Summary of the Opinion — Company Appeal (AT) (Insolvency) No. 183 of 2018

Factual and Procedural Background

This appeal was preferred by the Resolution Professional against the Adjudicating Authority's (National Company Law Tribunal, Mumbai Bench) order dated 18 April 2018 in I.A. 24/2018 in C.P. No.1061/2017. The Adjudicating Authority had allowed only 38 days of time consumed in litigation to be excluded from the computation of the total period of the Corporate Insolvency Resolution Process (CIRP).

The Resolution Professional (appellant) and the Committee of Creditors (CoC) requested that at least 55 days be excluded because an interim stay of the CIRP was in place. The Appellate Tribunal considered an earlier, similar decision (Quinn Logistics India Pvt. Ltd. v/s. Mack Soft Tech Pvt. Ltd.) and examined whether the stay period should be excluded from the 270-day limit. The Tribunal heard that the interim stay had been passed on 22.01.2018 and vacated on 19.03.2018, resulting in 55 days during which the CIRP was stayed.

Bench: [Justice S. J. Mukhopadhaya] Chairperson; [Justice Bansi Lal Bhat] Member (Judicial). Date of this appellate order: 09.05.2018.

Legal Issues Presented

1. Whether the period during which the CIRP was subject to an interim stay should be excluded from the 270-day statutory period for completion of the Corporate Insolvency Resolution Process.
2. If such exclusion is permissible, whether the Adjudicating Authority erred in excluding only 38 days instead of 55 days requested by the Committee of Creditors/Resolution Professional.

Arguments of the Parties

Appellant's Arguments (Resolution Professional)

• The Committee of Creditors had decided and requested the Adjudicating Authority to exclude at least 55 days from the 270-day CIRP period because that duration was consumed due to an interim stay passed by the Adjudicating Authority.
• The Adjudicating Authority noted the stay but allowed only 38 days' exclusion without providing reasons for denying the remaining requested days, despite the 270-day period approaching expiry on 19.04.2018.

The opinion does not provide a detailed account of the opposing party's (if any) specific arguments in response.

Table of Precedents Cited

Court's Reasoning and Analysis

The Tribunal began by considering a prior appellate decision that enumerated circumstances where intervening periods could be excluded from the 270-day CIRP limit. Those acceptable circumstances explicitly include stays of the CIRP by courts or tribunals.

Applying that framework to the present facts, the Tribunal found that the CIRP was stayed for 55 days by an interim order passed on 22.01.2018 and that the stay was vacated on 19.03.2018. During that period the Committee of Creditors were reviewing resolution plans submitted by applicants. Given that the stay falls within the types of circumstances identified in the earlier appellate guidance, the Tribunal concluded that the 55-day interim stay period should be excluded when computing the statutory 270-day period.

The Tribunal therefore modified the impugned order to exclude 55 days (rather than the 38 days allowed by the Adjudicating Authority) and provided the Resolution Professional/Committee of Creditors an additional 55 days from 09.05.2018 to complete the CIRP. The Tribunal explicitly stated that this 55-day extension would include time required to pass any order under Section 31 of the Insolvency & Bankruptcy Code, 2016.

Holding and Implications

Core Ruling: The impugned order dated 18.04.2018 is modified to exclude 55 days from the computation of the 270-day Corporate Insolvency Resolution Process; the appeal is disposed of accordingly.

Implications and direct effects:

• The Adjudicating Authority is directed to exclude 55 days (the period of interim stay from 22.01.2018 to 19.03.2018) when calculating the 270-day CIRP period.
• The Resolution Professional/Committee of Creditors are granted a further 55 days from 09.05.2018 to complete the Corporate Insolvency Resolution Process; this period includes the time needed to pass orders under Section 31 of the I&B Code, 2016.
• The impugned NCLT order is modified to this extent; the appeal is disposed of. No costs were awarded.

The opinion applies existing appellate guidance on exclusions; it does not purport to establish a novel legal principle beyond the application of that guidance to the present facts.