 20th April 2020, Regulation 40C was introduced in CIRP Regulations thereby the RP can exclude the period of lockdown from the timelines prescribed for the completion of the CIRP if he chooses. Since I am satisfied that no resolution plan was so far approved and that there were no deliberate delays or latches on the side of the applicant for the belated submission of the claim, it appears to me that this application requires consideration.

# 8. In view of the above discussion, this application is liable to be allowed by directing the RP to reconsider the claim if filed in proper Form, if not time is to be given for correction by stipulating time to resubmit and consider the claim in accordance with the provisions of the Code, and Regulations. The result of admission or rejection is to be intimated to the applicant.

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Vivek Raheja, Resolution Professional - Exclusion of time spent in judicial intervention & lockdown period due to Covid19, under section 12.

NCLAT (04.05.2021) in Vivek Raheja, Resolution Professional Vs….......[Company Appeal (AT) (Ins) No. 331 of 2021] held that;

• This Tribunal in suo moto Company Appeal (AT) (Insolvency) No. 01 of 2020 dated 31.03.2020 excluded the period of lockdown ordered by the Central Government and State Government including the 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 I & B Code.

• Further, this Tribunal also in Company Appeal (AT) (Insolvency) No. 120 of 2021 in “Anil Tayal vs. Committee of Creditors” dated 23.02.2021 excluded the time spent in judicial intervention. The NCLT, Principal Bench in “State Bank of India vs. M/s Century Communication Ltd. & Ors.” vide its order dated 09.12.2020 in I.A 5320 of 2020 excluded the lockdown period from 25.03.2020 to 31.08.2020 a total period of 160 days from the liquidation period.

Excerpts of the Order;

04.05.2021: The present Appeal is assailed against the order passed by the Adjudicating Authority vide order dated 17.03.2021 passed in I.A No. 891 of 2021 rejecting some of the prayers as sought by the Appellant herein. Brief facts:

# 1. The Learned Counsel for the Appellant submitted that the Appellant filed an Application being I.A No. 891 of 2021 before the Adjudicating Authority (NCLT New Delhi Bench- II) praying to exclude the time consumed on account of time loss due to the lockdown imposed by the Government of India and State Government and time consumed due to pendency of I.A 4208of 2020.

# 2. The Learned Counsel submitted that the Hon’ble Adjudicating Authority considered to exclude 97 days period from 25.03.2020 to 30.6.2020 on the ground of lockdown imposed by the Central Government as well as State Government instead of 160 days. Further, the Hon’ble Adjudicating Authority rejected the exclusion of time which was consumed due to pendency of I.A. The Learned Counsel submitted that as per Section 12(3) of the IBC 330 days time is fixed by the Code for the purpose of completion of CIRP process. However, the Learned Counsel submitted that in view of lockdown total 160 days has been lost and a period of 92 days was lost due to pendency of I.A 4208 of 2020. It is submitted that if the period is not excluded the Resolution Professional cannot completed the Resolution Process in respect of Corporate Debtor, thereby the Corporate Debtor may go into liquidation effortlessly.

# 3. The Learned Counsel further submitted that the CIRP of the Corporate Debtor had commenced from 26.02.2020 and due to lockdown i.e. from 25.03.2020 only one meeting was convened i.e. on 02.04.2020. Further, during unlock 3.0 ending 31.08.2020 the second and third meetings were convened on 09.06.2020 and 26.08.2020. Even after lapse of almost a year from the date of commencement of CIRP the process is at nascent stage. While so, the Appellant field an I.A 4208 of 2020 before the Adjudicating Authority on 27.09.2020 under Section 22(3)(b) of the Code and the said Application was pending for 123 days till the I.A was disposed of on 27.01.2021. 

# 4. The Learned Counsel submitted that the Hon’ble Adjudicating Authority excluded only 97 days from the CIRP Period. As per the provisions of the Code the CIRP should be completed within a period of 330 days from the date of commencement of CIRP. However, in the present case the 330 days ended on 21.01.2021 and if 97 days are applied 54 days already stand exhausted. The present RP is just left with 43 days only. It is submitted that the 43 days period is too insufficient to steer the CIRP to a successful conclusion.

