The primary objective behind the enactment of the Insolvency and Bankruptcy Code (IBC), 2016 was the revival of the company in the time bound manner without any delay so as to protect the interests of all the creditors and keep the company as going concern. The debt recovery tribunal and the courts dealing in the recovery proceedings were overburdened with the cases and there no time bound redressal available to the aggrieved whereas the time frame within which the Corporate Insolvency Resolution Process has to be completed in 180 days along with the provision of 90 days of extension or maximum allowed time is 270 days.
Generally the Corporate Insolvency Resolution Process has to be completed within the time frame of 270 days wherein the once a resolution plan approved by the Committee of creditors is submitted before the Adjudicating Authority where if the Resolution plan meets the requirements prescribed under Section 30 of IBC, the Adjudicating Authority shall approve the resolution plan and reject the same if the requirements under section 30 are not met by the Resolution Plan.
When the deviation from the timeline of 270 days is allowed?
National Company Law Appellate Tribunal while disposing of the appeal, Maharashtra Seamless Ltd. vs. K.K. Lakshmi naryana & Ors.; CA(AT) (Insolvency) No. 637 of 2018, laid down certain circumstances when the deviation from the Timeline of 270 days is allowed i.e. those circumstances which justify the exclusion from the calculation of time period of 270. The unforeseen circumstances justifying the exclusion are produced herein as under:-
- If the Corporate Insolvency Resolution Process is stayed by the Adjudicating Authority (NCLT or NCLAT), High Court or Supreme Court.
- If the no resolution professional is functioning for one or other reasons, like removal, during the Corporate Insolvency Resolution Process.
- The time gap occurred between the date of passing of the order of admission or moratorium and the date from which the Resolution Professional took charge to commence the Corporate Insolvency Resolution Process.
- The time difference occurred between the date on which the Adjudicating Authority, High Court or Supreme Court reserved its order and the date of actually passing of the order, the order being the direction to Resolution Professional to initiate the CIRP.
- If the order of CIRP is set aside by the Appellate Tribunal and the order of Appellate Tribunal is reversed by the Supreme Court, the time gap between both the dates.
- Any other sufficient reasons which justify the exclusion of a certain period.
In the view of above decision laid down by the NCLAT, the Adjudicating Authority is empowered to exclude such time taken during the happening of the unforeseen circumstances mentioned hereinabove. However, the unforeseen circumstances should justify their exclusion so as to protect the objective of the code and should not defeat the purpose of the same.
Disclaimer – Please note that the above articles is based on the interpretation of related laws and judicial pronouncement which may differ from person to person. The reader are expected to take the expert opinion on the matter.