The Supreme Court held that the entire resolution process has to be completed within the period stipulated under Section 12 of the Insolvency and Bankruptcy Code and any deviation would defeat the object and purpose of providing time limit.
Pursuant to an application made under Section 7 of the Insolvency and Bankruptcy Code, 2016, the corporate insolvency resolution process was initiated against Amtek Auto Limited, Corporate Debtor on 24.07.2017. A resolution professional was appointed. An advertisement was published by the resolution professional inviting prospective resolution applicants to submit a Resolution Plan by 31.08.2017. The Resolution Plans submitted by respondents were considered by the Committee of Creditors of Amtek Auto Limited through Corporation Bank (COC). However, the respondent withdrew its Resolution Plan and therefore the revised plan of Liberty was considered and approved by the COC on 2.4.2018. Subsequently, the Resolution Plan submitted by Liberty came to be approved by the National Company Law Tribunal, Chandigarh Bench, Chandigarh. However, the successful resolution applicant, Liberty did not act as per the approved Resolution Plan. Thereafter, a number of proceedings were initiated against the successful resolution applicant, Liberty.
The division bench of Justice M.R.Shah and Justice Sanjiv Khanna held that the approved resolution plan has to be implemented at the earliest and that is the mandate under the IBC. As per Section 12 of the IBC, subject to subsection (2), the corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process, which can be extended by a further period of 180 days. As per proviso to Section 12 of the IBC, which has been inserted by Act 26 of 2019, the 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 corporate insolvency resolution process granted under Section 12 of the IBC and the time taken in legal proceedings in relation to such resolution process of the Corporate Debtor. As per the third proviso to Section 12 of the IBC, which is also inserted by Act 26 of 2019, where the insolvency resolution process of a Corporate Debtor is pending and has not been completed within a period stated hereinabove, i.e., within a period of 330 days, such resolution process shall be completed within a period of 90 days from the date of commencement of the IBC amendment Act, 2019, i.e., 16.08.2019.
“The entire resolution process has to be completed within the period stipulated under Section 12 of the IBC and any deviation would defeat the object and purpose of providing such time limit. However, by earlier order, the time limit has been condoned in view of the various litigations pending between the parties and in the peculiar facts and circumstances of the case. Therefore, any further delay in implementation of the approved resolution plan submitted by DVI which as such has been approved by the adjudicating authority in the month of July 2020 and even the appeal against the same has been dismissed subsequently, any further delay would defeat the very object and purpose of providing specific time limit for completion of the insolvency resolution process, as mandated under Section 12 of the IBC,” the court added.
The Apex Court directed all the concerned parties to the approved resolution plan and/or connected with implementation of the approved resolution plan including IMC to complete the implementation of the approved resolution plan, within a period of four weeks from today, without fail. It is further directed and it goes without saying that on implementation of the approved resolution plan and even as per the approved resolution plan, an amount of Rs. 500 crores now deposited by DVI-successful resolution applicant be transferred to the respective lenders/financial creditors as per the approved resolution plan and/or as mutually agreed. Any lapse on the part of any of the parties in implementing the approved resolution plan with the time stipulated hereinabove shall be viewed very seriously.
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