NCLT Mumbai Allows ND Studios RPs' Plea To Exclude 116 Days From CIRP Period Due To Criminal Proceedings

The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice Virendra Singh Bisht (Retd.) (Judicial Member) and Mr. Prabhat Kumar (Technical Member) allowed the plea of ND Studio Resolution Professional's (“RP”) granting exclusion of 116 days from the Corporate Insolvency Resolution Process (“CIRP”) period acknowledging the genuine hardships due to the ongoing criminal proceedings. Background Facts: NCLT Mumbai admitted ND's Art World Private Limited (Corporate Debtor) into CIRP for a default of an outstanding debt of Rs 252.48 crore filed by Edelweiss Asset Reconstruction Company Ltd. National Award-winning art director Nitin Desai, one of the directors of the Corporate debtor also filed an appeal against the CIRP, however, the same was dismissed by NCLAT. In its previous Order, NCLT observed that a police case for abetment of suicide under the Indian Penal Code was registered against the Resolution Professor after Nitin Desai died in his studio, on the ground that the initiation of CIRP proceedings caused him to die by suicide. In line with this, it had allowed the Interim Resolution Professional's plea to continue with the CIRP 'only after normalcy is restored.' It observed: “Due to this, there seems to be an atmosphere of outrage in the area near the offices of Corporate Debtor and the same are also under control of police authorities for investigation purposes. We consider that the facts brought to our notice can be taken on record to safeguard the office of Resolution Professional, and in particular, likelihood of any proceeding against him for negligence in discharge of his duties under the code in relation to CIRP process.” The RP filed the application requesting exclusion of 116 days from the CIRP Period upto the date of taking over custody of the Studio, which is the sole asset of the Corporate Debtor since a First Information Report was lodged against him, preventing him to take custody of the said Asset of the Corporate Debtor due to the said Criminal Proceedings. NCLT Verdict: The NCLT Mumbai allowed the application and allowed the plea of ND Studio Resolution Professional's granting exclusion of 116 days from the Corporate Insolvency Resolution Process (“CIRP”) period acknowledging the genuine hardships due to the ongoing criminal proceedings. The Tribunal granted the exclusion of 116 days noting that the said CIRP is expiring on 20.04.2024 and acknowledged the genuine hardships being faced by the Resolution Profession in managing the CIRP due to criminal proceedings. It granted an exclusion of 116 days from 04.08.2023 (the date of FIR lodged against the Applicant) till 28.11.2023 (the date on which the Authorized Person for and on behalf of the Applicant took custody and control of the Studio) in the computation of the CIRP Period. Thus, the CIRP expiring on 20.04.2024 shall now expire on 14.08.2024. The Tribunal emphasized the importance of this extension for the successful resolution and revival of the Corporate Debtor, benefiting all stakeholders. It also directed the Resolution Professional to diligently work towards completing the CIRP within the extended timeframe and to submit quarterly progress reports. Case Title: Edelweiss Asset Reconstruction Company Ltd. vs ND S Art World Pvt. Ltd. Case No.: IA 2243/2024 (New IA) in C.P. (IB)/895(MB)2022 Counsel for Applicant: Mr. Nausher Kohli, Advocate Click here to Read/Download Order

NCLT Mumbai Allows ND Studios RPs' Plea To Exclude 116 Days From CIRP Period Due To Criminal Proceedings

Sachika Vij

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