Dyna Roof Private limited & Ors vs Purshottam Gaggar & Ors
WP (C) 6033 of 2022
Facts:
1.An insolvency proceeding was initiated under Section 10 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal (in short NCLT) at Guwahati Bench. In course of the proceeding before the NCLT Guwahati Bench the proforma respondent no. 5 Kamal Kumar Harlalka made an application under Section 12 (2) of the IBC of 2016 for grant of one time extension of the Corporate Insolvency Resolution Process. Accordingly by the order dated 13.05.2022 the NCLT Guwahati Bench granted an extension of 90 (ninety) days
2. RP made another application being IA (IBC)/60/GB/2022 in CP(IB)/18/GB/2021 under Section 60 (5) of the IBC of 2016 for further extension of the CIRP period by another 30 (thirty) days as per the requirement of respondent no. 2 (in short R2) i.e. the Punjab National Bank.
3. While considering the said application the order dated 25.08.2022 had been passed by the NCLT Guwahati Bench by which the prayer for an extension of a further period of 30 (thirty) days beyond 270 (two hundred seventy) days already availed, was granted. The reason for granting the extension provided in the order dated 25.08.2022 is that a resolution with regard to extension of CIRP was approved with 87.26% voting by the COC Further, the order dated 25.08.2022 proceeded on the premises that the application was made under Section 60 (5) of the IBC of 2016 read with Rule 11 of NCLT Rules of 2016.
4. Petitioner is challenging the above order.
Issue: Whether extension granted was in accordance with the law?
Arguments:
For petitioners:
1.Cousnel for petitioner submitted that first proviso to Section 12 of the IBC of 2016, which provides that any extension of the period of CIRP under Section 12 shall not be granted more than once, raises the contention that as in the instant case an extension of 90 (ninety) days was earlier granted as per the order dated 13.05.2022 of the NCLT Guwahati Bench in IA (IBC) 32/GB/2022 under Section 12(2) of the IBC of 2016, therefore, the subsequent extension by the impugned order dated 25.08.2022 would be impermissible in law and would also be beyond the jurisdiction of the NCLT
2. Counsel submitted that subsequent extension granted by the impugned order is on an application made under Section 60(5) of the IBC of 2016, it would be impermissible to do so under the law inasmuch as although Section 60(5) of the IBC of 2016 can be invoked notwithstanding the provisions in any other law, but Section 60 (5) of the IBC of 2016 cannot be invoked against the provisions of any of the provisions of IBC of 2016 itself.
3.Reasons for granting the subsequent extension as provided in the impugned order dated 25.08.2022, that it was based on a resolution approved by 87.26% of the members of the COC for extension of the CIRP, would also be untenable under the law
Respondents:
1. Counsel submitted that provisions of the second proviso to Section 12 of the IBC of 2016 allows a period of 330 days to the RP, from the date of commencement of the CIRP, to complete the insolvency proceeding. Accordingly, the contention raised by Mr. S. Chamaria, learned counsel for the R1-RP is that in the instant case, the period granted to the RP to complete the CIRP was 270 days, including the extension of 90 days, and therefore, as under the law there is still a balance of 60 days the subsequent extension was also within the permissible limits of the law
2. It was further contended that third proviso to Section 12 of the IBC of 2016 provides that in the event an insolvency resolution process is pending and had been not completed within 330 days referred in the second proviso, such CIRP shall be completed within a period of 90 days from the date of commencement of the IBC (Amendment) Act, 2019, meaning thereby, that if the resolution process was pending as on 16.08.2019, when the IBC (Amendment) Act, 2019 was given its effect, the RP is entitled to another 90 days to complete the proceeding.
Decision: Order was set aside.
Rationale:
1.Court noted that the expression ‘shall not be granted more than once’ under section 12 of the Code , would have to be interpreted to mean that irrespective of any circumstance that may be put forward, the law prohibits that whatever is sought to be granted cannot be granted more than once, which again would be in contra distinction to the expression ‘shall be granted once’ wherein a given circumstance may also justify to grant it beyond once although ordinarily it should be granted only once.
2. Court interpreted Section 12(3) with that of the second proviso brought in by the IBC (Amendment) Act, 2019 in a harmonious way to hold that the second proviso would have to be read to indicate what the Legislature had provided as the last intention, meaning thereby that irrespective of the provisions of Section 12(3) the total period mandatorily available to the RP to complete the CIRP would be 330 days which would also include any extension that may be granted.
3. Conjoint reading of the first proviso and the second proviso does not make it discernible or enables the Court to read between the lines that the provisions that the CIRP would mandatorily have to be completed within a maximum period of 330 days has diluted the provisions of the first proviso in any manner, which otherwise is explicit and unambiguous that no extension beyond once would be granted. The second proviso merely provides that whatever extension would be permissible under the law including the extended period shall mandatorily not be beyond 330 days and it cannot be construed that the second proviso would dilute the provisions of the first proviso in any manner and allow the RP to avail the total of 330 days by taking recourse to successive extensions beyond the first extension to reach 330 days.
4. Court held that reading of the provisions laid down by the Supreme Court in paragraph 127 of Essar Steel India Ltd (supra), makes it discernible that although the word mandatorily appearing in the second proviso to Section 12 had been struck down to be in violation of Article 14 of the Constitution meaning thereby the period beyond 330 days can also be contemplated, but any such period beyond 330 days would have to be subject to the condition precedent of being satisfied that only a short period beyond 330 days is left to complete the CIRP and secondly the extension beyond 330 days would be in the interest of all stake holders that the corporate debtor would be put back on its feet instead of being sent into liquidation
5.Court noted that section 60(5) of the IBC of 2016 would now have to be understood that an application under section 60 (5) to be maintainable notwithstanding anything contained in any other law would not also mean notwithstanding anything contained in the other provisions of the IBC of 2016 itself, but any other law other than the IBC of 2016. When there is a specific provision on the question of maintainability of a claim for subsequent extension under the first proviso to section 12, the provisions of section 60(5) cannot be invoked to take advantage of the non-obstante clause to make an application for subsequent extension maintainable in spite of the specific bar on its maintainability provided in the first proviso to section 12.
Order:
