Covid19 - Extension of Limitation & Exclusion of Lockdown period in CIRP/Liquidation process.

Following are the orders of Hon’ble SCI , NCLAT & amendments in CIRP / Liquidation process regulations for extension of limitation & exclusion of lockdown period in CIRP/Liquidation process.

 

1.  Extension of Limitation.

Hon’ble SCI (23.03,2020) in Suo Motu Writ Petition (Civil) No(s).3/2020, ordered for extension of limitation period in all proceedings as follows;

• “This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/ appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State). 

• To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings.

• We are exercising this power under Article 142 read with Article 141 of the Constitution of India and declare that this order is a binding order within the meaning of Article 141 on all Courts /Tribunals and authorities.”

 

2, Exclusion of Lockdown period from CIRP / Liquidation process

i). NCLAT (30.03.2020) in Suo Moto - Company Appeal (AT) (Insolvency) No. 01 of 2020, ordered for exclusion of lockdown period in CIRP as applicable,  where the registered office of the Corporate Debtor may be located;

• # (1) That the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for ‘Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where ‘Corporate Insolvency Resolution Process’ has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal.

 

ii). Board on 29.03.2020, amended CIRP Regulations [Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2020], for exclusion of lockdown period.

• # Regulation “40C. Special provision relating to time-line. Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.”.

 

iii). Board on 17.04.2020, amended Liquidation process regulations [Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2020] for exclusion of lockdown period.

• # Regulation 47A “Exclusion of period of lockdown.

Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of computation of the time-line for any task that could not be completed due to such lockdown, in relation to any liquidation process.”.

 

Caution;

It can observed that while NCLAT orders excludes the period of lockdown, under section 12 of the code, ordered by the Central Government and the State Governments, including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, but the amendments in the CIRP & Liquidation process regulations speaks for the period of lockdown imposed by the Central Government only. As such in the case of CIRP process, the orders of NCLAT shall prevail, but in the case of the Liquidation process, concerned amendment regulations have to be followed.

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.