# 5. The Learned Counsel relied upon the decision of the Hon’ble Supreme Court and this Tribunal in support of his case. 

# 6. Heard the Learned Counsel for the Appellant. The Learned Adjudicating Authority vide its order dated 17.03.2021 excluded 97 days on account of lockdown taking into consideration the period from 25.03.2020 to 30.06.2020 instead of 25.03.2020 to 31.08.2020 as prayed by the Applicant while calculating the total period of CIRP. However, the Learned Adjudicating authority rejected the exclusion of time consumed in judicial intervention for  the purpose of calculating total CIRP period. From the perusal of paragraph 10 of the impugned order the Learned Adjudicating Authority observed as under:

• “Here, we observe that the Applicant has not claimed the extension beyond the 330 days on the ground of exceptional circumstances rather he has claimed the period on the ground of pendency of the Application. We also notice that no stay order at any point of time was passed by this Adjudicating Authority regarding the CIR Process or on functioning of the RP.”

# 7. Further, the learned Adjudicating Authority was of the view that in terms of the second proviso of Section 12(3) of the Code, the Corporate Insolvency Resolution Process shall mandatorily be completed within a period of 330 days from the Insolvency commencement date, including any extension of the period of CIRP.

# 8. The Learned Adjudicating Authority by relying upon the provisions of the IBC and was of the view that the time consumed in judicial intervention can be considered as extension of the period, as mandated under the Code, and no exceptional circumstances shown or made, beyond 330 days.

# 9. The Learned Counsel for the Appellant relied upon the Judgment of the Hon’ble Supreme Court in the case of “Essar Steel India Ltd. Vs. Satish Kumar & Ors.” in Civil Appeal No. 8766-67 of 2019.

# 10. From the observations of the Learned Adjudicating Authority we are of the view that the Adjudicating Authority rejected the prayer with regard to period seeking exclusion of time consumed in judicial intervention on the ground that the Appellant has not shown the exceptional circumstances for excluding the time. It is unequivocal that the country faced pandemic situation namely Covid -19 and due to the said pandemic the whole nation suffered and regular activities have come to a stand still. The Learned Adjudicating Authority ought to have considered the situation as exceptional circumstances for the reason of prevailing pandemic in the country and the CIRP process was still at a nascent stage. It is an admitted fact that only 3 meetings have been convened from the date of commencement of CIRP till August, 2020. However, an Application is filed for replacing the RP. The said Application was pending for consideration before the Learned Adjudicating Authority and the same was disposed of on 27.01.2021. From the facts it is more relevant that the new RP has to commence the CIRP where it was left by his predecessor. The Hon’ble Supreme Court in “Essar Steel India Ltd.” Supra clearly held that:

• “The effect of this declaration is that ordinarily the time taken in relation to the Corporate Resolution Process of the Corporate Debtor must be completed within the outer limit of 330 days from the Insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the Insolvency Resolution Process beyond 330 days, and that it would be in the interest of all stakeholders that the Corporate Debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and /or Appellate Tribunal the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate tribunal to extend time beyond 330 days.”

# 11. From the Judgment of the Hon’ble Supreme Court that the Adjudicating Authority and /or this Tribunal may extend time beyond 330 days in exceptional cases. The Appellant had shown the exceptional circumstances one is the imposition of lockdown and pendency of the judicial proceedings before the Adjudicating Authority. Apart from the above , the Hon’ble Supreme Court in a number of cases clearly held that the liquidation is the last resort. In the present case as discussed above the CIRP is at nascent stage and the Resolution Professional has to take forward duly complied with the procedure as prescribed under the Code for the purpose of Resolution of the Corporate Debtor instead of pushing the Corporate Debtor into liquidation. This Tribunal in suo moto Company Appeal (AT) (Insolvency) No. 01 of 2020 dated 31.03.2020 excluded the period of lockdown ordered by the Central Government and State Government including the 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 I & B Code. Further, this Tribunal also in Company Appeal (AT) (Insolvency) No. 120 of 2021 in “Anil Tayal vs. Committee of Creditors” dated 23.02.2021 excluded the time spent in judicial intervention. The NCLT, Principal Bench in “State Bank of India vs. M/s Century Communication Ltd. & Ors.” vide its order dated 09.12.2020 in I.A 5320 of 2020 excluded the lockdown period from 25.03.2020 to 31.08.2020 a total period of 160 days from the liquidation period. 

# 12. In view of the aforesaid reasons and relying upon the decision of the Hon’ble Supreme Court and this Tribunal, having satisfied with the grounds as made in the Appeal, we hereby pass the following order:

• (a) A total period of 92 days is excluded whereby the time lost due to judicial intervention i.e. I.A 4208 of 2020 from the total time period of 330 days. Accordingly, we hereby set aside paragraph 10 of the impugned order dated 17.03.2021.

