Insolvency period may be excluded where project-wise segregation and settlement efforts delay issuance of Form-G.

The Appellant, the Authorized Representative of a class of Unsecured Financial Creditors (Homebuyers) holding a 72% voting share, challenged an order dated 20.02.2026 passed by the NCLT, New Delhi.

The Resolution Professional (RP), acting on a Committee of Creditors (CoC) resolution, had filed IA No. 410 of 2026 seeking an exclusion of 525 days (from 12.06.2024 to 21.11.2025) from the Corporate Insolvency Resolution Process (CIRP) timeline.

The exclusion was sought because the CIRP was at a standstill regarding project-wise resolution; specifically, negotiations for an amicable settlement and the eventual segregation of the "CHD Vann" project were pending.

On 24.01.2024, the RP had informed the Adjudicating Authority that Form-G (Invitation for Expression of Interest) could not be issued until project-wise issues were resolved.

The Adjudicating Authority rejected the exclusion, erroneously observing that the period was claimed based on "reserved orders," whereas the record showed the matter was heard and pronounced on the same day.

Whether the Adjudicating Authority erred in rejecting the application for exclusion of time despite the standstill in CIRP due to pending project-wise segregation and settlement efforts.

The court applied the principles of the Insolvency and Bankruptcy Code, 2016 (IBC) regarding the "exclusion of time" from the CIRP period, particularly in complex real estate insolvencies involving project-wise resolution.

It recognized that periods during which the CIRP cannot effectively proceed due to external legal impediments or pending judicial determinations on the segregation of assets (to facilitate the issuance of Form-G) justify exclusion to ensure the objective of value maximization and successful resolution.

The NCLAT observed that the Adjudicating Authority misconstrued the grounds for exclusion, focusing on a procedural technicality regarding "reserved orders" (para 5(xi) of the impugned order) while ignoring the substantive reasons detailed in the application.

The Appellate Tribunal noted that this was a real estate insolvency involving multiple projects where the RP was unable to proceed with Form-G until the status of specific projects was clear.

As the Adjudicating Authority itself had allowed the segregation of the "CHD Vann" project only on 21.11.2025, the RP was effectively rendered incapable of proceeding with the CIRP timelines for the remaining assets until that date.

The statement made by the RP on 24.01.2024—that he would await further instructions before issuing Form-G—underscored that the delay was beyond the RP’s control and tied to the ongoing segregation process.

The Tribunal answered the issue in the affirmative, finding that the Adjudicating Authority committed an error in rejecting the application.

Consequently, the Appeal was allowed, the order dated 20.02.2026 was set aside, and IA No. 410 of 2026 for exclusion of time was granted.