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2022 (11) TMI 805 - AT - Insolvency and BankruptcyApplication for withdrawal of IBC - Section 12A of I B Code - HELD THAT - It is an admitted fact that CIRP was initiated against the Corporate Debtor and the Adjudicating Authority vide its order dated 16.04.2018 admitted the application and appointed IRP. The IRP took charge and proceeded in accordance with law, namely making public announcement regarding initiation of CIRP against the Corporate Debtor in Form-A, preparation of list of creditors, and convening the Meetings of the Committee of Creditors and calling the Expression of Interest (EoI) etc. It is seen that one of the Prospective Resolution Applicant viz. namely Paras Agarwal submitted its plan for CD - As per the decision of the CoC, the Respondent / RP filed the Application before the Adjudicating Authority seeking withdrawal of CIRP Proceeding against the Corporate Debtor. This Tribunal is of the view that the impugned order passed by the Adjudicating Authority is a cryptic order without assigning any reasons. Once the CIRP proceedings initiated and the Committee of Creditors constituted, the Adjudicating Authority under Section 12-A of the Code, may allow withdrawal of application made by the Applicant i.e. IRP/RP where the Committee of Creditors approves with 90% voting share. In the present case, the CoC in its 15th Meeting approved withdrawal of application against the Corporate Debtor by more than 93% voting share and issued Form-FA which is a statutory requirement - this Tribunal is of the view that the order passed by the Adjudicating Authority is a non-speaking and without assigning any reasons is per se illegal. The Adjudicating Authority is directed to reconsider the Application on its merit and pass a reasoned order in accordance with law within a period of 45 days from receipt of copy of this order - Appeal disposed off.
Issues Involved:
1. Withdrawal of Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code (I&B Code), 2016. 2. Validity and adherence to the Committee of Creditors (CoC) decision-making process. 3. Adjudicating Authority's compliance with statutory requirements and judicial precedents. Issue-wise Detailed Analysis: 1. Withdrawal of Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code (I&B Code), 2016: The Appellant initiated CIRP proceedings against the Corporate Debtor under Section 7 of the I&B Code, 2016. The Adjudicating Authority admitted the application and appointed an Interim Resolution Professional (IRP). The Appellant, holding 93.2% voting share in the CoC, decided to withdraw the CIRP proceedings, citing the non-viability of the Resolution Plan submitted by the Prospective Resolution Applicant. The CoC approved the withdrawal with more than 90% voting share, and the IRP filed an application for withdrawal under Section 12A of the I&B Code. 2. Validity and adherence to the Committee of Creditors (CoC) decision-making process: The CoC convened multiple meetings, where the Resolution Plan's viability was discussed. The CoC, in its 15th meeting, decided to withdraw the CIRP proceedings. The CoC's decision-making process adhered to the statutory requirements, as the withdrawal application was approved with the requisite 90% voting share. The wisdom of the CoC, which is paramount, was highlighted, referencing the Supreme Court's ruling in "Vallal RCK Vs. Siva Industries and Holdings Ltd." 3. Adjudicating Authority's compliance with statutory requirements and judicial precedents: The Adjudicating Authority's order was deemed cryptic and lacking in reasons. The Tribunal noted that Section 12A of the I&B Code allows withdrawal of applications admitted under Sections 7, 9, or 10, provided the CoC approves with a 90% voting share. The Tribunal referenced Regulation 30A of The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which outlines the procedure for withdrawal. The Supreme Court's judgment in "Vallal RCK Vs. Siva Industries and Holdings Ltd." emphasized that the commercial wisdom of the CoC should not be interfered with unless it is capricious, arbitrary, or irrational. Conclusion: The Tribunal set aside the Adjudicating Authority's order, directing it to reconsider the application on its merits and pass a reasoned order within 45 days. The period spent before the Tribunal is excluded for the purpose of CIRP. The appeal was disposed of with no order as to costs.
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