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Every delay may have 100 good explanations, but the fact still remains that there is a delay, said Justice S. J. Mukhopadhaya, Chairperson, NCLAT. He was speaking here today at the colloquium on “Judicial Sensitisation on Insolvency Law and Associated Best Practices”.
Justice Mukhopadhaya raised serious concerns with regard to the constant delays in insolvency proceedings and said that the Members of NCLAT and NCLTs must cut the time period of insolvency proceedings short and focus on quicker disposal of cases. He emphasised that there are only limited grounds to argue at the stage of admission and that the Members of NCLTs should admit or dismiss the cases adhering to the prescribed time limits.
He requested the members of NCLTs to adhere to prescribed time limits by focusing on the subject matter at hand.
Justice Mukhopadhaya also discussed in detail the applicability of different provisions of the Limitation Act to insolvency proceedings and remarked, “If a party comes (to the tribunal) within limitation, we must also pass a reasoned order within limitation”, implying that Tribunals are equally obligated to follow timelines.
Talking about the bidding in insolvency process, he emphasised that the highest bid is not always the best in case of insolvency and therefore the need for careful consideration.
Spelling out the already envisaged six exits out of Corporate Insolvency Resolution Process (CIRP), Justice Mukhopadhaya emphasised:
- Pre-admission, where the erstwhile management/promoters settle with the applicant creditor.
- Post admission, prior to constitution of Committee of Creditors, with the Applicant Creditor by invoking inherent powers of NCLTs and NCLAT.
- After constitution of the Committee of Creditors by taking advantage of Section 12A of Insolvency and Bankruptcy Code, 2016 (IBC).
- Resolution Plan.
- After liquidation order is passed by reading section 230 of Companies Act into IBC in terms with the Appellate Tribunal’s Judgment in Y. Shivaram Prasad Vs S. Dhanapal dated 27.02.2019.
- Outright sale of the company as a whole, as opposed to being sold piece by piece, leading to its corporate death.
March 7, 2020