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NCLAT Allows 45-Day Extension for PIRP After of
New Delhi, – The has set aside an order of the that refused to extend the period of the (PIRP) against two . The appellate tribunal granted a further 45 days to complete the resolution after noting that the sole , , had already approved the guarantors' .
The bench, comprising Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha, held that the NCLT ought to have extended the PIRP period when the only remaining steps were and .
The Case: A Settlement in the Making
had initiated PIRP proceedings under against Dharmendra Shah and Sneha Dharmendra Shah. After the appointment of a and a public announcement on , claims were collated and a was constituted.
Through a series of negotiations spanning four meetings of the creditors, the guarantors eventually submitted a combined of Rs. 3.27 crore, plus PIRP costs, to be paid within 90 days. At the fifth meeting on , the sole member of the CoC – – resolved to accept the plan, subject to approval from the bank's competent authority and completion of an process.
With the initial 120-day PIRP period having expired on , the RP filed applications before the NCLT seeking an extension of 60 days. However, on , the NCLT rejected those applications, prompting the appeals before the NCLAT.
Arguments: Only Procedural Hurdles Remained
Counsel for argued that the had been substantively accepted and that only internal approvals and the process remained. The bank sought an additional 60 days to finalise the resolution.
The supported the bank's position, submitting that they had sincerely offered to repay and that the creditor had already agreed to the terms. They contended that the NCLT should have facilitated the completion of the process by granting an extension.
The RP stated that he would abide by the tribunal's order.
Legal Analysis: Must Be Granted
The NCLAT observed that the core purpose of the PIRP is to enable repayment of loans to financial creditors. In the present case, the guarantors and had already arrived at a settlement. Only formal approval by the bank's competent authority and the remained.
The bench noted:
"The purpose of the PIRP is for repayment of loan to the and when the repayment plans proposed by the guarantor were approved by the , after much deliberations and only approval of the appropriate authority of the had remained, the should have extended for completion of the whole process."
The Tribunal held that denying an extension in such circumstances would defeat the very object of the . It emphasised that procedural delays should not be allowed to derail a .
Decision: 45-Day Extension, NCLT Order Set Aside
The NCLAT allowed both appeals and set aside the impugned orders of the NCLT. It extended the PIRP period by 45 days from the date of its order – – and directed that all remaining steps be completed within that timeframe.
No order as to costs was made. The tribunal also disposed of any pending interim applications.
Implications for Insolvency Practice
The ruling reinforces the principle that once a has received from the , the must grant for its formalisation. The decision is expected to provide comfort to resolution professionals and financial creditors in personal insolvency cases where a settlement is near but logistical formalities remain.
For the guarantors, Dharmendra Shah and Sneha Dharmendra Shah, the extension offers a final opportunity to repay the debt and avoid the consequences of a failed PIRP, including potential .
