Jaiprakash Associates Ltd & Anr… Appellant Versus IDBI Bank Ltd. & Anr. … Respondents ( CIVIL APPEAL NO. 6486 of 2019 Order passed by Supreme Court of India)
In this particular matter, the Hon:Supreme Court, in order to do complete justice to the home buyers , had exercised it’s extra ordinary power under Article 142 of the Constitution of India, to salvage the situation and provided for a wholesome solution to serve the interest of all concerned and in particular of large number of home buyers(financial Creditors).
The provisio to Section 12 (3) of the Insolvency and Bankruptcy Code, 2016(“IBC”) mandates to complete the Corporate Insolvency Resolution Process (“CIRP”) within a period of three hundred and thirty (330) days from the insolvency commencement date, including the extension of the period of CIRP and time taken for legal proceedings. Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.
In the decided case, the initial period of 180 days to complete the CIRP got over and the resolution plan was not finalized by the Committee of Creditors. There were many confusions during the process with respect to the voting share of the financial creditors(home buyers), lack of clarity on the status of the home buyers as financial creditors, stagnancy in legal process due to amendment in the legislation etc. As the legislation was new and having many ambiguity with respect to the powers of Committee of Creditors in finalizing the resolution plan, the parties had approached various judicial forums several times, which further delayed the resolution process.
In the present case there was unanimity amongst all the parties that liquidation of Corporate debtor must be eschewed and instead an attempt be made to salvage the situation by finding out some viable arrangement which would subserve the interests of all concerned. The Hon:Supreme Court had noted that the liquidation of the company will affect the home buyers and put them further into desperate situation.
The Hon: Supreme Court considering the interest of the parties and to do complete justice to them and to establish the real intention of the lawmakers , superseding the restrictive provision of section 12, had ordered that in view of the matter it is proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days extended period from the date of the order instead of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. Through this order the Hon:Supreme Court had surpassed the time limit of 90 days to complete the pending process specified under section 12 and thereby ensured the justice to the stakeholders, particularly home buyers.
It is specifically mentioned in the order that these directions are issued in exceptional situation in the facts of the present case and shall not be treated as a precedent.
This judgement will enable the Interim Resolution Professional to count the 90 days from the date of the order to invite revised resolution plans from the final bidders.
Additional Notes- What section says.
Article 142 in The Constitution Of India 1949
142. Enforcement of decrees and orders of Supreme Court and unless as to discovery, etc ( 1 ) The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe
(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself
Section 12 of the Insolvency and Bankruptcy Code.
12. Time-limit for completion of insolvency resolution process. –
(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of sixty-six per cent. of the voting shares.
(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days: Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once:
Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor:
Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.