NCLAT Directs CIRP Extension from Order Date, Excluding Pendency Period for Effective Completion
- REEDLAW
- Jan 23, 2025
- 2 min read
NCLAT Directed CIRP Extension from Order Date, Excluding Pendency Period for Effective Completion.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench headed by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal on Wednesday (22.01.2025) and held that the extension of the CIRP period should commence from the date of the order granting the extension, ensuring the period of pendency is excluded to allow the resolution process to be effectively completed.
The appeal was filed against the order dated 22.08.2024 passed by the National Company Law Tribunal (NCLT), Mumbai Bench, Court IV, in IA No.4004(MB)2024. The Resolution Professional had sought an extension of 90 days from 12.05.2024, which was approved by the Committee of Creditors (CoC) in its 4th meeting. The CoC passed a resolution authorizing the extension in accordance with Section 12 of the Insolvency and Bankruptcy Code, 2016, and Regulation 40 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Adjudicating Authority allowed the application and granted the requested extension.
The Appellant's grievance in this appeal was that the extension granted from 12.05.2024 did not consider the period during which the application was pending before the Adjudicating Authority. The Appellant argued that the effective time available in the Corporate Insolvency Resolution Process (CIRP) was insufficient despite the granted extension. Reliance was placed on a judgment by the NCLAT Chennai Bench in Kiran Martin Gulla, RP of Varadharaja Foods Private Limited, REEDLAW 2024 NCLAT Chn 02567, decided on 21.02.2024. In that case, it was held that an extension period should commence from the date of the order granting such an extension, and any pendency of proceedings should be excluded while calculating the CIRP timeline.
The learned counsel for the Appellant contended that the CIRP was at an advanced stage, with two resolution plans received, and unless the extension was granted from the date of the order, the plans could not be duly considered within the CIRP timeline. The appeal against the order dated 22.08.2024 was filed on 11.09.2024.
The Tribunal found merit in the Appellant's submissions and held that the judgment in the Kiran Martin Gulla case fully supported the Appellant's argument. Consequently, the Tribunal modified the order to the extent that the 90-day extension would commence from the date of the present order. The appeal was thus disposed of with these observations.
Mr. Vishal Binod, Mr. Pulkitesh Dutt Tiwari and Ms. Shruti Singhi, Advocates represented the Appellant.
Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines, Press Releases and more.
Click on the Citation/Link to access these resources.
Comments