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2022 (11) TMI 4 - HC - Insolvency and BankruptcyRestoration of petition, which has been withdrawn - availability of effective alternative remedy of appeal before the NCLAT - initiation of CIRP - power of NCLT under Section 60(5) of the Insolvency and Bankruptcy Code or under Rule 11 of the NCLT Rules, to restore a petition which has been withdrawn - HELD THAT:- Under the provisions of the Insolvency and Bankruptcy Code, the insolvency resolution process, of a company, commences when the petition by a creditor, under Sections 7 to 9 is admitted. Subsequently, any application by the corporate debtor to withdraw the proceedings, on the ground that the claim of the corporate debtor is settled, is permissible after the committee of creditors, constituted under the resolution process, is consolidated. The provisions of the Code also stipulate that the committee of creditors is to be constituted within 30 days from the date of admission / appointment of an interim resolution professional. A question arose before the Hon’ble Supreme Court in (2019) 4 SCC 17 [2019 (1) TMI 1508 - SUPREME COURT] as to what is to be done if a settlement is arrived at even before the committee of creditors is constituted. The Hon’ble Supreme Court answered this question by holding that where the committee of creditors is not yet constituted, a party can approach the NCLT directly and the Tribunal, in exercise of its powers under Rule 11 of the NCLT Rules, may allow or disallow such an application for withdrawal or settlement - In view of the observations of the Hon’ble Supreme Court, the NCLT has the inherent power, to direct withdrawal of the creditors petition, before the committee of creditors is constituted. The recognition of such a power, by the Hon’ble Supreme Court, in a situation, which is not covered or contemplated under the Statute or the Rules made thereunder, clearly shows that the inherent powers of the NCLT cannot be interpreted restrictively and a wider and larger approach need to be taken while interpreting Rule 11 of the NCLT Rules. Such an expansive interpretation of Rule 11 would clearly mean that the Tribunal, which has the inherent power to permit withdrawal of a petition, would also have the inherent power to restore such a petition. There could be a dispute or challenge to the grounds on which such a power of restoration can be exercised. There cannot be a dispute on the inherent power of the NCLT to direct restoration of an application which had been permitted by the Tribunal to be withdrawn earlier - Apart from this, Section 60(5) c) of the Insolvency and Bankruptcy Code also empowers the NCLT to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person as well as any claim made by or against the corporate debtor. This provision is in the nature of a residuary power. The dispute between the petitioner and the respondent as to the maintainability of the petition filed by the unofficial respondent before the NCLT on account of the subsequent MOU, capping the liability of the writ petitioner to Rs.5 crores, and whether the writ petitioner had remitted the entire amount as claimed by the unofficial respondent or whether the writ petitioner had not remitted the entire amount of Rs.5 crores as contended by the unofficial respondent, are all issues which need to be gone into by the NCLT, without being bound by its earlier observation that, the situation, as before the Memorandum of Understanding, would revive in toto. This writ petition is disposed of leaving it open to the writ petitioner to raise all the aforesaid issues before the NCLT, in the hearing before the NCLT, which would take an appropriate decision on the objections raised by the writ petitioner.
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