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WITHDRAWAL OF APPEAL UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

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WITHDRAWAL OF APPEAL UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016
By: Mr. M. GOVINDARAJAN
May 10, 2021
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents

Corporate Insolvency Resolution Process

The Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) provides for initiation of corporate insolvency resolution process against a corporate debtor by financial creditors or operational creditors.  The corporate applicant itself initiate on its own for insolvency resolution process.  The said process is conducted within the time schedule as prescribed by the Code.  When no resolution plan is received or for some other reasons the Adjudicating Authority may order for the liquidation of the corporate debtor and appoint liquidator.  The liquidator conducts the liquidation proceedings and on completion of the same the corporate debtor will be dissolved.

Appeal

The Adjudicating Authority from the date of admission of the application for initiation of corporate insolvency resolution process monitors the resolution process as well as liquidation process and passes orders accordingly.  Any person aggrieved against the order of the Adjudicating Authority may file appeal before the National Company Law Appellate Tribunal which has Benches at New Delhi and Chennai.

 Every appeal shall be filed within 30 days before the National Company Law Appellate Tribunal.  The National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed 15 days.

Appeal against approving resolution plan

An appeal against an order approving a resolution plan may be filed on the following grounds,-

  • the approved resolution plan is in contravention of the provisions of any law for the time being in force;
  •  there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
  • the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;
  • the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or
  •  the resolution plan does not comply with any other criteria specified by the Board.

Appeal against liquidation order

An appeal against a liquidation order passed under section 33, or sub-section (4) of section 54L, or sub-section (4) of section 54N, may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order.

Withdrawal of appeal

There is no specific provision in the Code for the withdrawal of appeal filed before the National Company Law Appellate Tribunal.  However the National Company Law Appellate Tribunal allows the appellant to withdraw the appeal considering the facts and circumstances of the case. 

Section 12A of the Code provides that the Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of 90% voting share of the committee of creditors, in such manner as may be specified.

Grounds for withdrawal of appeal

The grounds for withdrawal of appeal are not restricted to some ground.  It depends upon the facts and circumstances of the case.  Here we will discuss some grounds on which the appeal may be withdrawn.

Settlement

The corporate debtor after admission of application for corporate insolvency resolution process may try to close the case by making settlement with the creditors.  If the settlement is accepted by the creditors the applicant may withdraw the application.  The settlement can be done at the appellate stage also.  The National Company Law Appellate Tribunal may allow withdrawing the appeal if there is a settlement reached between the parties.  The settlement may be in full or in future.  If the settlement is promised on a later date and the same has not been fulfilled then the creditor is entitled to initiate corporate resolution process again on such failure.

In ABHISHEK SINGH VERSUS HUHTAMAKI PPL LTD., M/S. MANPASAND BEVERAGES LTD. AND INTERIM RESOLUTION PROFESSIONAL [2021 (5) TMI 236 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], the appellant is the Director of the suspended Board of the Corporate Debtor, Manpasand Beverages Limited.   The appeal was filed challenging the order of Adjudicating Authority.  Thereafter the appellant has settled the claim of operational creditor and the operational creditor has filed application for withdrawal.  The application for withdrawal under Section 12A of Code has been filed through IRP.  IRP however stated that the money has been paid violating moratorium which the IRP has reported to the Adjudicating Authority.  The National Company Law Appellate Tribunal held that considering the objects of Code, they have no reason to doubt that the Adjudicating Authority without standing on technicalities would pass appropriate orders, if settlement has taken place between the original operational creditor and corporate debtor and committee of creditor is not yet constituted.   The appeal is permitted to be withdrawn with liberty to seek restoration of the appeal in case at any future time the effort to settle in terms of Section 12A of Code runs into difficulty and does not happen.

In MAHESH NIMAWAT VERSUS P.M. COLD STORAGE PVT. LTD. & ORS. [2021 (5) TMI 228 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] (decided on 25.09.2020), the appellant submitted that the claim of the respondent (Financial Creditor) has already been settled and the company petition which was pending before the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata has been disposed off in view of the settlement, which has been taken on record. Since in the instant appeal no more grievances survive, the Appellant is permitted to withdraw.

