The court clarified that 'extension' of time in insolvency proceedings does not equate to 'exclusion' of time, establishing that consolidation of related company petitions is not a recognized process under the Insolvency and Bankruptcy Code, 2016.

ORDER

(Hybrid Mode)

02.07.2024:

These two Appeals being CA (AT) (Ins) No. 1116/2020 & CA (AT) (Ins) No. 1097/2020, involve consideration of the same question of facts and law and hence for the purpose of brevity, they are being taken up together. In the connected Appeal, the Appellant has filed an Intervention Application, being IA No. 670/2021 & IA No. 671/2021, and the same has been sought to be withdrawn. Hence the same is accordingly directed to be dismissed as withdrawn.

In both the Appeals, the issues coming forth from the respective arguments as extended by the counsels, are as to what would be the rational interpretations to be given to Section 12 and especially the 2^nd proviso to it of the Insolvency and Bankruptcy Code, 2016 , for the purposes of extension of time towards completion of the CIRP proceedings and how such can be undertaken under provisions contained under Section 60 (5) of the Code.

Another very important issue which involves consideration is as to how the term “legal proceedings” would be construed for the purposes of extension of time, in the context of the provisions contained under 2^nd proviso to Section 12 (2), and whether the pendency of proceedings for the “consolidation” of the two Company Petitions could be taken as to be a legal proceeding at all, as contemplated under the I & B Code.

Before dealing with the aforesaid issues, we feel it apt to precisely deal with the facts of both the Appeals and then to answer the questions as argued by the learned Counsels for the parties.

As far as the Company Appeal No. 1116/2020, is concerned, that has been circumstanced with the following facts: -

(i) NCLT, Hyderabad directed the initiation of the CIRP (Corporate Insolvency Resolution Process) proceedings under Section 7 of the I & B Code, against M/s. KSK Mahanadi Power Company Limited on 03.10.2019 in CP No.492/07/HDB/2019.

(ii) Punjab National Bank (PNB) filed application under Section 7 of the I & B Code against M/s. KSK Water Infrastructure Pvt.Ltd. on 24.10.2019.

(iii) PNB as lead FC for KSK Water filed IA 32/2020 in CP/492/07/HDB/2019 seeking consolidation of CIRP of KSK Water with CIRP of KSK Mahanadi on 26.11.2019.

(iv) On 20.02.2020 Axis Bank filed application under Section 7 of the code against Raigarh Champa Rail Infrastructure Private Limited (RCRIPL).

(v) On 03.07.2020 Axis Bank filed application before NCLT for consolidation of CIRP of RCRIPL with CIRP of KSK Mahanadi in CP 492/07/HDB/2019.

(vi) These 2 consolidation applications were filed on the grounds that CIRP of all 3 entities done together will maximize the value of the entities and bring in effective resolution of the CD along with the other 2 entities because their business are inextricably interlinked and there is complete interdependence in their business operations.

(vii) While decision on Section 7 applications with respect to KSK Water and RCRIPL and on the consolidation application were pending before NCLT, the RP (Resolution Professional) sought extension of time of 90 days vide IA 471/2020 and NCLT allowed the same on 07.07.2020.

(viii) Again RP on 21.07.2020 filed IA 661/2020 seeking exclusion of 76 days on grounds of Covid Pandemic, change of RP, time taken to decide on IA 471/2020 etc., and this was allowed by NCLT on 07.09.2020. With this, the time limit of 270 days granted to complete CIRP of the CD stood to end as on27.11.2020.

(ix) On 06.10.2020 the RP again filed an application IA 929/2020, seeking a further exclusion of 102 days on grounds of pendency of under Section 7 applications of related entities and pendency of consolidation applications.

(x) NCLT in its order dated 26.11.2020 declined to grant exclusion of time on account of pendency of applications as above and allowed only 67 days for exclusion on account of Covid-induced lockdown and accordingly directed that with this exclusion CIRP period stands extended up to 02.02.2021 by which RP must complete CIRP.

(xi) Against this order dated 26.11.2020 the instant Appeal has b