-By Research Team of IBC Law Reporter
ORDER
The second surge of the pandemic has supervened in a major way, affecting lakhs of people. We are convinced that there is a force majeure circumstance necessitating our intervention in the best interests of the corporate debtor. The applicant shall not take any advantage of the alleged theft that is stated to have taken place in the premises of the corporate debtor, and that the present application has been made only due to the second wave of the Covid-19 pandemic. The Applicant shall file the undertaking by way of an affidavit in the Registry within a period of fifteen days.
FACTS OF THE CASE
1. Application filed by Glix Securities Private Limited, the Successful Resolution Applicant of R.D.Rubber Reclaim Limited (the Corporate Debtor), inter alia praying for extension of timelines for implementation of the Resolution Plan.
2. Application filed by Glix Securities Private Limited, the Successful Resolution Applicant of R.D.Rubber Reclaim Limited (the Corporate Debtor), inter alia praying for extension of timelines for implementation of the Resolution Plan.
3. The Applicant submitted its final Resolution Plan on 04.11.2020, which was approved.
4. RP filed an application for approval of the aforesaid Resolution Plan which was reserved for orders on 23.03.2021.
5. The Applicant had submitted its bid and expressed its interest in running the Corporate Debtor as a going concern only upon ascertaining the assets and properties of the Corporate Debtor.
6. From a news article in Prabhat Khabar, a Hindi daily, the Applicant came to know that there had been a theft in factory premises of the Corporate Debtor situated at Plot No. 4, Medium Industrial Area, Phase 4, AIADA, Saraikella Kharsawan, Jharkhand-832 108.
7. The Applicant apprehends that the theft may affect the implementation of the Resolution Plan to an extent that the Corporate debtor cannot be restarted and the new management cannot commence at the factory premises without ascertaining the loss.
8. As per the Resolution Plan, the Applicant is required to make payment of ₹1,99,94,835/- (Rupees one crore ninety-nine lakh ninety-four thousand eight hundred and thirty-five only) within ten days and ₹1,80,74,195/- (Rupees one crore eighty lakh seventy-four thousand one hundred and ninety-five only) within 100 days of approval of the Resolution Plan.
9. The Applicant submits that the Resolution plan was submitted on 04.11.2020. Since then, the circumstances have changed drastically due to the severity of the second wave of the Covid-19 pandemic.
10. In these circumstances, the Applicant prays for an extension of sixty days for making the first two tranches as proposed in the Resolution Plan.
11. The Applicant submits that through an email dated 06.05.2021, the Applicant had requested the RP to take necessary steps with the CoC for obtaining an extension of the timelines provided in the Resolution Plan. However, the RP responded that neither the RP nor the CoC has any power to modify the Resolution Plan once it has been voted upon.
DELIBERATION ON ISSUE
Learned Senior Counsel appearing for the Applicant, placed the following decisions for consideration:
a) NCLT Chandigarh Bench in the matter of FM Hammerle Textiles Limited granted exclusion of the entire lockdown period from the compliances required to be made in terms of the order dated 13.03.2020 approving the resolution plan.
b) Hon’ble NCLAT’s order dated 30.03.2020 in suo motu Company Appeal (AT) (Insolvency) No.01/2020 whereby the period of lockdown ordered by the Central Govt and State Govts including the period as may be extended either in whole or in part of the country where the registered office of the Corporate Debtor may be located, was excluded for the purpose of counting for resolution process under section 12 of the IBC, in all cases where CIRP has been initiated and pending before any Bench of the NCLT or in appeal before the Appellate Tribunal.
c) Notification issued by the Insolvency & Bankruptcy Board of India (IBBI) inserting regulation 40C to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, excluding the period of lockdown imposed by the Central Govt in the wake of Covid-19 outbreak for the purposes of the timeline of for any activity that could not be completed due to such lockdown, in relation to the CIRP.
CONCLUSION
The Applicant is the Successful Resolution Applicant in the CIRP of the Corporate Debtor. There is no specific provision in the Insolvency & Bankruptcy Code, 2016, that specifies what should be done in cases where a successful resolution applicant applies to the court for extension of timelines either on account of force majeure circumstances or otherwise. Further, once a resolution plan has been approved by the adjudicating authority, the Committee of Creditors (CoC) ceases to exist. Therefore, there is no way that the Adjudicating Authority can direct the CoC to consider the request. It is up to the Adjudicating Authority to find a way out in such circumstances. The order passed herein shall have effect only if this part of the order is complied with, failing which the consequences for violation of the approved Resolution Plan shall swiftly follow.
The Applicant shall be bound by the undertaking of the affidavit, and also by the terms of the approved Resolution Plan, save to the extent of relaxation of time, and he shall not be permitted to wriggle out of his obligations under the approved Resolution Plan.
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About the Author: The summary of this Order has been composed by Ms. Mansi Singh (Research Associate-IBC Law Reporter).
Disclaimer: The entire contents of this document have been prepared on the basis of the information existing at the time of the preparation. The author and IBC Law Reporter do not take responsibility for the same and this document cannot used to be quoted before any authority under any law.
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