IN THE NATIONAL COMPANY LAW TRIBUNAL

MUMBAI BENCH, MUMBAI

CP.(IB) 490/(MB)/2018
MA 1270/2019

CORAM: SHRI V. P. SINGH

MEMBER (J)
SHRI RAVIKUMAR DURAISAMY
MEMBER (T)

ORDER SHEET OF THE HEARING OF MUMBAI BENCH OF THE NATIONAL

COMPANY LAW TRIBUNAL ON 5.4.2019

NAME OF THE PARTIES: Andhra Bank

V/s

Sterling Biotech Limited

Section 7 of the Insolvency & Bankruptcy Code, 2016

ORDER

2. MA 1270/2019in C.P(IB)- 490(MB)/2018

MA 1259/2019 has been filed by the Resolution Professional seeking

the direction that till final disposal of CP(IB)490/2018, applicant be
permitted to continue as Resolution professional of the Corporate Debtor in
order to carry on the business of the Corporate Debtor as a going concern
with support of the Advisors of the Legal Counsel and other Advisors.

Applicant has also requested that he may be permitted in his capacity

as the Resolution professional to convene meetings of the CoC to discuss
certain important matter concerning the Corporate Debtor and seeks
requisite approvals from the CoC in this regard. Further prayer has been
made to permit the applicant to incur such costs as the RP’s costs, as may
be necessary including legal costs incurred by the Applicant to be paid from
the Accounts of the Corporate Debtor
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The applicant has contended that by order of this Tribunal dated

11.6.2018, the applicant was appointed as IRP of the Corporate Debtor.

Therefore, CoC in its first meeting held on 26.7.2018 confrimed his

appointment as Resolution Professional. This Tribunal by order dated
28.11.2018, extended the CIRP of the Corporate Debtor by a further of 90
days, with effect from 8.12.2018. The last date for the completion of the
CIRP of the Corporate Debtor was 8.3.2019.

The applicant has stated that given one-time settlement offered by

promoters of the Corporate Debtor. Andhra Bank, the original petitioner in
the captioned Company Petition submitted a Form FA as per Regulation
30 A of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations 2016 (“CIRP
Regulations”) dated March 5, 2019 along with a letter of guarantee for the
withdrawal of CIRP at the 14th COC meeting. After conducting a discussion
on the said withdrawal of the CIRP, the CoC was of the view that a
resolution for the withdrawal of CIRP under section 12 A of the Code may
be voted upon. Accordingly, as directed by the CoC, the Applicant put the
said resolution to the vote before the CoC. The said resolution for
withdrawal of CIRP under Section 12 A of the Code received a 90.32%
affirmative vote. Under Section 12A of the Code, the required percentage for
successful passage of such a resolution is 90 %. Therefore, the Applicant
says that the CoC resolved to withdraw the CIRP of the Corporate Debtor.
It is pertinent to mention that statutory period for completion of CIRP
was to end on 8.3.2019.The MA 951/2019 was filed by Andhra Bank, i.e.
one of the financial Creditors of the Corporate Debtor, on 8.3.2019, i.e. the
last date for completion of CIRP. After that, another MA 1010/2019 was filed
by the Resolution Professional under Section 12A of IBC, 2016 on
12.3.2019, i.e. for withdrawal of the petition.
The Application 1010/2019 for withdrawal of the Company petition is
filed after completion of the statutory period of CIRP. Thereafter MA
951/2019 and MA 1010/2019 was listed on 26.4.2019 for disposal.
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The RP has mentioned that after getting the application under Section
12A of the IBC, he asked the CoC to provide him with the details of OTS
offer, source of funds, timeframe for payment to each lender,
compliance with RBI norms and whether the interest of all the
stakeholders and CoC members have been provided by under the OTS
offer. Andhra Bank then informed the RP that they would directly
address the issue with the Tribunal and did not submit any information
to the RP.
It is thus clear that when an application under Section 12A was filed
by the RP, at that time, the CoC did not disclose the details of OTS offer, the
source of funds, the timeframe for payment to each lender, compliance with
RBI norms, etc.
The CoC informed that they would directly address this issue in the
Court. We have passed an order on 11.3.2019, wherein we have given notice
to the Central Government through Regional Director, Ministry of Corporate
Affairs, Enforcement Directorate, Income Tax Authorities, CBI, SEBI and
RBI, so that if they want to make any representation, they can make the
same before passing any further order on this MA for withdrawal.
Till date, the application for withdrawal of CP is pending for want of
report from various Government Authorities, RBI and SEBI. The government
has taken time for filing an affidavit in this regard.
RP has filed this application 1259/2019 seeking permission to
continue in his capacity as Resolution Professional of the Corporate Debtor
and to convene the meetings of CoC to discuss the important matters
concerning Corporate Debtor. The Resolution Professional has also sought
permission to replace the statutory auditor of the Corporate Debtor.
It is undisputed that CIRP period ended on 8.3.2019 and at the end of
that period i.e. on 8.3.2019, an application for withdrawal of the CP under
Section 12A was moved by one of the Financial Creditors, Andhra Bank.
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After that, on the next working day, i.e. on 11.3.2019, the application
was heard by this Bench and order was passed and after that, RP filed
application U/S 12A of the Code for withdrawal of the Company Petition.