• (b) A total period of 160 days is excluded the time lost on account of imposition of lockdown from 25.03.2020 to 31.08.2020. Accordingly, we modify paragraph 9 of the impugned order dated 17.03.2021.

• (c) Further the time spent in filing this Appeal i.e. from 12.04.2021 to 04.05.2021 is also excluded.

• 
  

# 13. With the aforesaid directions the Appeal is disposed of. No order as to Costs.

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Supreme Court of India, Suo Motu Writ Petition (Civil) No(s).3/2020 - Exclusion of Limitation period.

 Supreme Court (08.03,2021) in Suo Motu Writ Petition (Civil) No.3 of 2020, ordered for exclusion of Limitation period from 15.03.2020 till 14.03.2021 for the Lockdown period due to Covid19.

 

Excerpts of the order;

# 1. Due to the onset of COVID-19 pandemic, this Court took suo motu cognizance of the situation arising from difficulties that might be faced by the litigants across the country in filing petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under any special laws (both Central or State). By an order dated 27.03.2020 this Court extended the period of limitation prescribed under the general law or special laws whether compoundable or not with effect from 15.03.2020 till further orders. The order dated 15.03.2020 was extended from time to time. Though, we have not seen the end of the pandemic, there is considerable improvement. The lockdown has been lifted and the country is returning to normalcy. Almost all the Courts and Tribunals are functioning either physically or by virtual mode. We are of the opinion that the order dated 15.03.2020 has served its purpose and in view of the changing scenario relating to the pandemic, the extension of limitation should come to an end.

 

# 2. We have considered the suggestions of the learned Attorney General for India regarding the future course of action. We deem it appropriate to issue the following directions: –

• 1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.

• 2. In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.

• 3. The period from 15.03.2020 till 14.03.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.

• 4. The Government of India shall amend the guidelines for containment zones, to state.

 

“Regulated movement will be allowed for medical emergencies, provision of essential goods and services, and other necessary functions, such as, time bound applications, including for legal purposes, and educational and job-related requirements.”

 

# 3. The Suo Motu Writ Petition is disposed of accordingly.

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Bhim Sain Goyal Vs The American Swan Lifestyle Co. Pvt. Ltd.- Exclusion of time due to continuing restrictions after Covid19, lockdown

NCLAT (15.12.2020) in Bhim Sain Goyal Vs The American Swan Lifestyle Co. Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 1067 of 2020] held that;. we are of the considered opinion that to obviate the difficulties faced by the Appellant – Interim Resolution Professional in taking steps necessary for carrying forward the Corporate Insolvency Resolution Process, the prayer for exclusion of time w.e.f. 20th March, 2020 to 2nd September, 2020 based on recommendation of Committee of Creditors dated 9th September, 2020 was warranted.

Excerpts of the order;

15.12.2020: This appeal is preferred by the Interim Resolution Professional – Shri Bhim Sain Goyal, appointed to conduct the Corporate Insolvency Resolution Process in respect of the Corporate Debtor – ‘American Swan Lifestyle Co. Pvt. Ltd.’, against impugned order dated 23rd October, 2020 passed by the Adjudicating Authority (National Company Law Tribunal) New Delhi, Court II by virtue whereof the Adjudicating Authority, while declining exclusion of 167 days allowed exclusion only to the extent of 68 days from initial period of 180 days of Corporate Insolvency Resolution Process.

2. Learned counsel for the Appellant submits that the impugned order is a non-speaking order and the Adjudicating Authority has failed to appreciate that the Hon’ble Apex Court has extended limitation in suo moto proceedings from 15th March, 2020 till further orders.

3. After hearing Shri P. K. Sachdeva, Advocate representing the Appellant – Interim Resolution Professional, we find that the order passed by the Hon’ble Apex Court in suo moto Writ Petition (Civil) No. 3/2020 on 23rd March, 2020 concerns only filing of petitions/ applications/ suits/ appeals and other proceedings for which period of limitation has been extended w.e.f. 15th March, 2020 till further orders irrespective of the limitation prescribed under the general law or special laws. Though, this direction given by the Hon’ble Apex Court under Article 142 r/w Article 141 of Constitution of India has not been specifically made applicable to matters other than filing of petition, applications, suits, appeals, etc, the spirit behind it holds good in other proceedings as well. The Hon’ble Apex Court has taken note of the difficulties arising out of the imposition of lockdown in the wake of outbreak of COVID 19 pandemic and the directions came to be passed to obviate such difficulties.

