Lockdown period to be excluded from insolvency process timeline: NCLAT

The National Company Law Appellate Tribunal (NCLAT) on Monday directed that the lockdown period, as announced by the government, would be excluded for the purpose of counting of days for all ongoing insolvency matters, which are time bound. Passing a suo motu order, a three-member NCLAT bench headed by Acting Chairperson Justice B L Bhat said that it would applicable in all the corporate insolvency resolution process, which has been initiated or pending, or pending in Appel before the benches of NCLTs or before the appellate tribunal.

Besides, any interim order passed by the NCLAT or National Company Law Tribunal (NCLT) would continue till the next date of hearing, which would be notified once the tribunal and the appellate tribunal starts functioning. The NCLT and the NCLAT have closed their hearing amidst the three weeks lockdown imposed by the government to contain the spread of pandemic of Covid-19.

"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 NCLT or in Appeal before this Appellate Tribunal,” it said. “It is further ordered that any interim order/ stay order passed by this Appellate Tribunal in anyone or the other Appeal under Insolvency and Bankruptcy Code, 2016 shall continue till the next date of hearing, which may be notified later,” the NCLAT added.

The appellate tribunal has directed to communicate this order to the registrar of NCLT asking to circulate the same to all benches of NCLT across the country. Section 12 of the IBC mandates to complete the insolvency process  of a debt ridden company within 330 days from commencement, failing to which it has to face liquidation.  Earlier, the NCLAT had suspended its scheduled hearing till till March 31.

The NCLT had also suspended hearing at its Principal Bench at New Delhi and its fourteen other benches across India in cities which includes Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai, Cuttack, Jaipur, Kochi ,Amravati, and Indore.  According to the latest updates from the health ministry, India has reported about 1,071 Covid-19 cases and the number of deaths at 29. As many as 92 new cases of COVID-19 and four deaths have been reported in the last 24 hours.