NCLAT sets aside the Adjudicating Authority's retrospective extension order and grants an extension from the date of disposal of the appeal.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal (Judicial Member) and Arun Baroka (Technical Member) was hearing an appeal on the extension of CIRP. The NCLAT Bench set aside the NCLT's order retroactively extending the Corporate Insolvency Resolution Process (CIRP) due to procedural irregularities. It granted a 90-day extension from the appeal's disposal date, excluding the period of application pendency.
The Appellant, representing Vardharaja Foods Pvt Ltd, filed an appeal (Company Appeal (AT)(CH)(Ins) No.450/2023) against an order dated 27.07.2023 by the National Company Law Tribunal (NCLT) in Chennai. The order pertained to the extension of the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
In the impugned order, the NCLT extended the CIRP for 90 days from 10.05.2023, retroactively calculated, based on an application filed by the Resolution Professional. The Appellant contested this retrospective calculation, arguing it rendered the extension ineffective.
The Appellant highlighted procedural discrepancies and sought exclusion of the period from 09.05.2023 to 27.07.2023, during which the application was pending, from the CIRP timeline. They emphasized the importance of excluding pendency periods to ensure fairness to stakeholders.
Additionally, the Appellant referenced legal precedents, including the Supreme Court's stance on excluding time taken in legal proceedings. They argued for a pragmatic approach, urging the Appellate Tribunal to consider the circumstances and grant a fair extension.
Ultimately, the Appellate Tribunal ruled in favour of the Appellant, setting aside the retrospective extension and granting a 90-day extension from the date of disposal of the appeal. The tribunal emphasized the importance of fairness and excluded the period of pendency from the CIRP timeline. The appeal was allowed, with no costs incurred.
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