4. In the instant case, we find that the Adjudicating Authority has declined to exclude 167 days while reckoning the period of Corporate Insolvency Resolution Process by making an observation that the reasons stated are not plausible. The reasons assigned for seeking such exclusion and why the same did not prevail with the Adjudicating Authority have not been addressed. The impugned order to this extent can safely be termed to be a non-speaking order and cannot be supported.

5. It is submitted by Mr. P. K. Sachdeva, learned counsel for the Appellant that lockdown was imposed on 25th March, 2020 and even though the unlock process was stated in a phased manner after 30th June, 2020, many restrictions were continuing in the entire NCR area where the Corporate Debtor and its Registered Office is located. The Interim Resolution Professional and his team could not perform its function due to restrictions on movement.

6. Judicial notice has been taken of the hardship caused, curbs on movement and normal business activities which is evident from order passed by the Hon’ble Apex Court in suo moto proceedings. Therefore, following the spirit of the dictum of Hon’ble Apex Court, we are of the considered opinion that to obviate the difficulties faced by the Appellant – Interim Resolution Professional in taking steps necessary for carrying forward the Corporate Insolvency Resolution Process, the prayer for exclusion of time w.e.f. 20th March, 2020 to 2nd September, 2020 based on recommendation of Committee of Creditors dated 9th September, 2020 was warranted.

7. For the reasons stated hereinabove, we set aside the impugned order and while allowing the prayer direct exclusion of time w.e.f 20th March, 2020 to 2nd September, 2020 in reckoning of the ordinary Corporate Insolvency Resolution Process period viz. 180 days. Beyond that, if an occasion arises for seeking extension of time based on cogent reasons, the Resolution Professional shall be at liberty to seek the same from the Adjudicating Authority. The appeal is accordingly allowed with direction to the Appellant – Interim Resolution Professional to carry forward the Corporate Insolvency Resolution Process with expedition.

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Committee of Creditors of Rosewood Trexim Pvt. Ltd. Through Resolution Professional, Mr. Shailender Singh - Exclusion of Time for illness of RP due to Covid19.

NCLAT (15.12.2020) in Committee of Creditors of Rosewood Trexim Pvt. Ltd. Through Resolution Professional, Mr. Shailender Singh,[Company Appeal (AT) (Insolvency) No. 1066 of 2020] held that;. We accordingly, allow the appeal, set aside the impugned order and allow exclusion of 203 days w.e.f. 15th March, 2020 till 4th October, 2020 (inclusive of the period for which the petitioner was immobilized as a victim of COVID-19) from CIRP period of 180 days and also allow extension of CIRP period by 90 days.

Excerpts of the order;

15.12.2020: Aggrieved of dismissal of IA 4719 of 2020, seeking exclusion of period and extension of Corporate Insolvency Resolution Process (CIRP for short) period in the wake of lockdown imposed due to COVID-19 being declared Pandemic, by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Principal Bench, vide impugned order dated 19th November, 2020, the Committee of Creditors (“COC” for short) of Corporate Debtor- ‘Rosewood Trexim Pvt. Ltd.’ through Resolution Professional Mr. Shailendra Singh has preferred the instant appeal assailing the impugned order inter alia on the ground that the Resolution Professional had fallen sick around 01st September, 2020 necessitating to go into self-isolation and that he subsequently tested positive for COVID-19 on 18th September, 2020, which hampered progress in the conduct of CIRP.

# 2. It is submitted by the Appellant- Resolution Professional appearing in person that on account of being in self-isolation and quarantined as a victim of COVID-19 Pandemic, he could not carry on the CIRP. It is submitted that even when he was still in quarantine, due to urgency in the matter, he issued notice on 22nd September, 2020 convening meeting of COC on 24th September, 2020 through virtual mode but his efforts turned futile as his ill health proved to be a stumbling block in achieving the desired progress. It is submitted that the Appellant recovered from illness and after testing negative on 2nd October, 2020, he sent notice for 8th COC Meeting on 5th October, 2020 and the meeting of COC was finally conducted on 8th October, 2020 wherein the COC unanimously resolved by 100% voting of the sole COC member that the Adjudicating Authority be approached for exclusion of period of lockdown time and extension of time to conclude the CIRP.

