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2021 (6) TMI 195 - Tri - Companies LawWithdrawal of CIRP application admitted under section 7 of IC, 2016 - HELD THAT - As per section 12A of the Code, the Adjudicating Authority may allow the withdrawal of application admitted under sections 7, 9 or 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors - It is seen from the record that the CoC has by 100% votes approved the withdrawal of the underlying Company Petition. Further, the Applicant has submitted that the entire settlement amount has already been paid. It is also submitted that the CIRP cost has also been paid. There are no impediment in allowing the present application - application allowed.
Issues:
Application for disposal of Company Petition based on settlement agreement between Committee of Creditors and suspended board of directors. Analysis: The judgment pertains to an application (IA No. 446/KB/2021) filed by the Asset Reconstruction Company (India) Limited, acting as the Financial Creditor through the Resolution Professional (RP) of the Corporate Debtor. The application sought the disposal of the underlying Company Petition (CP No. 432/KB/2019) based on a settlement reached between the Committee of Creditors (CoC) and the members of the suspended board of directors of the Corporate Debtor, Mohan Jute Mills Limited. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor under section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) upon an application by the Asset Reconstruction Company (India) Limited. Mr. Kamal Nayan Jain was appointed as the RP of the Corporate Debtor to oversee the resolution process. During the CIRP proceedings, various Resolution Plans were received and presented to the CoC for consideration and voting. Simultaneously, the members of the suspended board of directors were challenging the admission of the Corporate Debtor into CIRP before the Hon'ble National Company Law Appellate Tribunal (NCLAT), which was subsequently dismissed. Following the dismissal of the appeal, a settlement proposal was received from the members of the suspended board of directors, leading to negotiations and discussions between the parties involved. The CoC meetings held on specific dates approved the withdrawal of the Company Petition and the filing of the application based on the settlement agreement. The settlement agreement between the Applicant and the Corporate Debtor involved the payment of ?14.83 crore by the members of the suspended board of directors to the Applicant, which exceeded the amount specified in the approved Resolution Plan. The CoC determined that this settlement would maximize value for all stakeholders, including the creditors. The judgment highlighted the provisions of section 12A of the Code, which allows for the withdrawal of an application admitted under sections 7, 9, or 10 with the approval of ninety percent voting share of the CoC. In this case, the CoC unanimously approved the withdrawal of the Company Petition, and the settlement amount was already paid, along with the CIRP expenses. Consequently, the Tribunal allowed the application (IA No. 446/KB/2021), leading to the disposal of the underlying Company Petition (CP No. 432/KB/2019) and all pending applications related to the matter. The Registry was directed to provide copies of the order to all parties involved, and a certified copy would be issued upon completion of formalities.
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