The NCLAT Single Bench consisting of Judge M. Venugopal, Judicial Member in the case of Vinod Tarachand Agarwal ruled that if the exclusion of the time limit of the CIRP makes it possible to relaunch the operations of the Debtor Company and thus achieve the objective of the Insolvency and Bankruptcy Code, such an exclusion must be authorized.
The appellant appealed against the order of NCLT, Ahmedabad Bench, which refused to exclude a certain period of CIRP despite passing the resolution at 100% votes of the debtor company’s creditors’ committee for the exclusion from the CIRP period for an additional 90 days as the Debtor Company’s assets had not been detached by the CBI and ED due to the Covid-19 pandemic.
The appellant argued that excluding the debtor company’s 90-day CIRP period would save the company from liquidation. It was also argued that there was a potential resolution claimant, who submitted their resolution plan, and that there was a likelihood of recovery from the debtor company.
Counsel for the Appellant stated that since he was pursuing legal proceedings with a view to obtaining the lifting of the seizure of the debtor Company’s sole property before various judicial authorities, the exclusion of the delay would allow the business to be reborn. He also cited the case of Creditors Committee of Essar Steel India Limited v Satish Kumar Guptawhere it was judged that “The contracting authority or the appeal authority has the discretion to extend the duration of the CIRP period even beyond 330 days in certain exceptional cases”.
The Tribunal accepted the Appellant’s assertions that these are exceptional circumstances and since the purpose of the Code is to restore the debtor company, the exclusion of the 90 day CIRP period should be made as it would help achieve the purpose of the IBC.
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