Corporate Insolvency Resolution Process (CIRP) against A Ltd. was initiated on application by its financial Creditors but the process was not completed within the time limit prescribed in terms of Section 12(1) of the In

Section 12(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) stipulates that the Corporate Insolvency Resolution Process (CIRP) must be completed within 180 days of the initiation. In extreme circumstances, if CIRP is not completed, the Resolution Professional (RP) shall file an application to the Adjudicating Authority for extension of time, only when instructed by the Committee of Creditors (CoC) with a resolution passed by 66% voting shares. Section 12(3) provides that on receipt of an application, if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days: Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once. Provided further that the Corporate Insolvency Resolution Process shall mandatorily be completed within a period of 330 days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted and the time taken in legal proceedings in relation to such resolution process of the corporate debtor. In the given case, there is a resolution by the Committee of Creditors with 70% voting share in favour of seeking an extension. Since 70% is greater than the required 66% voting share, the RP can file an application for extension. However, the extension can only be for a period of 60 days as resolved by the CoC, and the Adjudicating Authority will grant the extension only when it is satisfied that there are cogent reasons for the extension. Mere annexing the resolution is not sufficient; the application needs to be drafted with proper justification.