# 3. After hearing the Appellant in person and keeping in view the ground projected which is duly substantiated by material on record (Annexure A8 and A9 being page nos. 63 to 70 of the appeal paper book), we are of the considered opinion that the Appellant was, in the wake of outbreak of COVID-19 declared as Pandemic culminating in imposition of Nationwide lockdown w.e.f 25th March, 2020, prevented from undertaking further steps for bringing the CIRP to logical conclusion. There is ample proof on record to hold that the Appellant was tested positive for COVID-19 after falling sick and he became inactive due to medical reason being on self-isolation and quarantined. Thus, despite his earnest effort he was unable to convene meeting of the COC. Even an attempt made at convening such meeting through digital platform proved futile due to falling ill. In the given circumstances, the Adjudicating Authority should have taken these factors into consideration which warranted mitigating the hardship and not compounding the same. The COC, which was in existence, had not been dissolved and once the Nationwide lockdown was imposed as a sequel to outbreak of COVID-19 declared as Pandemic resulting in all activities related to trade and commerce business coming to a grinding halt, COC as an institution cannot be said to have got dissolved, moreso, when taking factors of Pandemic into consideration, fresh filing of applications under Sections 7, 9 & 10 of the ‘I&B Code’ was suspended and in suo moto jurisdiction of the Hon’ble Apex Court and this Appellate Tribunal, the limitation was extended. Having conspectus of all these relevant factors, we are inclined to hold that the COC would not be deemed to have been dissolved, at least for the purposes of passing of Resolution seeking exclusion of Lockdown period and extension of CIRP period beyond the prescribed time of 180 days. There being cogent reasons for acceding to the

prayer made in this appeal, we find that the impugned order cannot be sustained.

# 4. We accordingly, allow the appeal, set aside the impugned order and allow exclusion of 203 days w.e.f. 15th March, 2020 till 4th October, 2020 (inclusive of the period for which the petitioner was immobilized as a victim of COVID-19) from CIRP period of 180 days and also allow extension of CIRP period by 90 days.

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Nawal Kishore Prasad Vs Hospitech Management Consultants Pvt Ltd - Fee and Expenses of IRP/RP for the lockdown period.

NCLT New Delhi-V (13.07.2020) In Nawal Kishore Prasad Vs Hospitech Management Consultants Pvt Ltd [IB-1639/ND/2019 1A/2394/ND/2020 1A/2383/ND/2020 ] held that; In our considered view, when a person is engaged to perform the duty then he is entitled to get the fee and accordingly, the fee and expenses of the IRP/RP was approved by the CoC, therefore, only on the ground that during lockdown period no work has been done by the IRP/RP, the person cannot be debarred from claiming the fee, if it is approved by the committee of creditors, so, we find no force in the contention raised by the Ld. Counsel for Corporate Debtor that IRP/RP is not entitled to get the fee and expenses for the lockdown period.

Excerpts of the order;

IA-2394/2020: 

# 1. The present application is filed for submissions of Status report by Mr. Kumud Shekhar, Resolution Professional, in respect of second meeting of Committee of Creditors of Hospitech Management Consultants Pvt. Ltd. In the status report it is specifically mentioned that after the disposal of the Company Appeal (AT) Insolvency No. 219/2020 on 10.06.2020, the second CoC meeting was held on 13.06.2020 through VC and in that meeting, it was resolved that RP shall file form FA after the CIRP cost till 25th June 2020, is paid by the Corporate Debtor to withdraw the CIRP which is amounted to Rs. 17,75,638/ 

IA-2383/2020: - 

# 2. The present application is filed under Section 60(5) of the IBC, 2016 read with Rule 11 of the NCLT Rules, 2016 and Section 12 A of IBC, 2016 read with Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 seeking directions in company petition (IB) No. 1639/ND/2019 titled Nawal Kishore Prasad Vs. Hopitech Management Consultants Pvt. Ltd. 

# 3. Since, both the IAs are related with each other, therefore, we would like to dispose off both the IAs with this common order. 

# 4. We have heard the Ld. Counsel for petitioner/Corporate Debtor as well as RP and perused the averments made in both the applications. 

# 5. Ld. Counsel for petitioner submitted that Corporate Debtor had preferred an appeal against the order dated 27.01.2020 passed by this Adjudicating Authority and in that appeal the Hon'ble NCLAT passed the following order: - 

• “We accordingly dispose of this appeal giving liberty to the Corporate Debtor to approach the Committee of Creditor through IRP for permitting the Operational Creditor to withdraw the application in view of settlement stated to have been arrived at, inter-se the Operational Creditor and the Corporate Debtor. The appeal is accordingly disposed off. The interim directions shall stand vacated.” 

