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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 ..... the Adjudicating Authority after the Application in Form FA is submitted by the Creditor for withdrawal of the Company Petition? ii. Whether the IRP is prohibited from making an Application under Section 12A of the Insolvency and Bankruptcy Code read with Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, after the issue of the public advertisement under Section 13 of the Code read with Regulation 6 of the Regulations in Form A and before the last date for submission of the claims? iii. If such an Application is made, would it amount to misconduct on the part of the IRP? iv. Whether Adjudicating Authority has power to direct settlement of outstanding claims of other creditors who are not before it nornotices have been issued to them? 3. The admission of CIRP against the Corporate Debtor was passed on 10.06.2020. The Operational Creditor and Corporate Debtor entered into a settlement agreement dated 23.06.2020. The Operational Creditor was paid an amount of Rs. 21 lakhs 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia (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 that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Rs. 563.60 crores and the claims received as on 26.06.2020 is approximately Rs. 125.61 crores, therefore, the claims received between 27.06.2020 and 29.06.2020 is Rs. 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 Rs. 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 the financial distress, financial position of the Corporate Debtor is a fit case to involve a resolution process. 9. The Hon'ble Technical Member in exercise of power under Rule 11 has awarded a cost of Rs. 10 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 heard and "reserved for orders" on 06 July 2020. Copy of the said order is here to annexed and marked as "Annexure 1". 4. The question for consideration arises whether the IRP is duty bound to file the Form-FA before the Adjudicating Authority within 3 days of receiving the settlement ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 record of the 'Operational Creditor' on 9th January, 2020. 3. The 'Operational Creditor' also moved an Application for withdrawal under Rule 11 of the NCLT Rules, 2016 on the same date i.e. on 9th January, 2020, but no order was passed and it was adjourned for 3rd March, 2020. The Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 the last word on the subject. If the committee of creditors arbitrarily rejects a just settlement and/or withdrawal claim, the NCLT, and thereafter, the NCLAT can always set aside such decision under Section 60 of the Code. For all these reasons, we areof the view that Section 12 A also passes constitutional muster." (E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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