The Supreme Court on Monday ruled that Corporate Insolvency Resolution Process (CIRP) carried out under the Insolvency and Bankruptcy Code (IBC) must be completed within 330 days as laid down by the Code.
The Supreme Court held that the adjudicating authority cannot allow modifications or withdrawals of Resolution Plans approved by the Committee of Creditors at the behest of the successful Resolution Applicant, once the plan is submitted to it.
A Bench of Justices D Y Chandrachud and M R Shah ruled that the time limit can be extended only in exceptional circumstances as otherwise, the “open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time.” It asked the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) to stick to this should therefore, while deciding IBC matters, respect the deadline keeping in mind the “effect of such delays on the insolvency resolution process”.
“Judicial delay”, it said, “was one of the major reasons for the failure of the insolvency regime that was in effect prior to the IBC” and added that “we cannot let the present insolvency regime meet the same fate”. The judgment came on an appeal against an order of the NCLAT.