# 6. He further submitted that further in pursuant of said direction, the present application is filed by the Director of the suspended Board and hereinafter, through present application, the applicant seeks directions inter alia for fixing reasonable and realistic cost incurred for the purpose of Regulation 31(c) and (d) by the respondent/RP as the respondent/RP is harassing the applicant by demanding arbitrary, unreasonable and preposterous Corporate Insolvency Professional Process cost of Rs. 3,50,000/- per month plus the expenses even though the entire country since 25.03.2020 is under lockdown and businesses are suffering and the companies are not in the best of financial situations and the applicant's company which is an MSME is not in best of the financial position. Furthermore, for the period 05.03.2020 till 10.06.2020 (which includes the lockdown period due to COVID-19 pandemic), practically, no services were rendered or required concerning the CIRP of the Corporate Debtor. ……….

# 15. At this juncture, we would like to refer Regulation 34 of IBBI (Insolvency Resolution Process for Corporate Person) Regulation 2016 and same is quoted below: - 

• "The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process cost. 

Explanation :- For the purpose of this regulation”expense“ include the fee to be paid to the resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals if any, and other expense to be incurred by the resolution Professional.” 

# 16. In view of the aforesaid regulation the fee and expenses shall be fixed by the committee of creditor and not by adjudicating authority, and here in the case in hand it is not the case of applicant that fee and expenses are not approved by the committee of creditor rather the case of the applicant is that fee of Resolution professional is exorbitant, therefore, in view of aforesaid regulation this adjudicating authority is unable to accept the contention of the applicant of IA 2383/2020. 

# 17. In our considered view, when a person is engaged to perform the duty then he is entitled to get the fee and accordingly, the fee and expenses of the IRP/RP was approved by the CoC, therefore, only on the ground that during lockdown period no work has been done by the IRP/RP, the person cannot be debarred from claiming the fee, if it is approved by the committee of creditors, so, we find no force in the contention raised by the Ld. Counsel for Corporate Debtor that IRP/RP is not entitled to get the fee and expenses for the lockdown period. 

# 19. Mere plain reading of the provisions show that as per regulation 30A, after constitution of the COC, the applicant must filed application for withdrawal u/s 12A of IBC through IRP/RP and that is the reason Hon'ble NCLAT directed the corporate debtor to approach the Committee of Creditor through IRP for permitting the Operational Creditor to withdraw the application in view of settlement stated to have been arrived at, inter-se the Operational Creditor and the Corporate Debtor. Hence we are of the considered view that since the applicant directly filed the present application , therefore, same is not maintainable. Accordingly, we hereby DISMISSED the IA-2383/2020 . 

# 20. So far IA -2394 is concerned, Corporate Debtor is directed to file bank guarantee of Rs. 17,75,638/- in favour of RP, thereafter, RP is directed to file an withdrawal application, which shall be considered in accordance with the provision of law. With this order IA-2394 is disposed off.

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Hemant Sharma RP of Global Softech Ltd. - Exclusion of Lockdown period.

NCLAT (02.11.2020) in Hemant Sharma RP of Global Softech Ltd. (Company Appeal (AT) (Insolvency) No. 942 of 2020) permitted exclusion of period commencing from 25th March, 2020 till 15th September, 2020 while computing the period of 180 days for the purpose of bringing the Corporate Insolvency Resolution Process

Excerpts of the order;

02.11.2020: Prayer for exclusion of time as sought by the Resolution Professional of the Corporate Debtor – ‘Global Softech Ltd.’ was partially allowed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad, Court 2 in terms of impugned order dated 15th October, 2020. While the Appellant – Resolution Professional had sought exclusion of period of lockdown w.e.f. 25th March, 2020 to 15th September, 2020, the learned Adjudicating Authority allowed exclusion of only 68 days w.e.f. 23rd March, 2020 to 31st May, 2020 on the ground that the lockdown period in the State was declared only for such period. The Adjudicating Authority also took note of the fact that the first 180 days period inclusive of lockdown period had expired on 24th July, 2020. Thus, the application came to be partially allowed.

