Pravin R Navandar vs VOVL Limited

This is an Application filed on 11.03.2020 U/s.60 (5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") by Mr. Pravin R Navandar, the Resolution Professional of the Corporate Debtor VOVL Limited, seeking exclusion of an aggregate period of 68 (sixty eight) days from the computation of the corporate insolvency resolution process ("CIRP") period of the Corporate Debtor.

The Applicant has sought exclusion of the following periods of time from the calculation of the CIRP period of 180 days:

a. 13 days from 8 November 2019 to 20 November 2019 ("13 Day Period") being the days commencing from 8 November 2019 and up to 20 November 2019, which is the period between the date on which the Admission Order was passed by this Tribunal and the date on which the IRP received the Admission Order and took charge for commencing the CIRP of the Corporate Debtor;

b. 47 days from 20 December 2019 to 4 February 2020 ("47 Day Period") comprising of -

i. The period of 32 days between 20 December 2019 and 20 January 2020 i.e. the period between the first meeting of the COC wherein it was decided and resolved by the COC to appoint the Applicant herein as the Resolution Professional of the Corporate Debtor and the order of this Tribunal appointing the Applicant as the Resolution Professional; and

ii. The period of 15 days from 20 January 2020 till 4 February 2020 i.e. the period between the order this Tribunal appointing the Applicant as the Resolution Professional and the date on which the said order was made available to the Applicant.

c. 8 days between the order dated 12 February 2020 ("8 Day Period") being the period between the order dated 12 February 2020 passed by this Tribunal in the CIRP of Videocon Industries Limited, and the order dated 19 February 2020 passed by the Appellate Authority by which the said order dated 12 February 2020 was stayed, during which period the CIRP of the Corporate Debtor could not proceed and the Applicant could not take steps to keep the Corporate Debtor a going concern with respect to the assets forming the subject matter of the order dated 12 February Order.

Applicant relied upon the judgement of the Hon'ble National Company Law Appellate Tribunal ("NCLAT") in the matter of Quinn Logistics India Private Limited v. Mack Soft Tech Pvt. Ltd and Ors Company Appeal (AT) 2018 SCC Online NCLAT 243 has held that the Adjudicating Authority/NCLAT has the jurisdiction to 'exclude certain periods' for the purpose of counting the total CIRP period of a corporate debtor ("CIRP Period") if the facts and circumstances justify exclusion, in unforeseen circumstances such as:

a. If the CIRP is stayed by a court of law or the Adjudicating Authority, Appellate Authority or the Supreme Court of India;

b. If no resolution professional is functioning for one or other reason during CIRP;

c. 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 CIRP;

d. On hearing a case, if order is reserved by the Adjudicating Authority or the Appellate Authority or the Supreme Court and finally pass order enabling the resolution professional to complete the CIRP;

e. If the CIRP is set aside by the Appellate Authority or the order of Appellate Authority is reversed by the Hon'ble Supreme Court and the CIRP is restored.

f. Any other circumstances justifying exclusion of certain period

It is submitted that circumstances under which the exclusion of 68 days from the computation of the CIRP Period is sought in the MA is covered within the scope of NCLAT's decision in Quinn Logistics.

Exclusion of the 13 Day period:

a. The CIRP of the Corporate Debtor was commenced by this Tribunal's order dated 8 November 2019 ("Admission Order") in C.P. (IB) 2742(MB) OF 2019. Under the Admission Order, Mr. Rakesh Rameshwar having registration number IBBI/IPA-001/IP-P00696/2017-18/1211 was appointed as the interim resolution professional of the Corporate Debtor ("IRP")

b. Although the IRP was appointed by this Tribunal on 8 November 2019, a copy of the Admission Order was received by the IRP only on 20 November 2019 when the advocates for the original petition in the Company Petition forwarded a copy of the Admission Order to the IRP vide email dated 20 November 2020 (Exhibit B to IA 912 of 2020 at Pg. 20).

c. The IRP effectively took charge of the Corporate Debtor for initiating the CIRP only on 21 November 2019, i.e. after a period of 13 days from the Admission Order. In addition, during the period between the date of and the Admission Order till 20 November 2020, there was no insolvency resolution professional functioning.

d. Accordingly, it is submitted that the 13 Day Period falls within the criteria laid down in Quinn Logistics as set out in paragraphs 1 (b) and 1 (c) above and deserves to be excluded from the computation of the CIRP Period of the Corporate Debtor.

