ONE PAGE 41 – In the matter of M/s RD Rubber Reclaim Ltd

ONE PAGE 41 – In the matter of M/s RD Rubber Reclaim Ltd
Exclusion of lockdown period – Extension of timelines for implementation of Rplan.
Court:  NCLT Kol IA 496 in CP(IB) 1724 of 2018, 12.07.2021

1. Background: IA filed by SRA praying for extension of timelines for implementation of Rplan. Rplan after approval by COC was reserved for order on 23.03.21. SRA on 17.04.21 gets to know that theft happened at factory premises of CD and the RP filed FIR and any substantial loss to equipments of CD may affect implementation of Rplan, so without ascertaining loss, SRA cannot commence the factory premises.

This was followed by outbreak of second wave of Covid pandemic and the entire business activities all over India including that of Applicant got crippled. Rplan was submitted on 04.11.20 & since then circumstances have changed drastically and hence SRA prays before AA to exclude 60 days in below timelines* and to direct the RP & COC accordingly.

a. First Tranche amount of Rs.1,99,94,840/- in X + 70 days

b. Second Tranche amount of 1,80,75,000/- in X + 160 days

c. Issue of fresh equity share capital to extent of 18,07,500 equity shares @ Rs.10 each aggregating to Rs.1,80,75,000 in X+160 days. (X is date of approval of Rplan by AA)

2. Case Laws:

a. FM Hammerle Textiles Ltd (NCLT Chandigarh)-11.05.20: Excluded entire lockdown period from compliances in terms of the order approving Rplan.

b. NCLAT in CA(AT)(Ins)02/2020-30.03.20: Period of lockdown order by CG & SG including the period extended either in whole or in part of the country where Reg office of CD is located was excluded for the purpose of counting for resolution process u/s12 in all cases where CIRP is initiated & pending before NCLT or Appellate Authority.

c. Notification IBBI/2019-20/GN/REG059 dt.29.03.20 by IBBI inserting 40C to CIRP Regulations excluding lockdown period imposed by CG for any activity that could not be completed due to lockdown, in relation to the CIRP.

d. SC order dt 23.03.2020 WP (Civil) No.3/2020 extended the period of limitation prescribed under general or special law whether condonable or not, with effect from 15.03.2020 till further orders.

e. Fincast Founders & Engineers Pvt Ltd (RA) v Rajat Mukherjee, RP of Shaifali Rolls Ltd-22.07.20: NCLT Ahm after considering the lockdown & resultant detriments to business gave relaxation of timeframe or payment as well as for completion of CIRP.

f. NCLAT in Kotak Mahindra Bank Ltd v AP Enterprises Pvt Ltd thru RP: Allowed exclusion of lockdown period ie from 25.03.20 to 31.07.20 from the schedule of making payment. Once the RA takes over the CD its supervision and control comes to monitoring committee and COC becomes irrelevant & dismissed the appeal by FC.

3. NCLT Evaluation & Judgment: AA authority cannot direct the RP/COC to consider the request as there is no specific provision under IBC that specifies what should be done at force majeure circumstances or otherwise. Also, once Rplan is approved COC ceases to exist. Hence AA has to find a way out by invoking Rule 15 of NCLT Rules. NCLT is convinced that that there is a force Majeure circumstance necessitating its intervention in the best interests of the CD. SRA to file an affidavit that it will not take advantage of the alleged theft and it is bound to the timelines extended in view of the second wave and shall not be permitted to wriggle out of its obligations in the Rplan, failing which the consequences of violation of Rplan shall follow. IA is allowed by AA with above observations providing exact last dates for payment as 20.07.21, 18.10.21 & 18.10.21 instead of 25.05.21, 19.08.21 and 19.08.21.

MS Mano Ranjani

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