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2022 (2) TMI 14 - Tri - Insolvency and BankruptcyWithdrawal of CIRP - Whether the Resolution Professional can be permitted to withdraw the CIRP against the Corporate Debtor by invoking inherent powers under Rule 11 of NCLT Rules? - HELD THAT - While Section 12A of the Code confers power on the Adjudicating Authority to allow the withdrawal of the petition admitted under Section 7 or 9 or 10 of the Code, when the application is made by the Applicant with the approval of 90% voting share of the CoC, in such manner as may be specified, Regulation 30A of CIRP Regulations provides for withdrawal of a petition before the constitution of the Committee by the Applicant through the IRP as well as after constitution of the Committee by the Applicant, as per procedure stated therein. Thus, the power under the above is discretionary while considering the Application filed by IRP for withdrawal of the Company Petition. Since CIRP gets terminated upon withdrawal of CIRP proceedings against the CD and the IRP/RP stands discharged, all such claimants are very much entitled to submit their claims before the Adjudicating Authority as per the procedure laid down under the Code. In second category of matters, the Financial/Operational Creditor whose claim before this Tribunal has been disposed of, with a direction to approach the IRP can seek revival of their company petition, in view of the changed circumstances, by filing necessary application before the Tribunal, to recall the said order. In so far as the third category of cases, the same can be continued before the Tribunal. Therefore, the argument that allowing withdrawal of the CIRP ordered against the Corporate Debtor, by virtue of a settlement would jeopardize recovery opportunity of the FC/OC, and amounts failure to hear the concerned parties is totally unfounded and mischievous. This is a fit case to exercise the inherent power under Rule 11 of NCLT Rules, 2016 by this AA, and accordingly hold that the application deserves to be allowed - application allowed.
Issues:
1. Application under Section 12A of Insolvency & Bankruptcy Code, 2016 to set aside the order directing Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to settlement between operational creditor and corporate debtor. Analysis: The Interim Resolution Professional (IRP) filed an application under Section 12A of the Insolvency & Bankruptcy Code, 2016, seeking withdrawal of the CIRP against the Corporate Debtor citing a settlement between the operational creditor and the corporate debtor. The IRP relied on the ruling of the Supreme Court in Swiss Ribbons vs. Union of India, emphasizing the Adjudicating Authority's power to permit withdrawal of CIRP on account of settlement between the creditor and the corporate debtor. The key issue was whether the Resolution Professional could withdraw the CIRP against the Corporate Debtor by invoking inherent powers under Rule 11 of NCLT Rules. The Tribunal considered the relevant provisions of the Insolvency & Bankruptcy Code and the CIRP Regulations, specifically Section 12A and Regulation 30A, which provide for the withdrawal of a petition admitted under the Code. The Tribunal highlighted the discretionary nature of the power conferred on the Adjudicating Authority to allow withdrawal of the petition with the approval of the Committee of Creditors. The Tribunal also referenced the Supreme Court's judgment in Swiss Ribbons, emphasizing the need to consider all relevant factors before allowing or dismissing a withdrawal petition. The Tribunal further discussed the concept of "concerned parties" in the context of withdrawal of CIRP, noting that it includes parties directly involved in the dispute before the Adjudicating Authority. The Tribunal clarified that allowing withdrawal of CIRP would not deprive financial or operational creditors of their opportunity to submit claims, as they could still do so before the Adjudicating Authority. The Tribunal referred to a similar case where withdrawal of CIRP was allowed post-settlement, ensuring protection of the interests of the applicants whose petitions were disposed of. Based on the analysis of the factual matrix and the absence of claims received by the IRP, the Tribunal exercised its inherent power under Rule 11 of NCLT Rules and allowed the withdrawal of CIRP against the Corporate Debtor. The Corporate Debtor was released from the insolvency process and allowed to function independently through its Board of Directors, effective immediately. The Tribunal emphasized the importance of considering the specific circumstances of each case before making a decision on withdrawal of CIRP.
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