In AVTAR SINGH RAHI VERSUS HOSPITECH MANAGEMENT CONSULTANTS PVT. LTD. (THROUGH ‘INTERIM RESOLUTION PROFESSIONAL’) & ANR. [2020 (6) TMI 746 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI](decided on 10.06.2020),  the appellant submitted that the respondent No. 2 – Mr. Nawal Kishore Prasad (Operational Creditor) is the sole creditor and ‘Committee of Creditors’ comprises of him only. Since the ‘Committee of Creditors’ has already been constituted and there is no other claimant, the only legally permissible exit route for the ‘Corporate Debtor’ to come out from the rigour of ‘corporate insolvency resolution process’ is by way of taking recourse to mechanism under Section 12A of the ‘Insolvency and Bankruptcy Code, 2016’.  The NCLAT disposed of this appeal giving liberty to the ‘Corporate Debtor’ to approach the ‘Committee of Creditors’ through ‘Interim Resolution Professional’ for permitting the ‘operational Creditor’ to withdraw the application in view of settlement stated to have been arrived at, inter-se, the ‘operational creditor’ and the ‘corporate debtor’. The appeal is accordingly disposed off.

In ASHISH PRAKASH CHANDRA GANDHI VERSUS TRAU BROS NV & ANR. [2020 (3) TMI 1332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] (decided on 05.03.2020), the appellant submitted that the matter has been amicably settled in terms of consent terms reduced to writing on 2nd  March, 2020, A copy whereof has been produced.   The respondent No.1/operational creditor also admitted that consent terms have been reduced to writing in pursuance of settlement amicably reached between the parties.  The settlement amount is agreed to be paid as provided in Para 3 of the consent terms. The consent terms, having been agreed to by the parties, are binding on the parties and in view of the consent terms, respondent No. 1 is required to withdraw the application filed under Section 9 of Code before the Adjudicating Authority. The respondent No.1 submitted that the consent terms may be taken on record in these appeal proceedings and proceedings before the Adjudicating Authority may be closed. In the circumstances of the case, the Appellate Tribunal  deemed it appropriate to invoke our inherent powers in terms of Rule 11 of the National Company Law Appellant Tribunal Rules and dispose of the Appeal as per the consent terms. Corporate Debtor is released from the rigour of Corporate Insolvency Resolution Process. The Adjudicating Authority is directed to close the case. The consent terms takes care of the fee of the Resolution Professional as also resolution costs and the IRP admits that all such fee and costs have been paid.

Withdrawal of application

The appeal filed before the National Company Law Appellate Tribunal by the corporate debtor may be withdrawn if the creditors has withdrawn the application before the Adjudicating Authority. 

In ASHWANI SETIA VERSUS BHAWANI INDUSTRIES PVT. LTD. & ANOTHER [2021 (5) TMI 235 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] (decided on 16.03.2021), the appellant-Director of the Corporate Debtor-Texlene Forge Private Limited submitted that this appeal was filed against admission of C.P. (IB) No. 344/Chd/Pb/2018.  After following procedure under Section 12A of the Code, the Adjudicating Authority (NCLT, Chandigarh Bench, Chandigarh) has allowed I.A. No. 490 of 2020 and the original operational creditor has been allowed to withdraw the Application under Section 9 of the Code and the application under Section 9 has been withdrawn.   The appellant submitted that in view of such developments prayed the Appellate Tribunal to permit the appellant to withdraw the appeal.

In ANIL GOEL VERSUS AMIT AGRAWAL & ORS. [2020 (5) TMI 679 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] (decided on 27.05.2020)  the appellant sought to withdraw the appeal with liberty to invoke his right under Section 12A of the Code. The appeal is accordingly disposed of as withdrawn with liberty to the Appellant to invoke Section 12A of the Code giving an offer which shall be considered by the ‘Committee of Creditors’ irrespective of rejection of any earlier offer. The appellant shall also be at liberty to raise all the objections permissible under law including in respect of constitution of the ‘Committee of Creditors’. The appeal is accordingly disposed off.