Ld. Counsel appearing on behalf of the RP has submitted that since

the application for withdrawal of CP is pending before this tribunal, this
period should be excluded from computation of CIRP period.
Section 12 of IBC specifically provides that CIRP shall be completed
within 180 days from the date of admission of the application to initiate the
said process. Further power has been given to extend the period under
Section 12(3) of the Code, which provides that Adjudicating Authority may
extend the period of CIRP beyond 180 days, i.e. 90 days, for completion of
CIRP , where the process cannot be completed within 180 days.
The application for withdrawal of CP by Financial Creditor was filed on
8.3.2019. Undisputedly 270 days provided for completion of CIRP ended on
8.3.2019. The application for withdrawal of company petition is filed on the
last day for completion of CIRP. After admission of the Petition, the
application for withdrawal of CP can be filed under Section 12A of the Code
read with Regulation 30A of IBBI Regulations 2016. Given the said
provision the application for withdrawal of Section 12A shall be submitted
to the IRP or the RP, as the case may be, in form FA of the Schedule, before
issue of invitation for expression of interest under Regulation 36A, after
complying certain conditions as has been stipulated under the Regulation.
Since the application, filed by the Financial Creditor directly in the
court on 8th March2019 for withdrawal of the petition, was not as per the
provision of Regulation 30A of IBBI Regulation, 2016, and after that IInd
application for withdrawal of company petition, which was numbered as MA
1010/2019,has been filed in the court by RP on 12.3.2019 , i.e. after the
expiry of the statutory period for completion of CIRP ,thus the
maintainability of the withdrawal itself is questionable.
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On the basis of the pendency of this application for withdrawal, filed

on 12.3.2019 under Regulation 30A of IBBI Regulations, 2016 ,which was
not filed within the timeframe given under the Code, no period can be
excluded from computation of CIRP.
The first application for withdrawal of CP which was filed by one of the
Financial Creditors Andhra Bank which was numbered as MA 951/2019
was also filed on 8.3.2019, i.e. the date on which CIRP ended, thus we
cannot say that even a single day waswasted on account of pendency of this
application for withdrawal of CP.

It is pertinent to mention that Hon’ble NCLAT in Quinn Logistics India

Pvt Ltd has laid down the principle on which basis, certain period can be
excluded which is given as under:
10.For example, for following good grounds and unforeseen

circumstances, the intervening period can be excluded for counting of

the total period of 270 days of resolution process:-

(i) If the corporate insolvency resolution process is stayed by ‘a court

of law or the Adjudicating Authority or the Appellate Tribunal or

the Hon’ble Supreme Court.

(ii) If no ‘Resolution Professional’ is functioning for one or other

reason during the corporate insolvency resolution process, such

as removal.

(iii) The period between the date of order of admission/moratorium is

passed and the actual date on which the ‘Resolution Professional’

takes charge for completing the corporate insolvency resolution

process.
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(iv) On hearing a case, if order is reserved by the Adjudicating

Authority or the Appellate Tribunal or the Hon’ble Supreme Court

and finally pass order enabling the ‘Resolution Professional’ to

complete the corporate insolvency resolution process.

(v) If the corporate insolvency resolution process is set aside by the

Appellate Tribunal or order of the Appellate Tribunal is reversed

by the Hon’ble Supreme Court and corporate insolvency

resolution process is restored.

(vi) Any other circumstances which justifies exclusion of certain

period.

However, after exclusion of the period, if further period is

allowed the total number of days cannot exceed 270 days which is the

maximum time limit prescribed under the Code.

Since not a single day was wasted on account of pendency of the

application for withdrawal of CP, and the period of CIRP ended on 8.3.2019,
therefore after completion of the statutory period as provided under the
Code, permission cannot be granted to RP to hold the meeting of CoC and
take important decision in any of the matter.

The RP has filed this application under Section 60(5) of IBC and
sought permission to continue in his capacity as RP in order to carry on the
business of the Corporate Debtor as a going concern with support of the
Advisors of the Legal Counsel and other Advisors and further sought the
permission to act as RP and to convene the meeting of the CoC to discuss
certain important matter with respect to the Corporate Debtor cannot be
permitted after completion of CIRP period.
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It is pertinent to mention that after initiation of CIRP, we have not

restrained the RP in discharging his duties. The CIRP continued till the end
of CIRP period i.e. 8th March 2019. If no resolution was approved within the
statutory period for completion of CIRP, then he should have acted as per
the provisions of the Code.

However, despite that even after the expiry of the statutory period for
completion of CIRP, RP has sought permission to complete the CIRP. The
statutory period provided for completion of CIRP cannot be extended beyond
270 days.

It is also important to point out that RP has sought permission to

replace the statutory auditors of the Corporate Debtor and to permit the RP
to incur such costs as the RP’s costs, as may be necessary including legal
costs incurred by the applicant to be paid from the accounts of the
Corporate Debtor.

The RP was entitled to hold the meetings and take a decision on CIRP
within the statutory period. After the expiry of 270 days, any such decision
cannot be taken by the RP.

It is also to be made clear that after completion of the statutory

period, in our view RP has no authority to replace Statutory Auditor of the
Corporate Debtor since the same is not provided for under IBC, 2016.

In the circumstances, we at this moment reject MA 1259/2019.

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RP is directed to submit an explanation as to why he has failed to

discharge his duties in not filing his report within the time provided under
the Code. In case no resolution plan was approved by CoC then he should
have filed application under Section 33 of IBC for liquidation of the
corporate debtor. The explanation may be submitted within three days from
today.

Sd/- Sd/-

RAVIKUMAR DURAISAMY V. P. SINGH

Member (Technical) Member (Judicial)