9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (1) TMI 152 - AT - Insolvency and BankruptcySeeking release of the corporate debtor from the rigours of CIRP - NCLT closed the CIRP proceedings despite the stay order by NCLAT against withdrawal Order - initiation of the first CIRP on the basis of Section 9 Application filed by the Zielen Industry Pvt. Ltd., which was later permitted to be withdrawn - what should be the effective CIRP against the corporate debtor? HELD THAT - It is noted that the Adjudicating Authority admitted Section 9 Application filed by the operational creditor Zielem Industries Pvt. Ltd. against the corporate debtor-Sintex BAPL Limited on 18.12.2020. It is also noted that the operational creditor-Zielem Industries Pvt. Ltd. and the corporate debtor entered into a settlement which led to the filing of an Application bearing I.A. No. 18/AHM/2021 seeking withdrawal of the Section 9 admission order and closure of the CIRP - the order to maintain status quo-ante with regard to the corporate debtor and its assets means that the withdrawal of Rs. 116.41 Crores by State Bank of India on 30.06.2021 was against this stay order and this amount should be put back in the account of the corporate debtor, and additionally the hold put by SBI on amount of Rs. 31.27 Crores which is in the the Trust and Retention Account should also be released so that the amount remains as an asset and under the control of the corporate debtor. Once the claim and interest of financial creditor-KKR India Financial Service Ltd. had been noticed by the Adjudicating Authority while considering the withdrawal application and protection was granted through stay of its own order on 30.06.2021, which was further reinforced by the order dated 12.07.2021 requesting restoration of status quo ante by this Tribunal, it would only be appropriate that the CIRP, which was initiated as a result of Section 9 Application vide Order dated 18.12.2020, be allowed to continue and run its due course as it would allow adequate and proper insolvency resolution of the corporate debtor. The Application for withdrawal of Section 9 Application filed is set aside and consequently the CIRP initiated as a result of admission of Section 9 Application vide Order dated 18.12.2020 is allowed to run its due course and be completed in accordance with the provisions of IBC, 2016 - Appeal disposed off.
Issues Involved:
1. Validity of the withdrawal of Section 9 Application and closure of CIRP. 2. Appropriateness of the initiation of CIRP under Section 7 Application. 3. Conduct of State Bank of India regarding withdrawal of funds. 4. Jurisdiction of NCLT to comment on the legality of IBBI regulations. 5. Restoration of assets and management of the corporate debtor. Detailed Analysis: 1. Validity of the Withdrawal of Section 9 Application and Closure of CIRP: The primary issue is whether the CIRP initiated under Section 9 Application should continue or be closed following the withdrawal order dated 29.06.2021. The NCLT had permitted the withdrawal based on a settlement between the operational creditor and the corporate debtor. However, this order was stayed by the NCLAT on 12.07.2021, restoring the status quo ante and directing that the IRP continue to manage the corporate debtor's affairs. The judgment emphasizes that the CIRP initiated on 18.12.2020 should continue to ensure an adequate and proper insolvency resolution, considering the interests of all creditors. 2. Appropriateness of the Initiation of CIRP under Section 7 Application: The CIRP initiated under Section 7 Application by KKR India Financial Services Ltd. on 19.07.2021 was contested. The NCLAT noted that the earlier CIRP under Section 9 was still ongoing due to the stay order. Initiating a fresh CIRP under Section 7 would complicate the resolution process and potentially harm the interests of other creditors. Thus, the judgment sets aside the Section 7 Application and directs the continuation of the CIRP initiated under Section 9. 3. Conduct of State Bank of India Regarding Withdrawal of Funds: State Bank of India (SBI) withdrew Rs. 116.41 Crores from the Trust and Retention Account of the corporate debtor after the NCLT's stay order. The judgment directs SBI to deposit the withdrawn amount back into the corporate debtor's account and release the hold on an additional Rs. 31.27 Crores. This ensures that the corporate debtor's assets remain intact for the resolution process. 4. Jurisdiction of NCLT to Comment on the Legality of IBBI Regulations: The judgment addresses the NCLT's comments on the legality of IBBI regulations in its order dated 29.06.2021. It clarifies that the NCLT does not have the jurisdiction to declare any provision of IBC or its regulations as ultra vires. The judgment emphasizes that Regulation 30-A of IBBI should be read harmoniously with Section 12A of IBC, and the NCLT's observations on the inconsistency between them were avoidable. 5. Restoration of Assets and Management of the Corporate Debtor: The judgment directs that any assets alienated or withdrawn from the corporate debtor after the Section 9 admission order should revert to the position as on 29.06.2021. This includes the machine claimed to be owned by KKR India Financial Services Ltd., which should be dealt with by the Resolution Professional under IBC provisions. The judgment ensures that the corporate debtor's assets are preserved for an effective resolution process. Conclusion: The judgment concludes by setting aside the withdrawal of the Section 9 Application and allowing the CIRP initiated on 18.12.2020 to continue. It directs the restoration of funds withdrawn by SBI and sets aside the Section 7 Application's admission order. The judgment provides a comprehensive resolution framework, ensuring that the corporate debtor's insolvency process is conducted in a fair and orderly manner, considering the interests of all stakeholders.
|
