2022 (9) TMI 1348 - AT - Insolvency and Bankruptcy

Seeking permission to resolution applicant to withdraw the resolution plan - HELD THAT - After noticing the adverse effect on all businesses the Hon ble Supreme Court in Ebix Singapore 2021 (9) TMI 672 - SUPREME COURT had laid down that vesting any such power in the Successful Resolution Applicant to withdraw shall be impermissible. In event the submission of the Appellant is accepted that due to financial difficulty he is unable to implement the plan and he be permitting to go back from the commitments made in the Resolution Plan, it shall have disastrous effect on the entire process undertaken. The IBC is process consists of different steps with a ultimate object of reviving the Corporate Debtor. Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC - On the submission made by Counsel for the Appellant that since he had no financial capacity to implement the plan he should have been allowed to withdraw, the Adjudicating Authority has rightly rejected his application. There is no merit in Appeal - The Appeal is dismissed.

Summary

Issues:
- Appeal against rejection of application to withdraw resolution plan
- Interpretation of Supreme Court judgment in Ebix Singapore Pvt. Ltd. case
- Financial difficulty as a ground for withdrawal from resolution plan

Analysis:
The judgment pertains to an appeal filed against the rejection of an application to withdraw a resolution plan by the Adjudicating Authority. The appellant sought permission to withdraw the resolution plan dated 24.10.2019, citing financial difficulties. The Adjudicating Authority rejected the application based on the judgment of the Hon'ble Supreme Court in the Ebix Singapore Pvt. Ltd. case. The appellant argued that the cases considered in the Ebix Singapore case were different from the present case, where financial difficulty was the reason for withdrawal request. However, the Tribunal examined the submissions and the record.

The Tribunal referred to the Supreme Court's observations in the Ebix Singapore case regarding the adverse impact of the Covid-19 pandemic on businesses and the insolvency resolution process. The Supreme Court highlighted the lack of legislative provisions allowing successful resolution applicants to withdraw plans due to economic slowdown. The Court emphasized that enabling such withdrawals through judicial interpretation would contradict the legislative intent of the Insolvency and Bankruptcy Code (IBC). The Tribunal noted that allowing a successful resolution applicant to withdraw after plan approval would disrupt the IBC process aimed at reviving the corporate debtor.

The appellant's argument that financial incapacity was not their fault and resulted from subsequent developments was considered. However, the Tribunal held that financial difficulties alone cannot justify withdrawal from an approved resolution plan. It was emphasized that permitting withdrawal based on financial incapacity would undermine the objectives of the IBC. Therefore, the Tribunal found no merit in the appeal and dismissed it, upholding the rejection of the application to withdraw the resolution plan.