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2022 (2) TMI 565 - AT - Companies LawSeeking to withdraw the Scheme of Amalgamation proposed by the First Respondent with its creditors - Rule 11 of National Company Law Appellate Tribunal Rules, 2016 - HELD THAT - The Scheme stands rejected by majority of the creditors of the First Respondent and the said Company is also undergoing Insolvency proceedings, the relief prayed for in the present Application, be allowed. Application allowed.
Issues:
1. Interlocutory application seeking withdrawal of a Scheme of Amalgamation proposed by a company with its creditors. 2. Challenge to the direction given by the National Company Law Tribunal (NCLT) regarding non-payment by the company to its creditors. 3. Appeal against the direction given by NCLT to Credit Rating Agencies regarding the company's default status. 4. Application for withdrawal of the Scheme by a creditor company after rejection by majority creditors. 5. Legal proceedings initiated by the Reserve Bank of India (RBI) leading to insolvency proceedings against the company. 6. Multiple appeals filed by different parties challenging the impugned order of NCLT. Analysis: 1. The case involved an Interlocutory Application filed by the Administrator of a company seeking to withdraw a Scheme of Amalgamation proposed with its creditors. The Tribunal allowed the withdrawal as the Scheme was rejected by a majority of creditors and the company was undergoing insolvency proceedings initiated by the RBI. The Application was granted based on the rejection of the Scheme by the creditors and the ongoing insolvency proceedings. 2. A challenge was raised against the direction given by NCLT regarding non-payment by the company to its creditors. The Tribunal set aside the impugned order, allowing the withdrawal of the Scheme. The challenge was successful, leading to the setting aside of the NCLT's direction on non-payment by the company to its creditors. 3. An appeal was made against the direction given by NCLT to Credit Rating Agencies not to consider the company's non-payment as default under debt documents. The Tribunal allowed the appeal and set aside the impugned order, thereby permitting the withdrawal of the Scheme. The appeal was successful in overturning the direction to Credit Rating Agencies regarding the company's default status. 4. Another Application for withdrawal of the Scheme was filed by a creditor company after the rejection of the Scheme by a majority of creditors. The Tribunal allowed the Application, considering the rejection of the Scheme by the creditors and the company's insolvency proceedings. The withdrawal was permitted based on the rejection of the Scheme by the majority of creditors. 5. Legal proceedings initiated by the RBI resulted in insolvency proceedings against the company. The Tribunal took into account these proceedings while allowing the withdrawal of the Scheme, as the company was facing insolvency due to RBI's actions. The insolvency proceedings played a crucial role in the decision to permit the withdrawal of the Scheme. 6. Multiple appeals were filed by different parties challenging the impugned order of NCLT. Each appeal was allowed by the Tribunal, leading to the setting aside of the impugned order and the withdrawal of the Scheme. The appeals were successful in overturning the NCLT's direction and allowing the withdrawal of the Scheme.
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