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2021 (10) TMI 340 - Insolvency & Bankruptcy
Withdrawal of the petition under Section 7, 9 or 10 of the IBC - CIRP was initiated but the settlement arrived at between the parties and the terms of settlement are filed alongwith this Application - inherent power under Rule 11 of NCLAT, Rules, 2016 - HELD THAT:- Hon’ble Supreme court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT] unequivocally held that before constitute of committee of creditors, a party can approach the NCLT directly, and the Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case. It cannot be read that Hon’ble Supreme Court has held that this Appellate Tribunal should exercise inherent power and allow or disallow an Application for withdrawal or settlement.
It is well settled that inherent power can be exercised only when no other remedy is available to the litigant and nowhere a specific remedy is provided by the statute. If an effective alternative remedy is available, inherent power will not be exercised, especially when the applicant may not have availed of that remedy. It is also settled law that inherent power cannot be invoked which intends to by-pass the procedure prescribed. The procedure prescribed under the law is to be followed strictly - Rule 11 of NCLAT Rules, 2016 provides that the inherent power of the Appellate Tribunal can be exercised to make any orders as may be necessary for meeting the ends of the justice or to prevent abuse of process of the Appellate Tribunal. This provision suggest that such power can be exercised in the absence of express provision of the Code or Regulation.
The procedure prescribed for withdrawal of the petition under Section 7, 9 or 10 of the IBC before the constitution of CoC and after constitution of CoC is provided in Section 12-A and Regulation 30-A of the Regulation. When the settlement has taken place at an appellate stage the Applicant who has filed the petition under Section 7 or 9 of the IBC may file the Application (Form – FA) under Section 12-A of the IBC r/w Regulation 30-A of the Regulations for withdrawal of the Petition before the Ld. Adjudicating Authority - there is a prescribed procedure for withdrawal of Petition under Section 7 of the IBC. Therefore, there is no justification to invoke inherent power of this Appellate Tribunal and to take on record the terms of the settlement and pass the order for withdrawal of Petition under Section 7 of the IBC.