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2021 (1) TMI 109 - Tri - Insolvency and BankruptcySeeking termination of Insolvency Resolution Process / proceedings initiated - section 9 of the Insolvency and Bankruptcy Code 2016 - HELD THAT - Bare perusal of the provisions shows that Section 12A is inserted by the amendment dated 06.06.2018 under which an application which was admitted under Section 7, 9 or 10 can be withdrawn and regulation 30A, which has been amended recently with effect from 25.07.2019, after the decision of Swiss Ribbons, which provides how the withdrawal applications filed under Section 12A can be entertained by the Adjudicating Authority while considering the prayer of withdrawal of applications, which have been admitted under Section 7, 9 or 10 - Bare perusal of the amended provision made in the regulation 30A shows that there are two circumstances under which withdrawal is permissible. One is before the admission of the application under Section 7, 9 or 10 and before the constitution of COC and second one is after admission of the application under Section 7, 9 or 10 and after constitution of the COC and appointment of IRP. The present application herein was admitted on 13.02.2020 and IRP was appointed and the Operational Creditor was also directed to deposit of ₹ 2 lacs to meet the immediate expense of the IRP but here in place of IRP, the Suspended Board of Directors have filed the present application under Rule 11 of the NCLT Rules, 2016. In the present case, even the application has not been filed by the Operational Creditor rather it has been filed by the Suspended Board of Directors of the Corporate Debtor. There is a specific provision under Section 12A for withdrawal of application admitted U/S 7, 9 10 of IB Code and the procedures are prescribed under regulation 30A for withdrawal of applications after the admission of application and before and after the Constitution of the COC, therefore, we can say that before the constitution of the COC the application must be filed by the applicant through the IRP, in view of Regulation 30A (1)(a) and application under Sub Rule (1) shall be made in Form-FA accompanied with bank guarantee and when such application is filed under Clause (a) of Regulation (1) then the IRP is required to submit the application to the Adjudicating Authority within 3 days of its receipt but in this case, the Operational creditor has not filed the application in terms of Regulation 30A rather it has been filed by the Suspended Board of Directors of the Corporate Debtor. Application dismissed.
Issues Involved:
1. Termination of the Insolvency Resolution Process (CIRP). 2. Settlement between the Corporate Debtor and Operational Creditor. 3. Legal provisions regarding withdrawal of insolvency applications. 4. Role and procedure involving the Interim Resolution Professional (IRP). 5. Maintainability of the application filed by the Suspended Board of Directors. Issue-wise Detailed Analysis: 1. Termination of the Insolvency Resolution Process (CIRP): The promoters, shareholders, and suspended directors of the Corporate Debtor filed an application to terminate the Insolvency Resolution Process initiated on 13-02-2020. They argued that the outstanding amount owed to the Operational Creditor had been amicably settled, and the Operational Creditor had no further grievances. The Tribunal noted that under the law settled by the Hon'ble Supreme Court in the case of Swiss Ribbons, it is empowered to terminate the Resolution Process based on a settlement before the Committee of Creditors (CoC) meeting. 2. Settlement between the Corporate Debtor and Operational Creditor: The application highlighted that the Corporate Debtor and Operational Creditor had entered into a Settlement Agreement on 26.02.2020, which included the payment of ?6,00,000 to the Operational Creditor. The Operational Creditor agreed to withdraw the insolvency petition and support the termination of the CIRP. The Tribunal examined the terms of the settlement and noted that the Operational Creditor had no objections to the termination of the CIRP. 3. Legal provisions regarding withdrawal of insolvency applications: The Tribunal referred to Section 12A of the Insolvency and Bankruptcy Code, 2016, which allows the withdrawal of an application admitted under Sections 7, 9, or 10 with the approval of ninety percent voting share of the CoC. Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, outlines the procedure for withdrawal, including the requirement for the application to be filed through the IRP. 4. Role and procedure involving the Interim Resolution Professional (IRP): The IRP submitted that he had already received claims from Financial Creditors and resolution plans after the constitution of the CoC. He contended that the application was filed without informing him, which was against Regulation 30A, mandating that such applications be filed through the IRP. The Tribunal emphasized that the application for withdrawal should be submitted by the applicant who initiated the insolvency process, through the IRP, using Form FA. 5. Maintainability of the application filed by the Suspended Board of Directors: The Tribunal observed that the present application was filed by the Suspended Board of Directors of the Corporate Debtor, not by the Operational Creditor who initiated the insolvency proceedings. According to Section 12A and Regulation 30A, only the applicant who filed the original insolvency application is authorized to file for withdrawal. As the application was not filed in accordance with these provisions, it was deemed not maintainable. Conclusion: The Tribunal concluded that the present application did not comply with the specific provisions of Section 12A and Regulation 30A of the CIRP Regulations. Consequently, the application was dismissed as not maintainable.
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