Exclusion of the 47 Day Period:

a. On 20 December 2019, the IRP convened the first meeting of the Committee of Creditors of the Corporate Debtor ("CoC"), wherein it was inter alia resolved unanimously by the CoC to appoint the Applicant herein as the resolution professional of the Corporate Debtor ("CoC Resolution"). Pursuant to the CoC Resolution, State Bank of India, one of the members of the CoC, filed M.A. No. 23 of 2020 in C.P. (IB) 2742(MB) of 2019 with this Tribunal on 2 January 2020 seeking confirmation of the Applicant's appointment as the resolution professional.

b. The Applicant is given to understand that all M.A.s in C.P. (IB) 2742(MB) of 2019 were listed for hearing before this Hon'ble Tribunal on 6 January 2020; but the said M.A. No. 23 of 2020 could not be taken up for hearing on 6 January 2020 on account of paucity of time.

c. Thereafter, M.A. 23 of 2020 in C.P. (IB) 2742(MB) of 2019 was listed before this Tribunal on 20 January 2020, and by an order dated 20 January 2020, the Applicant herein was appointed as the resolution professional of the Corporate Debtor. The Applicant received a copy of this Tribunal's aforesaid order dated 20 January 2020 only on 4 February 2020.

d. Although the IRP was appointed during the period, on account of continued lack of cooperation by the erstwhile management and promoters of the Corporate Debtor, the IRP was unable to effectively carry out his functions as the interim resolution professional, including in collecting information relating to the assets, finances and operations of the Corporate Debtor as required under the scheme of the IBC despite repeated requests to the erstwhile/ suspended directors of the Corporate Debtor to furnish necessary information and assistance. In this regard, the Applicant is given to understand that the IRP issued letters dated 22 November 2019, and emails dated 17 December 2019, 3 January 2020 and 20 January 2020 to the erstwhile management/ promoters of the Corporate Debtor seeking information and cooperation in conducting the CIRP.

e. However, in view of there being no response from the erstwhile management/ promoters, the IRP and CoC awaited the orders of this Tribunal for appointment of the Applicant as the resolution professional so that the Applicant could take available next steps under the IBC for collecting relevant information. It is pertinent that after being appointed as the resolution professional, the Applicant has filed an application under Section 19 (2) of the IBC against the erstwhile management/ promoters of the Corporate Debtor seeking cooperation with his directions and providing information for conducting the CIRP.

f. In addition, on account of the IRP not receiving cooperation from the erstwhile management/ promoters, and since the IRP and CoC were awaiting the appointment of the Applicant as the resolution professional by this Tribunal, the following actions which were required to have been completed by 20 January 2020 i.e., by the 73rd day from the date of commencement of CIRP could not be completed:

S/No

Description of activity

Stipulated time period under IBC

1.

Submission of information memorandum ("IM") to the members of the Committee of Creditors

Within 2 weeks of appointment of resolution professional, but not later than 54th day of Commencement of CIRP ("ICD")

Regulation 36(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016("CIRP Regulations").

2.

Resolution professional to form an opinion on whether transactions under Sections 43, 45, 50 or 66 have been entered into by the Corporate Debtor

Within a period of 75 days from the date of ICD

Regulation 35A of the CIRP Regulations.

3.

Publication of Form G

Within a period of 75 days

from the date of ICD

Regulation 36A of the CIRP

Regulations

4.

Invitation of expression of Interest

g. It is submitted that in light of the foregoing paragraphs, that despite the CoC Resolution being passed on 20 December 2019, the Applicant take charge as the resolution professional only on 4 February 2020 and there were effectively no insolvency professional discharging duties during the intervening period.

h. In light of the foregoing paragraphs, for a period of 47 days, i.e. from the CoC Resolution to appoint the Applicant as the Resolution Professional of the Corporate Debtor and the date on which the order of this Hon'ble Tribunal appointing the Applicant as the resolution professional was made available to the Applicant, the CIRP of the Corporate Debtor could not be effectively progressed and the intervening period was effectively lost for fulfilment of the functions pertaining to the CIRP.

i. It is submitted that therefore the circumstances during the period between 20 December 2019 and 4 February 2020 has prejudicially affected the CIRP of the Corporate Debtor on account of unforeseeable factors beyond the control of either the IRP, the CoC and/ or the Applicant which necessitates the exclusion of the aforesaid 47 days in view of the criteria laid down by Quinn Logistics as set out in paragraph 4(f) above.