Pursue other legal remedies

In  OM PRAKASH RAJGARHIA, ERSTWHILE MANAGING DIRECTOR, OVERNITE EXPRESS VERSUS HI TECH RESOURCE MANAGEMENT LTD. & ANR.  [2021 (5) TMI 232 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI](decided on 01.03.2021), the Advocate representing the appellant on instructions seeks to withdraw the appeal with liberty to pursue the legal remedies that may be available to appellant. This was not objected to by respondents as the Corporate Insolvency Resolution Process proceedings are proceeding ahead and embargo placed on constitution of Committee of Creditors stands removed in terms of order dated 4th February, 2021.  The appeal was accordingly dismissed as withdrawn. The appellant shall be at liberty to pursue any other remedy available under law.

In PRAYAG POLYTECH PVT. LTD. VERSUS PURBANCHAL TRADE AND INDUSTRIES LTD. [2020 (3) TMI 1333 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] (decided on 18.03.2020) the Advocate submitted that she has instructions from the appellant to withdraw this appeal. The Advocate for Appellant stated that she may be permitted to withdraw the appeal with liberty to the appellant to pursue appropriate remedies in appropriate forum.  The Advocate for respondent did not object. The appeal is disposed as withdrawn with liberty to the appellant to pursue appropriate remedies available in appropriate forum.

Fresh appeal

In STATE BANK OF INDIA VERSUS JET AIRWAYS (INDIA) LTD THROUGH ITS RP MR. ASHISH CHHAWCHHARIA & ANR [2021 (5) TMI 233 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] - Company Appeal (AT)(INSOLVENCY) NO.77 OF 2021 (decided on 01.03.2021), the appellant submitted that the matter is listed before the NCLT, Mumbai Bench, Mumbai on 2nd  March, 2021.  He sought permission to withdraw the appeal with the liberty to file fresh appeal at appropriate stage.  The NCLAT granted permission to the appellant to withdraw the appeal.

Extension of time

In VIVEK RAHEJA VERSUS VIJAY PUROHIT, STATE BANK OF INDIA [2021 (5) TMI 231 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI], the appellant stated that even Committee of Creditors had filed appeal against the impugned order which was having Company Appeal (AT) (Insolvency) No. 61 of 2021 and it had come up before Court No. 1 and the same had already been allowed and time was extended so that the resolution plan could be approved. The appellant submitted that in view of this development, he has instructions from the appellant to withdraw this appeal.  For reasons stated above, the appellant is allowed to withdraw this Appeal.

Not pressed

The National Company Law Appellate Tribunal may dismiss the appeal as the same is not pressed by the appellant i.e. means the intention of the appellant is not to pursue the appeal.

In SUDERSHAN GUPTA RESOLUTION PROFESSIONAL – VIL LTD. VERSUS CENTRAL BANK OF INDIA & ORS. [2021 (5) TMI 230 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] (decided on 18.01.2021) the respondent have filed their written submissions.   When the case was called out, Advocate for the appellant submitted that he has been instructed to withdraw the instant appeal bearing no. Company Appeal (AT) (Insolvency) No. 928 of 2020. He does not want to press the Appeal. The appeal is dismissed as not pressed.

Re-visiting the impugned order

In SANDHHYA SHIPPING SERVICES PVT. LTD. RAJAGURUSAMI MAHESHWARAN, RESOLUTION PROFESSIONAL OF SANDHHYA SHIPPING SERVICES PVT. LTD. VERSUS TRANS ASIAN SHIPPING SERVICES PVT. LTD. & ANR. [2021 (5) TMI 229 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] (decided on 27.11.2020), the appellant is aggrieved of the observations made in the impugned order. It is contended that the order of admission and commencement of Corporate Insolvency Resolution Process against the corporate debtor was not communicated to appellant for 7 months. Therefore, no fault could be found in the conduct of Corporate Insolvency Resolution Process by the appellant.  The appellant prayed for allowing her to withdraw the appeal with liberty to approach the Adjudicating Authority (National Company Law Tribunal), Division Bench-I, Chennai for expunction of remarks/ observations casting stigma on the appellant. In the circumstances of the case, the appeal is permitted to be withdrawn with liberty granted to the appellant to file an application before the Adjudicating Authority (National Company Law Tribunal), Division Bench-I, Chennai for revisiting the impugned order and expunging the observations/ remarks made against the appellant as Resolution Professional, within one week.

 

By: Mr. M. GOVINDARAJAN - May 10, 2021

 

 

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