On September 13, in the case of Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited, the Supreme Court held that NCLT/NCLAT, the adjudicating and appellant authority under the Insolvency and Bankruptcy Code (IBC), should strictly adhere to the stipulated time provided under the IBC to clear the resolution plans. The Court also observed the In its judgment, the learned Court held that once the Committee of Creditors (CoC) approves a resolution plan and submits it to the NCLT, the NCLT cannot permit any modifications or withdrawals on behalf of the successful Resolution Applicant.
The Bench of Justice DY Chandrachud and Justice MR Shah highlighted the failure of erstwhile insolvency regime, which was plagued with similar issues of delays. The Court noted that, under Section 12 of the IBC, the resolution process is time bound and the stipulated time ranges from 180 days to a maximum of 270 days. The bench also stated that if these delays are frequent, it would have an undeniable impact on the commercial assessment that the parties undertake during the course of negotiation.
Referring to the Ministry of Corporate Affairs’ Standing Committee on Finance’s report titled, ‘Implementation of Insolvency and Bankruptcy Code- Pitfalls and Solutions’, the Court highlighted that over 70% of Corporate Insolvency Resolution Processes (CIRP) which have faced delays over and above 180 days, such number of delayed cases go against the basic aim and objectives of the code. The report further details the reasoning behind such delays by attributing them to the NCLT taking Inordinate time in admitting CIRPs, multiplicity of litigation at the SC and the NCLAT, coupled with late and unsolicited bids by the Resolution Applicants after the original bidder becomes public. All these reasons combined results in adverse effects vis-à-vis commercial activity, degradation in the value of Corporate Debtor, efficiency and affordability of the resolution process.