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2021 (2) TMI 882 - Tri - Insolvency and BankruptcyWithdrawal from CIRP on the ground that the Applicant is in the process of re-structuring the debt of the Corporate Debtor - Seeking indulgence and challenging the action of IRP, of not filing the application of withdrawal of CIRP of the Corporate Debtor - section 60(5) and section 12A of Insolvency Bankruptcy Code, 2016 - HELD THAT - The Bench observed that the Interim Resolution Professional has acted fair and has taken actions as per requirements of the Code judiciously. It is a settled law by the Hon'ble Supreme Court through various judicial pronouncements that Corporate Insolvency Resolution Proceedings (CIRP) are proceedings in rem. On the issue as to which event is crucial for withdrawal of CIRP, as per the law laid down by Hon'ble K.C. Sanjeev v. Easwara Pillai Kesavan Nair 2020 (8) TMI 542 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI , the relevant date for considering withdrawal of CIRP is the date of application and nothing else. As a matter of fact, in this case no application for withdrawal of CIRP has ever been filed by the Interim Resolution Professional before the Adjudicating Authority, rather this IA has been filed by the assignee of financial creditor. As is evident from the records, since CoC has already been constituted in this case, any application for withdrawal of CIRP has to comply with regulation 30A (1) (b) of CIRP regulations read with Section 12 A of IBC-2016. Application dismissed.
Issues Involved:
1. Whether the Interim Resolution Professional (IRP) acted judiciously in not filing the application for withdrawal of Corporate Insolvency Resolution Process (CIRP). 2. Whether the assignee of the financial creditor has the right to seek withdrawal of CIRP before the constitution of the Committee of Creditors (CoC). 3. The applicability of the SARFAESI Act, 2002, and the Transfer of Property Act, 1882, in the context of the assignment of debt. 4. Whether the assignment agreement was valid and enforceable given the stamp duty issues. 5. The implications of the constitution of CoC on the withdrawal process under Section 12A of the Insolvency and Bankruptcy Code (IBC), 2016. Detailed Analysis: 1. Whether the IRP acted judiciously in not filing the application for withdrawal of CIRP: The Tribunal observed that the IRP acted in accordance with the requirements of the IBC judiciously. The IRP's actions were deemed fair, and it was noted that CIRP proceedings are proceedings in rem, as established by the Supreme Court. The IRP's decision to not file the withdrawal application was based on the need for compliance with the relevant regulations and laws. 2. Whether the assignee of the financial creditor has the right to seek withdrawal of CIRP before the constitution of CoC: The Applicant, an assignee of the original financial creditor, argued that they had requested the IRP to withdraw the CIRP before the CoC was constituted. They contended that the IRP deliberately constituted the CoC despite the request for withdrawal. However, the Tribunal noted that the relevant date for considering the withdrawal of CIRP is the date of the application, and no formal application for withdrawal was filed by the IRP before the Adjudicating Authority. 3. The applicability of the SARFAESI Act, 2002, and the Transfer of Property Act, 1882, in the context of the assignment of debt: The IRP argued that the Applicant's reliance on Section 5 of the SARFAESI Act, 2002, was misplaced as it does not apply to proceedings under the IBC. The Tribunal agreed, stating that the provisions of the IBC prevail over the SARFAESI Act in this context. The CoC's counsel also argued that the nature of the right created in favor of the original petitioner under the consent award cannot be transferred under the Transfer of Property Act, 1882. 4. Whether the assignment agreement was valid and enforceable given the stamp duty issues: The CoC's counsel submitted that the assignment agreement was insufficiently stamped, making it unenforceable under the Maharashtra Stamp Act, 1958. The Tribunal noted that the agreement required appropriate stamp duty to be enforceable. The Applicant argued that the assignment of debt under the SARFAESI Act, 2002, is exempt from stamp duty, but the Tribunal found that the agreement was not properly stamped at the relevant time. 5. The implications of the constitution of CoC on the withdrawal process under Section 12A of IBC, 2016: The Tribunal emphasized that once the CoC is constituted, any application for withdrawal of CIRP must comply with Regulation 30A(1)(b) of the CIRP regulations read with Section 12A of the IBC. The CoC's consent is necessary for withdrawal, and the Tribunal referred to the Supreme Court's judgment in Swiss Ribbons v. Union of India, which highlighted the collective nature of CIRP proceedings and the necessity of CoC's approval for withdrawal. Findings & Conclusion: The Tribunal concluded that the IRP acted judiciously and in accordance with the law. Since the CoC was already constituted, any application for withdrawal of CIRP must comply with the relevant regulations and laws. The application filed by the assignee of the original financial creditor was dismissed, and the stay on the functioning of the CoC was vacated.
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