The NCLAT direction came after a petition filed by the resolution professional of Reliance Naval and Engineering, challenging the order of the Ahmedabad-bench of the National Company Law Tribunal.
The “pre-pack” scheme will require amendments to the Insolvency and Bankruptcy Code (IBC) to take effect, and the government may introduce a Bill to this effect as early as the next session of Parliament.
The National Company Law Appellate Tribunal (NCLAT) on Thursday directed to exclude the lockdown phase – March 25 to August 31, 2020 – while computing the insolvency resolution period for Anil Ambani-led Reliance Naval and Engineering Ltd.
The NCLAT direction came after a petition filed by the resolution professional of Reliance Naval and Engineering, challenging the order of the Ahmedabad-bench of the National Company Law Tribunal (NCLT).
The NCLT had on August 20, 2020, though granted extension of 90 days to the resolution professional to complete the Corporate Insolvency Resolution Process (CIRP) beyond 180 days, but declined to exclude the lockdown period on the ground that 90 days period of the extension was still in hand.
Reliance Naval and Engineering contended that its corporate office, located in Maharashtra has been worst hit, with most of the areas declared Red Zone, culminating in the extension of the lockdown till August 31, 2020 and this hardship was required to be mitigated.
A three-member NCLAT bench headed by Acting Chairperson Justice B L Bhat allowed the appeal.
“We allow this appeal by directing that the period of lockdown w.e.f. March 25, 2020 till August 31, 2020 shall be excluded while computing the period of CIRP.
“To avoid any confusion/ambiguity, we make it clear that this direction will not in any case be construed as interference with the extension of 90 days’ time granted by the NCLT, which shall begin only after the expiry of the period of CIRP period of 180 days after excluding the period from March 25, 2020 up to August 31, 2020,” it said.
Under the Insolvency & Bankruptcy Code, CIRP of the debt-ridden firm has to be completed within 180 days or within the extended period of 90 days and mandatorily be completed within 330 days, including any extension and the time taken in legal proceedings. Failing to this, the debt-ridden company has to go for liquidation.
Meanwhile, the NCLAT also said: “We make it clear that this order will not serve as a precedent in all cases as it has been passed in the peculiar circumstances of the instant case”.
Reliance Naval and Engineering’s CIRP is undergoing since January 15 this year.