Issuance of Form G by CoC to Grant Extension After Expiry of 300 Days to Complete CIRP Process is Valid: NCLAT [Read Order]
Issuance – CoC – Form G – NCLAT – taxscan
Issuance – CoC – Form G – NCLAT – taxscan
The Delhi bench of the National Company Law Appellate Tribunal(NCLAT) in the matter of Mr Ramneek Goel has held that issuance of form G by the Committee of Creditors (CoC) to grant an extension after expiry of 300 days to complete the Corporate Insolvency Resolution Process (CIRP) process is valid.
The appellant challenged the order dated 13.06.2023 passed by the National Company Law Tribunal, Chandigarh Bench, Chandigarh in IA Nos.326/2021 filed by the Resolution Professional (“RP”) praying for extension/ exclusion of 90 days for re-publication of invitation for the Expression of Interest (“EOI”) (Form-G). The Adjudicating Authority by the impugned order has allowed the application filed by the RP granting an extension of 90 days.
CIRP against the Corporate Debtor – Nexgen Laminators Private Limited commenced by order dated 25.11.2019. FormG was issued by the RP on 08.02.2020 and 30.06.2020. In response to Form-G published on 30.06.2020, the Appellant submitted his EOI. The Appellant was asked by the CoC to improve the Resolution Plan. The Appellant offered Rs.24.51 crores.
The extension was granted by the Adjudicating Authority of 90 days and thereafter 30 days on 15.03.2021. On the Appellant’s revised Resolution Plan, certain observations were made by the SIDBI. The Meeting of the CoC was scheduled in which, the Appellant was also invited to participate. In the Meeting, the RP informed the CoC that he has received Resolution Plan from another person Mr Sunil Bajaj, 15 minutes before the meeting.
The CoC resolved to pass a Resolution that to maximize the value of the assets of the Corporate Debtor, as the other Resolution Plan is offering higher value, it would be in the interest of the stakeholders to republish the Form-G and seek more Resolution Applicants for resolution of the Corporate Debtor. It was further noted that at least 90 days of the CIRP period is required in the event a fresh Form-G is issued.
It was contended that 300 days were going to expire on 15.04.2021 and the extension of 90 days based on a request from a stranger just two days before the expiry of the CIRP period, ought not to have been entertained.
The Senior Counsel for the Appellant relying on the judgment of the Supreme Court in Essar Steel, Commission of Creditors v. Satish Kumar Gupta – (2020) 8 SCC 531 contended that extension of time beyond the outer limit of 330 days could only be granted in exceptional circumstances. Extension sought by CoC solely based on the reason that fifteen minutes before the 19th CoC, Respondent No.1 offered 10% more, which was no ground for extension.
Counsel appeared for Respondent No.1 submitted that Respondent No.1 has filed the Resolution Plan based on information available in the public domain and no confidential information was shared by the RP with them and allegations of the Appellant were baseless and are desperate attempts to distract this Tribunal from the main issue.
It is well settled that Adjudicating Authority has the discretion to extend time beyond the CIRP period of 330 days in exceptional cases, to protect the interest of the stakeholders by putting the Corporate Debtor back on its feet instead of forcing the Corporate Debtor into liquidation.
The Appellant was only a Resolution Applicant and cannot have any vested right that it is his application alone, which should be voted on and approved. The CoC has ample jurisdiction under the IBBI Regulations, 2016.
Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) observed that the Adjudicating Authority had not committed any error in granting an extension of 90 days period after the expiry of 300 days to complete the process. The exclusion of time granted by Adjudicating Authority in the facts of the present case cannot be held to be erroneous and uncalled for.
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