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TMI Blog2021 (2) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... r Corporate Persons) Regulations, 2016, mandates the IRP that upon the receipt of Form FA, has to file an application for withdrawal with adjudicating authority within 3 days of receipt of the same. It is clear that once a code gets triggered by admission of CIRP against the Corporate Debtor, it is necessary that the body which is to oversee the resolution process must be consulted before any individual Corporate Debtor is allowed to settle his claims. This being a collective action is a proceeding in rem. The moot question now remains to be answered is whether the Adjudicating Authority can allow a withdrawal of CIRP against Corporate Debtor before constitution of COC - it is irrelevant whether the last date for receiving claims is still open or lapsed as per the public notice, upon receiving Form FA, it is bounded duty of IRP to file the application for withdrawal within 3 days under Section 12A of the Code read with Regulation 30A (3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It is an undisputed fact that the IRP has filed the application within 3 days and has acted in letter and spirit of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards full and final settlement of operational Creditors due as per the settlement agreement. The copy of the settlement agreement and Form FA is extracted below: 4. The Applicant/ IRP, however, has received the following claims in response to the public announcement dated 17.06.2020, the claims are furnished as follows: Claims as on the date of filing Application (26th June 2020): Sr. No. Name of Creditor Claim Form Amount Claimed (in Crores) Date of claim form received. 1. Karad Janata Sahkari Bank Ltd. FORM C 55.60 24.06.2020 2. Sangali Urban Co-op Bank Ltd. FORM C 7.73 18.06.2020 3. Vasantdada Shetkari Sahkari Bank Ltd FORM C 62.28 24.06.2020 Total Claims received as on 26.06.2020 125.61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy) No. 1427 of 2019 decided on 28.02.2020) observed as follows. 4. Considering the Provisions of Section 12 A of IBC and Regulation 30 A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, it is clear that the IRP is duty bound to place the Application for withdrawal within three days of its receipt. The grievance of the Appellant is that in spite of such provision such action was not taken. The Appellant is raising various grievances against the IRP. We have been dealing with these types of matters relating to withdrawal and in this regard various parties do appear to have been facing problems. The date of filing of application for withdrawal to Adjudicating Authority is material considering Judgment in the matter of Swiss Ribbons Pvt. Ltd. vs. Union of India 2019 SCC Online SC 73 in Para 79 and 80, Hon ble Supreme Court observed as under: 79. It is clear that once the Code gets triggered by admission of a creditor s petition under Sections 7 to 9, the proceeding that is before the Adjudicating Authority, being a collective proceeding, is a proceeding in rem. Being a proceeding inrem, it is necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor, the CIRP shall get revived further action under the CIRP shall enshrined. 8. However, the Learned Member (Technical) has deferred with the order of Learned Member (Judicial). He has recorded in his order that even before the last date of receiving claims which is on 29.06.2020 in pursuance of the public advertisement dated 17.06.2020, the Application for withdrawal was filed on 26.06.2020. The total claims as on due date on 29.06.2020 is approximately ₹ 563.60 crores and the claims received as on 26.06.2020 is approximately ₹ 125.61 crores, therefore, the claims received between 27.06.2020 and 29.06.2020 is ₹ 438 crores. Further, he also recorded that the order of admission of CIRP is a process in rem as discussed by the Hon ble Supreme Court in Swiss Ribbons Pvt Ltd and Anrs v/s Union of India judgement and considering the past history of Corporate Debtorand its inability to pay a few crores of rupees, even some lakhs of rupees as dues and as such in view of huge amount of claim approximately ₹ 563.60 crores in this case, permitting withdrawal of the CIRP may not be desirable. The Hon ble Technical Member observed in his finding that considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub-regulation(1). (3) Where an application for withdrawal is under clause (a)of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt. 3. The code mandates filing of Form-FA within 3 days to the Adjudicating Authority and the CoC is yet to be constituted in the present case. The series of events post commencement of CIRP are as follows: iii. In present case: i. Insolvency commencement date was 10 June 2020 ii. Order was received on 15 June 2020; iii. Public announcement calling for claims from creditors was made on 16 June 2020; iv. Settlement agreement along with Form FA was received by the IRP from the Original Petitioner (Operational Creditor)on 23 June 2020 in view of complete settlement and payment of its dues; v. Regulation 30A(3) only give 3 days to file the application under section 12A of the Code and the said application was filed on 26 June 2020; vi. This IA i.e. IA 1025 of 2020 was then hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Process for Corporate Persons) Regulations, 2016, it is clear that the IRP is duty bound to place the Application for withdrawal within three days of its receipt. The grievance of the Appellant is that in spite of such provision such action was not taken. The Appellant is raising various grievances against the IRP. We have been dealing with these types of matters relating to withdrawal and in this regard various parties do appear to have been facing problems. The date of filing of application for withdrawal to Adjudicating Authority is material considering Judgment in the matter of Swiss Ribbons Pvt. Ltd. vs. Union of India 2019 SCC Online SC 73 ... 7. It is also important to refer to the judgment of Hon ble NCLAT in the case of Gouri Prasad Goenka v/s. Mr. Surendra Kumar Agarwal Anr [Company Appeal (AT) (Insolvency) No. 105 of 2020] dated 30 January 2020 wherein it has been held as under: 2. According to learned counsel for the Appellant, the matter was immediately settled with the Operational Creditor much prior to the constitution of the Committee of Creditors and more than the amount claimed has been paid by two Demand Drafts handed over to the Advocate on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016 allow or disallow an application for withdrawalor settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case. 80. The main thrust against the provision of Section 12 A is the fact that ninety per cent of the committee of creditors has to allow withdrawal. This high threshold has been explained in the ILC Report as all financial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus settlement involving all creditors ought, ideally, to be entered into. This explains why ninety per cent, which is substantially all the financial creditors, have to grant their approval to an individual withdrawal or settlement. In any case, the figure of ninety per cent, in the absence of anything further to show that it is arbitrary, must pertain to the domain of legislative policy, which has been explained by the Report (Supra). Also, it is clear, that under Section 60 of the Code, the committee of creditors do not have th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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