2021 (2) TMI 1224 - Tri - Insolvency and Bankruptcy

Application filed by IRP for withdrawal of CIRP - Filing of Form FA by IRP - Section 12A read with Regulation 30 A of I B Code - HELD THAT - It is admitted fact that the Operational Creditor had filed an application for initiation of the CIRP against the Corporate Debtor and on his application, the CIRP was initiated and subsequently, the CoC was constituted in which State Bank of India being the sole financial creditor is the sole member of the CoC and it is also admitted that the State Bank of India has approved the withdrawal by 100% voting. Mere plain reading of Section 12A shows that the Adjudicating Authority may allow the withdrawal application admitted under Section 7, 9 or 10 on an application made by the applicant with the approval of the 90% of the voting share of the CoC. Therefore, to file an application under Section 12A, the applicant is required to establish two elements i.e. first, the application must be filed by the applicant on whose prayer application under Section 7, 9 or 10 is admitted and secondly, it must be approved by 90% voting share of the CoC but herein the case in hand, it is admitted fact that the CoC which constitute the sole member of SBI by 100% voting approved the withdrawal. But so far the first element is concerned i.e. the application must be filed by the person on whose prayer application is admitted under Section 7, 9 or 10 is not established by the IRP/applicant of this present application and it is admitted fact that the present application has been filed by the IRP and not by the applicant. In view of Section 12A the application must be filed by the applicant whose application is admitted u/s 7 or 9 or 10 IBC and nowhere either in the IBC or the in the Regulations, it is mentioned that any person other than applicant, whose application is admitted is empowered to file an application. Of course, under the Regulations it is mentioned that the application must be filed through the IRP or the RP the case may be but it never says that the application will be filed at the instance of the Corporate Debtor or the member of the CoC if it is not duly signed or filled by the applicant, therefore, we are unable to accept the contention of the IRP that in view of the directions given by the Hon'ble NCLAT, the IRP has filed the application. The application is not filed by the applicant, on whose application CIRP is initiated therefore, the present application filed by the IRP even after the approval by the CoC by 100% voting, is not maintainable and liable to be dismissed - Application dismissed.

Summary

Issues Involved:
1. Objections raised by the Operational Creditor.
2. Application for withdrawal of CIRP under Section 12A of the Insolvency and Bankruptcy Code, 2016.
3. Constitution of the Committee of Creditors (CoC).
4. Non-inclusion of Axis Bank in the CoC.
5. Procedural aspects of filing Form FA.

Detailed Analysis:

1. Objections Raised by the Operational Creditor:
The Operational Creditor raised several objections against the application filed by the Interim Resolution Professional (IRP) under Section 12A of the Insolvency and Bankruptcy Code (IBC), 2016. The objections included:
- The IRP did not consider the claim of the Operational Creditor in its entirety.
- The application was filed in contravention of Section 12A read with Regulation 30A of the IBC 2016.
- The Form FA was filed incorrectly by the IRP.
- The IRP did not consider the claim of Axis Bank while constituting the CoC.

2. Application for Withdrawal of CIRP under Section 12A of the IBC 2016:
The IRP filed the application for withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the IBC 2016, read with Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016. The IRP argued that the withdrawal was in the interest of the Corporate Debtor to maintain it as a going concern. The CoC, constituted with the sole claim of the Financial Creditor (State Bank of India), approved the withdrawal with 100% voting share.

3. Constitution of the Committee of Creditors (CoC):
The CoC was constituted by the IRP on 05.10.2020, with the sole claim of the Financial Creditor, State Bank of India, amounting to ?12,66,000/-. The first meeting of the CoC was held on 07.10.2020, where the CoC approved the settlement of the claim amount of State Bank of India and the withdrawal of the CIRP under Section 12A of the IBC 2016.

4. Non-Inclusion of Axis Bank in the CoC:
The IRP submitted that Axis Bank filed its claim on 23.09.2020, but the claim form was defective. The IRP communicated the defect to Axis Bank on 01.10.2020. By the time the CoC was constituted on 05.10.2020, Axis Bank had not rectified the defect. The claim of Axis Bank was against a Fixed Deposit maintained with the bank, and the status of the claim was discussed in the first CoC meeting on 07.10.2020.

5. Procedural Aspects of Filing Form FA:
The IRP argued that the Form FA was filed for the purpose of withdrawal of the CIRP process. The IRP had requested the Operational Creditor to sign Form FA, but the Operational Creditor refused. The IRP, therefore, signed Form FA in the interest of maintaining the Corporate Debtor as a going concern. The Operational Creditor contended that only the applicant could file Form FA, and the IRP was not empowered to file the withdrawal application without the applicant's consent.

Judgment:
The Tribunal held that the application for withdrawal of CIRP under Section 12A must be filed by the applicant who initiated the CIRP, and it must be approved by 90% of the voting share of the CoC. In this case, although the CoC approved the withdrawal with 100% voting share, the application was not filed by the original applicant (Operational Creditor). Therefore, the application filed by the IRP was not maintainable. The Tribunal rejected the prayer of the IRP to allow the withdrawal of the Company Petition and dismissed the application.