# 2. Shri P. Nagesh, Advocate appearing for the Appellant submits that the lockdown restrictions did not terminate on 31st May, 2020 as noticed by the Adjudicating Authority in the impugned order. It is submitted that the Registered Office of the Corporate Debtor is located in Union Territory of Dadra and Nagar Haveli and its Corporate Office is situated in the State of Maharashtra, where lockdown restrictions continued till 15th September, 2020 and no business/commercial activities could be undertaken. It is further submitted that two Prospective Resolution Applicants had responded to the Expression of Interest and they wanted some time to file Resolution Plans but imposition of lockdown due to COVID-19 pandemic on 23rd March, 2020 resulting in disruption of commercial activities no progress could be achieved in the Corporate Insolvency Resolution Process. It is submitted that the object of the I&B Code would be defeated if the Resolution Process is allowed to be scuttled for the reasons weighing with the Adjudicating Authority, moreso, as the lockdown restrictions specific to the areas where the Registered Office and Corporate Office of the Corporate Debtor are situated and continued upto 15th September, 2020.

# 3. Annexure A-9 forming page 62 of the appeal paper book is copy of the order passed by the Government of Maharashtra which brings it to fore that the lockdown restrictions were extended in the entire state of Maharashtra till 30th September, 2020. Annexure A-8 forming page 61 of the appeal paper book is an order passed by the U.T. Administration of Dadra & Nagar Haveli and Daman & Diu, which shows that the lockdown restrictions were extended upto 31st August, 2020. Having heard learned counsel for the Appellant and after perusing the Company Appeal (AT) (Insolvency) No. 942 of 2020 record, we are convinced that the ground projected for exclusion of the lockdown restriction period from 25th March, 2020 till 15th September, 2020 has substance and same deserves to be allowed, so as to make the resolution process meaningful and result oriented. We accordingly allow this appeal and set aside the impugned order with direction that the period commencing from 25th March, 2020 till 15th September, 2020 shall be excluded while computing the period of 180 days for the purpose of bringing the Corporate Insolvency Resolution Process to its logical conclusion. To remove any ambiguity, it is clarified that the extended period of 90 days beyond 180 days shall commence only after the prescribed period of 180 days after exclusion of aforesaid period in terms of this judgment is over. Appeal alongwith I.A. Nos. 2563/2020, 2564/2020 and 2565/2020 stands disposed of.

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Sudip Bhattacharya, RP of Reliance Naval and Engineering Ltd - Exclusion of the period of Lockdown

NCLAT(08.10.2020) disposed of the appeal of  Sudip Bhattacharya, RP of Reliance Naval and Engineering Ltd. [Company Appeal (AT) (Insolvency) No. 858 of 2020] and permitted exclusion of the period of lockdown due to Covid19, w.e.f. 25th March, 2020 till 31st August, 2020 and made clear that this order will not serve as a precedent in all cases as it has been passed in the peculiar circumstances of instant case.

Excerpts of the order;

# 08.10.2020: Appellant, Resolution Professional of ‘Reliance Naval and Engineering Ltd.’ is aggrieved of order dated 20th August, 2020 by virtue whereof the Adjudicating Authority (National Company Law Tribunal) Ahmedabad Bench, Court 2 granted extension of 90 days to the Resolution Professional to complete the Corporate Insolvency Resolution Process (CIRP) beyond 180 days but declined to exclude the lockdown period on the ground that 90 days period of extension was still in hand.

# 2. After hearing Shri Rajshekhar Rao, Advocate representing the Resolution Professional and Shri Sanjeev Kumar, Advocate representing the Committee of Creditors, we are of the considered opinion that having regard to the imposition of lockdown on account of outbreak of COVID-19 declared as pandemic from 23rd March, 2020 to 29th May, 2020 (Nationwide) and the fact that the State of Maharashtra where the Corporate Office of the Corporate Debtor is stated to be located has been worst hit with most of the areas declared Red Zone culminating in extension of lockdown till 31st August, 2020, the hardship was required to be mitigated by allowing the exclusion as prayed for.

# 3. We allow this appeal by directing that the period of lockdown w.e.f. 25th March, 2020 till 31st August, 2020 shall be excluded while computing the period of CIRP. To avoid any confusion/ambiguity, we make it clear that this direction will not in any case be construed as interference with the extension of 90 days’ time granted by the Adjudicating Authority, which shall begin only after expiry of the period of CIRP period of 180 days after excluding the period from 25th March, 2020 upto 31st August, 2020. With these observations the appeal is disposed of.

# 4. We make it clear that this order will not serve as a precedent in all cases as it has been passed in the peculiar circumstances of instant case.

