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2021 (6) TMI 572 - Tri - Insolvency and BankruptcyPrayer for withdrawal of Company Petition filed under section 9 of IBC - HELD THAT - The present application is filed under Section 12A IBC 2016 read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and not under Rule 11 of the NCLT Rules, 2016 - Mere plain reading of the provision shows that nowhere it is mentioned in the Regulations that a claim can only be verified on the last date. The applicant has not explained the reasons when he received the claim on 18.02.2021 and the last date was on 19.02.2021 then what prevented him to verify the claims within this period. And why he has waited for 7th day as provided in the Regulation 13(1) of the IBBI (Insolvency Resolution of Corporate Persons) Regulation, 2016 when he has received the claim of the financial creditor, who according to the regulations and laws would have been the sole member of the CoC. This has not been explained by the applicant/IRP. Admittedly, the CoC has not been constituted but from the material available on record, it is crystal clear, that claim of the financial creditor and other creditors (Operational Creditors) were received prior to the submission of the Form FA and as per the averment made in the application, the IRP instead of verifying the claims of the creditors, had waited for settlement, which was going to be arrived between the applicant and Corporate Debtor. Which in our considered view is not the letter and spirit of Section 12A and Regulation 30A of the IBBI (Insolvency Resolution of Corporate Persons) Regulation, 2016 as well as the decisions upon which the applicant has placed reliance - Since, the IRP has received a claim of one of the financial creditor, which is more than One Crore. Therefore, it is the duty of the IRP; before considering the Form FA, verify the claim and if the claim is found to be genuine then constitute the CoC and if the claim is not genuine then reject the same. Since, before the submission of Form FA, there was a claim of more than One Crore of the financial creditor, under such circumstances, there are no option but to reject the application submitted by the IRP to permit the applicant to withdraw the application - application rejected.
Issues Involved:
1. Withdrawal of Company Petition under Section 9 of the IBC. 2. Settlement between Operational Creditor and Corporate Debtor. 3. Verification of claims by the IRP. 4. Constitution of the Committee of Creditors (CoC). 5. Compliance with Section 12A and Regulation 30A of the IBBI Regulations. Issue-Wise Detailed Analysis: 1. Withdrawal of Company Petition under Section 9 of the IBC: The Applicant/IRP filed an application seeking withdrawal of Company Petition (IB) 296/ND/2020 under Section 9 of the Insolvency and Bankruptcy Code (IBC), which had been admitted by the Tribunal on 04.02.2021. The application was based on a settlement reached between the Operational Creditor and the Corporate Debtor, with consent terms executed on 20.02.2021. 2. Settlement between Operational Creditor and Corporate Debtor: The IRP received Form FA from the Operational Creditor on 20.02.2021, indicating the withdrawal of the insolvency process due to the settlement. The Operational Creditor also provided Demand Drafts covering the full amount of professional fees and expenses of the IRP, which were confirmed as received. The IRP then filed the withdrawal application within the statutory period of three days as required. 3. Verification of claims by the IRP: The IRP had published a Public Announcement on 09.02.2021 and received claims from creditors. By 19.02.2021, six claims were received, including one from a Financial Creditor and five from ex-employees. Despite receiving these claims, the IRP did not verify them immediately but waited for the settlement to materialize. According to Regulation 13(1) of the IBBI Regulations, the IRP should have verified the claims within seven days from the last date of receipt. 4. Constitution of the Committee of Creditors (CoC): The IRP did not constitute the CoC before filing the withdrawal application, citing Regulation 13(1) which allows seven days for claim verification. However, the Tribunal noted that the IRP had the opportunity to verify the claims earlier and should have constituted the CoC within 30 days from the date of appointment, as per the Supreme Court's decision in Swiss Ribbons Pvt. Ltd. vs. Union of India. 5. Compliance with Section 12A and Regulation 30A of the IBBI Regulations: Section 12A of the IBC allows withdrawal of applications with the approval of 90% of the CoC's voting share. Regulation 30A provides the procedure for withdrawal before and after the constitution of the CoC. The Tribunal observed that the IRP failed to follow the spirit of these provisions by not verifying claims and constituting the CoC despite having received a significant claim from a Financial Creditor. Conclusion: The Tribunal rejected the application for withdrawal of the Company Petition due to non-compliance with the verification and CoC constitution requirements. The IRP was directed to verify the claims and act according to the law. The IRP was also granted the liberty to file a fresh application in compliance with legal provisions.
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