2019 (6) TMI 420 - HC - Insolvency and Bankruptcy

Withdrawal of CRIP process initiated against the corporate debtor - section 12A read with section 60(5) of the IBC 2016 - HELD THAT - Petition disposed off.

Summary

Issues:
1. Interpretation of Section 82 of the Code of Criminal Procedure in light of Articles 14 and 21 of the Constitution of India.
2. Jurisdiction of High Court under Articles 226 and 227 vis-a-vis Sections 60(5)(c), 63, and 231 of the Insolvency and Bankruptcy Code, 2016 (IBC).
3. Application of Section 12-A, Regulation 30-A of Insolvency and Bankruptcy Board of India Regulations, and Section 29-A of IBC regarding withdrawal of an application admitted under Section 7 of IBC.
4. Legality of observations made by NCLT against promoters/directors of a company in insolvency proceedings.
5. Consideration of criminal proceedings in the withdrawal of insolvency application.
6. Remedies available in case of dismissal of the withdrawal application under Section 12A.

Analysis:
1. The petition sought the Court to interpret Section 82 of the Code of Criminal Procedure to align with the Constitution, specifically Articles 14 and 21. The petitioner argued that the term 'absconder' should only apply under specific conditions outlined in the section to avoid unconstitutionality.

2. The petition also raised concerns regarding the jurisdiction of the High Court under Articles 226 and 227 in relation to Sections 60(5)(c), 63, and 231 of the Insolvency and Bankruptcy Code, emphasizing that the High Court's jurisdiction should not be limited by provisions of the IBC.

3. The Court examined the application of Section 12-A, Regulation 30-A of Insolvency and Bankruptcy Board of India Regulations, and Section 29-A of the IBC concerning the withdrawal of an application admitted under Section 7 of the IBC. The Court clarified the mandatory nature of allowing withdrawal under certain conditions and emphasized that criminal proceedings should not influence such decisions.

4. The judgment addressed the legality of observations made by the NCLT against the promoters/directors of a company in insolvency proceedings. The Court emphasized that such observations should be relevant to the pending matter and issued without affording the concerned parties a fair hearing.

5. The Court deliberated on the consideration of criminal proceedings in the withdrawal of an insolvency application, highlighting that criminal proceedings should not be a decisive factor in allowing or denying withdrawal under Section 12-A of the IBC.

6. Lastly, the judgment discussed the available remedies in case of the dismissal of the withdrawal application under Section 12A, mentioning the option of appeal before the NCLAT and potential recourse to the Apex Court. The Court granted limited protection to the petitioner pending further legal action, allowing time to approach higher courts for relief.