2020 (8) TMI 891 - Tri - Insolvency and Bankruptcy

Seeking withdrawal of application - Section 12A of the IB Code, 2016 read with regulation 30(1) (a) of the CIRP Regulations, 2016 along with Rule 11 of National Company Law Tribunal Ruled, 2016 and Section 60(5) of the Insolvency and Bankruptcy Code 2016 with Rule 154 of NCLT Rules 2016 - HELD THAT - IRP constituted the CoC consisting of Mr. Mukeshbhai Desai as Financial Creditor. The said constitution of CoC was challenged by the Suspended Management vide IA 752/19, which said IA was allowed on 10.07.2020, whereby, the constitution of the CoC with sole member namely Mukeshbhai Desai has been declared as void ab initio since there are no other claimants, and the Corporate Debtor is a going concern, hence the liberty was granted to the Operational Creditor to file the withdrawal application - It is stated that RP thereafter filed the instant application on 27.07.2020 with a prayer for withdrawal of the IB application filed Under Section 9 of the lB Code along with form FA dated 16.03.2020, i.e. application for the withdrawal of Corporate Insolvency Process( Under Regulation 30A of the IBBI ( Insolvency Resolution Process for Corporate Process) Regulation 2016 (Annexure C page No.37 in the said form FA). It is very surprising that the said form FA is dated 16.03.2020/20.03.2020, duly signed by the authorized signatory of the operational Creditor of CP(IB) 178/18, but the same has been filed along with the instant application after about four months without assigning any reason for such delay - It is pertinent to mention that IA 752/2019 was pending for adjudication but the RP never mentioned and/or apprised the Adjudicating Authority about the filing of the Form FA by Operational Creditor, subsequently filed withdrawal of CP(IB) 118/2018, meanwhile was contesting the said IA 752/19 by filing a reply and advancing argument, thereby not only wasted his own time and money but has also wasted the time of the Adjudicating Authority and its resources, such action of the RP is not accepted. The application so filed by the applicant RP is partially allowed.

Summary

Issues:
1. Application filed under Section 12A of the IB Code, 2016 for withdrawal of Corporate Insolvency Resolution Process.
2. Challenge to the constitution of Committee of Creditors (CoC) by Suspended Management.
3. Delay in filing Form FA for withdrawal of Corporate Insolvency Process.
4. Failure to inform the Adjudicating Authority about the withdrawal application.

Analysis:
1. The application was filed under Section 12A of the IB Code, 2016 seeking withdrawal of the Corporate Insolvency Resolution Process. The Resolution Professional (RP) prayed for dismissal of the application, discharge as RP, review of certain orders, and any other relief deemed fit by the Adjudicating Authority. The application was partially allowed, granting relief only with respect to dismissal of the Corporate Insolvency Process and discharge of the RP.

2. The constitution of the CoC, with a sole member Mukeshbhai Desai, was challenged by the Suspended Management. The challenge was upheld, declaring the CoC constitution as void ab initio due to lack of other claimants and the Corporate Debtor being a going concern. The Operational Creditor was granted liberty to file a withdrawal application, leading to the subsequent filing by the RP.

3. The RP filed the withdrawal application along with Form FA dated 16.03.2020 after a significant delay of about four months. The delay in filing the form without providing any reason was noted as surprising. Additionally, the RP failed to mention the filing of Form FA during the pendency of the challenge to the CoC constitution, which led to wastage of time and resources.

4. The RP's failure to inform the Adjudicating Authority about the filing of Form FA and the withdrawal application during the pendency of the challenge to the CoC constitution was highlighted. The RP's actions were deemed unacceptable for wasting time, money, and resources. The application was disposed of with observations on the partial allowance of certain prayers while rejecting others.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal, including the withdrawal of the Corporate Insolvency Resolution Process, challenge to the CoC constitution, delay in filing necessary forms, and the RP's failure to inform the Adjudicating Authority in a timely manner.