2025 (1) TMI 993 - AT - IBC

Admissibility of section 7 application - Appellant s proposal for a One-Time Settlement (OTS) with Indian Bank affects the proceedings initiated under Section 7 of the Insolvency and Bankruptcy Code (IBC) or not - right of Union Bank of India and Bank of Baroda to intervene in the insolvency proceedings - HELD THAT - In the facts of the present case and in view of the law laid down with Hon ble Supreme Court in GLAS Trust Company 2024 (10) TMI 1185 - SUPREME COURT (LB) the appropriate recourse to be taken by the Appellant in the present matter is to permit the Financial Creditors to file 12A Application through the IRP in accordance with Section 12A read with Regulation 30A of CIRP Regulation 2016. It is open for the Financial Creditor while filing the application under Section 12A to take into consideration the CIRP cost by giving a Form FA to the IRP for filing the Application. The other Financial Creditors including Union Bank of India Bank of Baroda or any other Financial Creditors are free to file their objections in the event their dues are not settled or taken care of. Conclusion - The appropriate recourse to be taken by the Appellant in the present matter is to permit the Financial Creditors to file 12A Application through the IRP in accordance with Section 12A read with Regulation 30A of CIRP Regulation 2016. The acceptance of an OTS can justify the withdrawal of insolvency proceedings under Section 12A provided that CIRP costs are addressed and other Financial Creditors rights are considered. There are no reason to keep the appeal pending. The Appeal is disposed of with giving liberty to the Financial Creditor - Indian Bank to file an application under 12A through IRP in accordance with 12A Regulation 30A which shall be done within two weeks from today.

2024 (10) TMI 1185 - SC

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following core legal questions:

Whether the Appellant's proposal for a One-Time Settlement (OTS) with Indian Bank affects the proceedings initiated under Section 7 of the Insolvency and Bankruptcy Code (IBC).
Whether the Financial Creditors, including Union Bank of India and Bank of Baroda, have the right to intervene in the insolvency proceedings.
What is the appropriate recourse for the Appellant and the Financial Creditors under Section 12A of the IBC in light of the Supreme Court's decision in GLAS Trust Company?
How should the Corporate Insolvency Resolution Process (CIRP) costs be addressed in the event of a withdrawal application under Section 12A?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Impact of OTS Proposal on Section 7 Proceedings

Relevant Legal Framework and Precedents: The proceedings are governed by Section 7 of the IBC, which deals with the initiation of the CIRP by a Financial Creditor. The acceptance of an OTS proposal by a bank can potentially impact ongoing insolvency proceedings.
Court's Interpretation and Reasoning: The Tribunal noted that the Indian Bank accepted the OTS and issued a no dues certificate. This acceptance necessitates consideration of withdrawal of the insolvency proceedings under Section 12A.
Key Evidence and Findings: The Indian Bank's acceptance of the OTS and issuance of a no dues certificate were pivotal in the Tribunal's decision to allow the withdrawal of the insolvency application.
Application of Law to Facts: The Tribunal applied the provisions of Section 12A, which allows withdrawal of an insolvency application with the approval of 90% of the Committee of Creditors (CoC), to the facts of the case.
Treatment of Competing Arguments: The Tribunal acknowledged the interests of other Financial Creditors but emphasized the need to proceed under Section 12A given the settlement with Indian Bank.
Conclusions: The Tribunal concluded that the OTS acceptance by Indian Bank justifies the filing of a Section 12A application for withdrawal of the insolvency proceedings.

Issue 2: Intervention by Other Financial Creditors

Relevant Legal Framework and Precedents: Financial Creditors have the right to intervene in insolvency proceedings if their claims are affected. Section 11 of the IBC outlines the rights of Financial Creditors.
Court's Interpretation and Reasoning: The Tribunal allowed Union Bank of India and Bank of Baroda to intervene, recognizing their status as Financial Creditors with claims against the Corporate Debtor.
Key Evidence and Findings: The intervention applications filed by Union Bank of India and Bank of Baroda were considered valid given their creditor status.
Application of Law to Facts: The Tribunal applied the principles of creditor rights under the IBC to permit intervention by other Financial Creditors.
Treatment of Competing Arguments: The Tribunal balanced the interests of all Financial Creditors, allowing them to object if their dues remain unsettled.
Conclusions: The Tribunal concluded that intervention by other Financial Creditors is permissible and necessary for a fair resolution process.

Issue 3: Recourse under Section 12A

Relevant Legal Framework and Precedents: Section 12A of the IBC allows withdrawal of insolvency applications with CoC approval. The Supreme Court's decision in GLAS Trust Company provides guidance on this process.
Court's Interpretation and Reasoning: The Tribunal emphasized the need to follow the procedure under Section 12A, allowing the Financial Creditor to file a withdrawal application through the Interim Resolution Professional (IRP).
Key Evidence and Findings: The acceptance of the OTS by Indian Bank and the procedural requirements under Section 12A were central to the Tribunal's decision.
Application of Law to Facts: The Tribunal directed the Financial Creditor to file a Section 12A application, ensuring compliance with the statutory framework.
Treatment of Competing Arguments: The Tribunal addressed potential objections by other Financial Creditors, ensuring their rights are protected.
Conclusions: The Tribunal concluded that the appropriate recourse is to file a Section 12A application, considering the OTS acceptance and the need for CoC approval.

Issue 4: Addressing CIRP Costs

Relevant Legal Framework and Precedents: Regulation 30A of the CIRP Regulations outlines the treatment of CIRP costs in withdrawal applications.
Court's Interpretation and Reasoning: The Tribunal noted that CIRP costs must be considered in the withdrawal application, with the Financial Creditor responsible for addressing these costs.
Key Evidence and Findings: The Tribunal relied on the IRP's report regarding incurred CIRP costs.
Application of Law to Facts: The Tribunal directed the Financial Creditor to include CIRP costs in the withdrawal application, ensuring compliance with Regulation 30A.
Treatment of Competing Arguments: The Tribunal acknowledged the IRP's concerns regarding CIRP costs, ensuring they are addressed in the withdrawal process.
Conclusions: The Tribunal concluded that CIRP costs must be included in the withdrawal application under Section 12A.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The appropriate recourse to be taken by the Appellant in the present matter is to permit the Financial Creditors to file 12A Application through the IRP in accordance with Section 12A read with Regulation 30A of CIRP Regulation, 2016."
Core principles established: The acceptance of an OTS can justify the withdrawal of insolvency proceedings under Section 12A, provided that CIRP costs are addressed and other Financial Creditors' rights are considered.
Final determinations on each issue: The Tribunal disposed of the appeal, allowing the Financial Cred

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