TIME LIMIT FOR RECTIFICATION AND ADMISSION IS DIRECTORY 

It is pertinent to note that Section 9 (5) of Insolvency and Bankruptcy Code, 2016 provides the time limit for admission and rejection of the application and also the time limit for rectification of the defect in the application:

SECTION 9(5)

“Section 9 (5) – The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order—

Introduction

A bench of Supreme Court comprising of Justice R.F. Nariman and Justice Sanjay Kishen Kaul in the case of M.D. Frozen Foods Exports Pvt. Ltd. And Ors. Vs Hero Fincorp Ltd., in Civil Appeal No. 15147 of 2017 dealt with the issue that whether an NBFC is entitled to initiate proceedings under SARFAESI Act and arbitration proceedings, simultaneously, with respect to a loan account.

Background

In our previous publication on the subject, we had discussed the changes introduced by the Ordinance dated 23 November 2017 (the Ordinance), amending the Insolvency and Bankruptcy Code, 2016 (Code) (see our Ergo Newsflash dated 24 November 2017).

Companies undergoing corporate insolvency resolution process tend to be in dire need of funds to meet their working capital expenses. Interim finance can be an important tool for effective reorganization so as to prevent liquidation.

The Insolvency and Bankruptcy Board of India has amended the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 with effect from February 7, 2018, and has brought into force the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2018[1]. The salient features of the new regulations have been discussed hereunder.

Appointment of registered valuers

Enforced with the objective of time-bound insolvency resolution and maximization of assets, the Insolvency Bankruptcy Code, 2016 (hereinafter referred to as “IBC”), in order to facilitate the process of insolvency resolution, has provision for appointment of an insolvency resolution professional (hereinafter referred to as “IRP”).

It is known that I & B Code came into effect from 01.12.2016.  Subsequently, it perspired during various proceedings in NCLT that it has no specific provision for limitation period and/or categorical applicability of Limitation Act on initiation of insolvency process under the Act.

However, the limitation period is prescribed under the Limitation Act for every suit instituted, appeal preferred, and application made under the law.

As per Section 5(14) of the IB Code "Insolvency Resolution Process Period" is 180 days.

“Period of one hundred and eighty days beginning from the insolvency commencement date and ending on one hundred and eightieth day;”

COMPLETION OF INSOLVENCY RESOLUTION PROCESS - It must be noted that Section 12 of the IB Code prescribes the time limit for completion of Insolvency Resolution process.