NCLT Mumbai: Timeline Provided By CIRP Regulation 36A(6) Must Be Adhered To Strictly

Background Facts:

On 27.02.2023, the Corporate Insolvency Resolution Process ('CIRP') was initiated against Sristi Hospitality Private Limited (Corporate Debtor) by Saraswat Co-operative Bank Limited (Respondent No. 2) under Section 7 of the Insolvency and Bankruptcy Code, 2016 ('IBC'). Mr. Rajan Deshraj Agarwal (Respondent No. 1) was appointed as the Interim Resolution Professional ('IRP')

On 16.05.2023, invitations for Expression of Interest ('EOI') were issued, with a deadline for submissions by 31.05.2023. On 01.06.2023, Shree Siddhivinayak Cotspin Pvt. Ltd. (Applicant) requested an extension to submit an EOI, citing the absence of their director due to travel before the deadline. It asked for a 2-5 day extension and stated to submit the same within 3 days of approval. Respondent No. 1 declined the extension request on 03.06.2023, citing the CoC's decision not to extend the EOI submission timeline.

Aggrieved with the decision, the Applicant filed a petition seeking a one-day delay condonation of delay, an extension to submit an EOI, and requesting the Respondents to allow the consideration of the submission.

NCLT Verdict:

The NCLT Mumbai dismissed the application and held that the timeline provided by the CIRP Regulation 36A(6) must be adhered to strictly.

The Tribunal noted that the Applicant's main argument was that it could not have submitted the EOI since the required information in Form G for the Invitation of EOIs was not accessible. Further, columns 8 and 9 of the said form, provided only the email details and address of Respondent No. 1 indicating that the information can be sought by contacting the IRP.

The NCLT, upon reviewing the Applicant's initial communication, noted that it merely stated that the Applicant couldn't submit the EOI due to their Director being out of station for 15 days. The email did not mention any deficiency of information that could have prevented the Applicant from submitting the EOI.

Likewise, in the second communication dated 02.06.2023, the Applicant sought condonation for the delay in submitting the EOI, citing business-related travel as the reason for missing the submission deadline. However, the travel records provided by the Applicant indicated that the relevant director had returned to Mumbai on 26.05.2023 much before the submission deadline on 31.05.2023 contradicting the stated reason for the delay.

Thus, NCLT held that there is no justification for condoning the delay in filing the EOI, even if it is only for one day since the Applicant's argument that the EOI couldn't be submitted on time due to the Applicant Director's travel engagements is grossly incorrect.

The Tribunal also placed reliance on the NCLAT's decision in Dwarkashish Sakhar Karkhana Ltd. vs. Pankaj Joshi and others and observed that the timeline given in Regulation 36A(6) is to be adhered to strictly.

It also noted that Form-G for the invitation of EOIs was as per norms and did contain all the required information. The specified Form provided that the IRP can be contacted at the given address for the necessary information, if any, however, no steps were made by the Applicant to contact the IRP at any point in time for any information.

In conclusion, NCLT rejected the application by observing that the Applicant has failed to provide any legitimate reasons for the condonation of delay in filing the EOI.

Case Title: Shree Siddhivinayak Cotspin Pvt. Ltd. vs. Rajan Deshraj Agarwal and Anr.

Case No.: IA No. 2390 of 2023 In CP(IB) 518 (IB)2020

Counsel for the Applicant: Sr. Adv., Prateek Seksaria a/w Adv. Aniruth Purusothaman

Counsel for the Respondent No.1/RP: Adv. Amir Arsiwala a/w Farzeen C Pardiwalla

Counsel for Respondent No. 2: Adv. Ayush Kothari a/w Adv. Shreyansh Desai

Counsel for SRA: Sr. Adv. Vikram Nankani a/w Manoj Mishra

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