Exclusion of the 8 Day Period

a. This Tribunal Vide its order dated 12 February 2020 in M.A. No. 2385 of 2019 in C.P. (IB)-02/MB/2018 ("12 February 2020 Order"), held that the foreign oil and gas assets and properties, including any claim, interest therein, of the Videocon Group held through the Corporate Debtor and its overseas subsidiaries, Videocon Hydrocarbon Holdings Limited, Videocon Energy Brazil Limited and Videocon Indonesia Nunukan Inc are the assets of Videocon Industries Limited ("VIL"), the holding company of the Corporate Debtor, for the purpose of VIL's CIRP which is being conducted as part of the Videocon Group's consolidated CIRP.

b. Subsequently, by an order dated 19 February 2020 passed in Company Appeal (AT) (Ins.) No. 299 of 2020 by the NCLAT, the 12 Feb Order passed by this Tribunal was stayed by Hon'ble NCLAT.

c. It is submitted that during the intervening period between 12 February 2020 and 19 February 2020, virtually the only business assets of the Corporate Debtor, being the foreign oil and gas assets held through its step-down subsidiaries were effectively held to be properties/assets of Videocon Industries Limited (also undergoing CIRP). This substantially jeopardised the entire CIRP of the Corporate Debtor since the Corporate Debtor significantly derives its value from the said foreign oil and gas assets.

d. It is submitted that under Section 25(1) of the IBC, the Applicant, as the resolution professional of the Corporate Debtor is entrusted with the duty under the IBC to keep operations of the Corporate Debtor a going concern during the CIRP. The Applicant was unable to take steps to keep the Corporate Debtor a going concern in respect of the said foreign oil and gas assets during the period when the 12 Feb Order was in operation. Accordingly, it is submitted that the CIRP of the Corporate Debtor could not proceed in an effective manner during the period of 8 days between the passing of the 12 Feb Order and the order dated 19 February 2020 of the Appellate Authority.

e. It is submitted that during the 8 Day Period, the CIRP of the Corporate Debtor was effectively brought to a standstill on account of the orders of this Tribunal. Accordingly, the 8 Day Period deserves to be excluded from the CIRP period as per the criteria laid down by the Appellate Authority in Quinn Logistics as set out in paragraph 3 (a) above.

We have perused the records and made material available on record and duly considered the reasons submitted by the RP in respect of the present application, the main grounds taken for exclusion of CIRP are described in the present I.A.

On hearing the submission of the counsel for the applicant and going through the pleadings this bench is of the view that the first tranche of exclusion period of 13 days form 08.11.2019 till 20.11.2019 and the last tranche period of 8 days from 12.02.2020 till 19.02.2020 are only deserved to be allowed. With regard to the 47 days period from 20.12.2019 and 04.02.2020 it is not deserved to be allowed in view of the fact that the previous IRP was continuing till the Applicant RP taken charge and there was no break in CIRP. It is well accepted principle that there cannot be any vacuum during the Corporate Insolvency Resolution Process especially when the Company is a functioning/going concern. If we accept the request as sought by the Applicant for the two periods of 47 days which comprise of 32 days and 15 days, it would imply, mean that during this period the Company was manned by none or without any resolution professional and the Company was not a going concern and that could give rise to pilferage/theft of assets of the Corporate Debtor. This would also rise an issue as during this period no fees would have been paid to the IRP/RP as CIRP cost. Considering above aspects, practical view and the principle as discussed above the period of exclusion of 47 days sought by the applicant is without any merit therefore, we are not inclined to grant exclusion of such period of 47 days.

Ordered Accordingly. Application for U/s. 60 (5) is partly Allowed.