# 5. Copy of this order be sent to the Adjudicating Authority for information.

 

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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Poonam Basak, RP for Kings Electronics Pvt. Ltd. - Exclusion of Covid19 - lockdown period

NCLT (V) Mumbai (16.09.2020) on the application of  Poonam Basak, RP for Kings Electronics Pvt. Ltd. [(7) IA/1358/2020 INCP(IB)/2267/MB/2019] permitted to exclude the lockdown period commencing from 30.03.2020 to 31.07.2020 from the calculation of Corporate Insolvency Resolution Process.

Excerpts of the order;

# 1. IA 1358/2020 has been filed u/s.12(2) to exclude the lockdown period commencing from 30.03.2020 to 31.07.2020 from the calculation of Corporate Insolvency Resolution Process.

 

# 2. Attention is drawn of the Bench to an Order of NCLAT, New Delhi [Suo Moto – Company Appeal (AT)(Insolvency) No.01 of 2020 Order dated 30.03.2020] under which the exclusion of CIRP period due to lockdown has been allowed to be excluded, relevant portion reproduced below:-

“Upon requests for urgent listing of cases having been made telephonically to Registrar of this Appellate Tribunal from various persons, who were unable to physically file the same on account of complete lockdown declared by Government with effect from 25th March, 2020, we take suo moto cognizance of the unprecedented situation arising out of spread of COVID 19 virus declared a pandemic. Having regard to the hardships being faced by various stakeholders as also the legal fraternity, which go beyond filing of Appeals/ cases, which has already been taken care of by the Hon’ble Apex Court by extending the period of limitation with effect from 15th March, 2020 till further order/s in terms of order dated 23rd March, 2020 in Suo Motu Writ Petition (Civil) No(s).03/2020, inasmuch as certain steps required to be taken by various authorities under Insolvency and Bankruptcy Code, 2016 or to comply with various provisions and to adhere to the prescribed timelines for taking the ‘Resolution Process’ to its logical conclusion in order to obviate and mitigate such hardships, this Appellate Tribunal in exercise of powers conferred by Rule 11 of National Company Law Appellate Tribunal Rules, 2016 r/w the decision of this Appellate Tribunal rendered in “Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech Pvt. Ltd. in Company Appeal (AT)(Insolvency) No.185 of 2018” decided on 8th May, 2018 do hereby orders as follows:

 

- (1) That the period of lockdown ordered by the Central Government and State Governments including the 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.”

 

3. Accordingly, this Bench “Allows” the IA 1358/2020 as prayed by the Applicant.

 

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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NCLAT, Suo Motu - Company Appeal (AT) (Insolvency) No. 01 of 2020 - Exclusion of Lockdown period in CIRP/Liquidation process

NCLAT (2020.03.30) in Suo Moto - Company Appeal (AT) (Insolvency) No. 01 of 2020, ordered for Exclusion of Lockdown period in CIRP/Liquidation process.

 

Excerpts of the Order; 

 

“Upon requests for urgent listing of cases having been made telephonically to Registrar of this Appellate Tribunal from various persons, who were unable to physically file the same on account of complete lockdown declared by Government with effect from 25th March, 2020, we take suo moto cognizance of the unprecedented situation arising out of spread of COVID19 virus declared a pandemic. Having regard to the hardships being faced by various stakeholders as also the legal fraternity, which go beyond filing of Appeals/ cases, which has already been taken care of by the Hon’ble Apex Court by extending the period of limitation with effect from 15th March, 2020 till further order/s in terms of order dated 23rd March, 2020 in Suo Motu Writ Petition (Civil) No(s).03/2020, inasmuch as certain steps required to be taken by various Authorities under Insolvency and Bankruptcy Code, 2016 or to comply with various provisions and to adhere to the prescribed timelines for taking the ‘Resolution Process’ to its logical conclusion in order to obviate and mitigate such hardships, this Appellate Tribunal in exercise of powers conferred by Rule 11 of National Company Law Appellate Tribunal Rules, 2016 r/w the decision of this Appellate Tribunal rendered in “Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech Pvt. Ltd. in Company Appeal (AT) (Insolvency) No.185 of 2018” decided on 8th May, 2018 do hereby order as follows: -

 

(1) That the period of lockdown ordered by the Central Government and the State Governments including the 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.

 

(2) 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.

 

A copy of this order be communicated to Registrar of National Company Law Tribunal, New Delhi with a request to circulate the same to all Benches of NCLT across the country including the Principal Bench based at Delhi.

 

A copy of this order be also communicated to Secretary, Ministry of Corporate Affair, New Delhi for information and compliance by various Authorities under its control.”

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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Blog;  Covid19 - Extension of Limitation & Exclusion of Lockdown period in CIRP/Liquidation process