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TMI Blog2019 (12) TMI 1536X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (a) to (d) of IBC, 2016. The public notice was published in daily newspapers and claim petition from Financial Creditors and Operational Creditors were received. 2. These MAs (M.A. 20/KPB/2019, MA/21/KOB/2019 and MA/23/KOB/2019 in TIBA/15/2019) have arisen consequent to the order passed by this Tribunal on 15th Nov 2019 in MA/17/KOB/2019 in TIBA/15/KOB/2019 filed by the IRP with regard to the Form FA application submitted on behalf of Operational Creditor under Section 12A of IBC 2016 read with Regulation 30A(1) to (5) and 6 of Adjudicating Authority Regulation and also read with Section 60 (5)(c) of IBC, 2016 for withdrawal of TIBA/15/KOB/2019 filed under Section 9 of IBC 2016. 3. During the hearing of MA/17/KOB/2019 on 15.11.2019, the Financial Creditor (SBI) of the Corporate Debtor has also impleaded himself requesting this Bench not to pass an order for withdrawal of the application and requested to continue the CIRP Process as the Corporate Debtor has defaulted an amount of Rs. 15.60,65.148.34 to the Financial Creditor. In this connection, he cited Hon'ble Supreme Court Judgement in Writ Petition (Civil) No.99 of 2018 in the case of Swiss Ribbons Pvt Ltd Vs. Union of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is settled with the operational creditor. It is submitted that any such preferential settlement and withdrawal shall be detrimental to the interest of other creditors and no such withdrawal may be granted without the consent of 90% voting share of the Committee of Creditors. It is a fact the Corporate Debtors has committed default and unable to pay its debt of Rs. 15.61 crore to the petitioner itself since 30.3.2018. 10. The applicant further submits that under section 12A of the Insolvency and Bankruptcy Code, 2016, 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 ninety per cent voting share of the committee of creditors. Hence it is mandatory that 90% of the voting share of committee of creditors is required for withdrawal while in all other cases maximum 66% is prescribed for approval. 11. The applicant also submits that under Regulation 30A(1) (a) of IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016, an application for withdrawal under Section 12A may be made to the Adjudicating Authority before the Constitution of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required Form FA was also submitted to the IRP along with the covering letter dated 4.11.2019. 15. The Corporate Debtor has also submitted that on 7.11.2019 the IRP requested for an additional amount of Rs. 2,00,000/- (Rupees two lakhs only) for filing the withdrawal application along with Form FA before this Tribunal. 16. According to the Corporate Debtor, as per Section 12A of the IBC 2016 read with IBBI CIRP Regulation 30A(1)(a), where the payment of dues has been settled and the Form FA has been filed by the Operational Creditor through the IRP as prescribed in the IBBI Regulation 2016, the CIRP process comes to an end with the approval of the Adjudicating Authority. Accordingly Corporate Debtor prayed to reject the Application of the Financial Creditor as non-maintainable and devoid of any merit. MA/21/KOB/2019 17. MA/21/KOB/2019 was filed by the Interim Resolution Professional intimating this Tribunal regarding constituting Committee of Creditors under Regulation 17(1) and List of Creditors under Regulation 13(2)(d) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016. In the said MA it was reported by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor, this is obviously not in consonance with Section 12A of the IBC 2016, and Regulation 30A of the CIRP Regulations prescribed. 22. Accordingly the Corporate Debtor vide MA 23/KOB/20-19 sought a direction to declare that the CIR proceedings in the matter has concluded with the filing of Form FA by the IRP before the constitution of the Committee of Creditors and also to dispose of any application by any person including anyother Creditor of the Corporate Debtor by restraining the IRP from constituting and convening any meeting of the Committee of Creditors as the same would be in violation of the IBC Code and the regulations thereon. 23. After hearing the parties and the materials available on records, this Tribunal has issued direction on 21.11.2019 to stay the convening of the meeting of the Committee of Creditors proposed on 22.11.2019 until further orders. 24. Today, we have heard the respective counsel of all the MAs and it is also observed that MA/KOB/17/2019 was filed by the IRP on 13.11.2019 enclosing the Form FA submitted by the Corporate Debtor in TIBA/15/KOB/2019. 25. During the hearing, the Counsel for the Corporate Debtor has drawn our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2018 with retrospective effect from 06.06.2018. It reads as follows: 12-A. Withdrawal of application admitted under Section 7, 9 or 10.-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 ninety per cent voting share of the committee of creditors, in such manner as may be specified.‖ 50. The ILC Report of March 2018, which led to the insertion of Section 12A, stated as follows: 29.1 Under rule 8 of the CIRP Rules, the NCLT may permit withdrawal of the application on a request by the applicant before its admission. However, there is no provision in the Code or the CIRP Rules in relation to permissibility of withdrawal post admission of a CIRP application. It was observed by the Committee that there have been instances where on account of settlement between the applicant creditor and the corporate debtor, judicial permission for withdrawal of CIRP was granted [Lokhandwala Kataria Construction Pvt. Ltd. v. Ninus Finance & Investment Manager LLP, Civil Appeal No. 9279 of 2017; Mothers Pride Dairy India Private Limited v. Portrait Advertisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution professional, as the case may be, in Form FA of the Schedule before issue of invitation for expression of interest under Regulation 36A. (2) The application in sub-regulation (1) shall be accompanied by a bank guarantee towards estimated cost incurred for purposes of clauses (c) and (d) of Regulation 31 till the date of application. (3) The committee shall consider the application made under sub-regulation (1) within seven days of its constitution or seven days of receipt of the application, whichever is later. (4) Where the application is approved by the committee with ninety percent voting share, the resolution professional shall submit the application under sub-regulation (1) to the Adjudicating Authority on behalf of the applicant, within three days of such approval. (5) The Adjudicating Authority may, by order, approve the application submitted under sub-regulation (4).‖ This Court, by its order dated 14.12.2018 in Brilliant Alloys Pvt. Ltd. v. Mr. S. Rajagopal & Ors., SLP (Civil) No. 31557/2018, has stated that Regulation 3 0A(1) is not mandatory but is directory for the simple reason that on the facts of a given case, an application for withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor and this Appellate Tribunal may initiate contempt Proceeding for non-compliance of directions" 29. The Counsel for the financial Creditor accordingly pleaded before this Bench not to accept the Form FA filed by the Operational Creditor and continue with the CIR Process as an amount of Rs. 15,60,65,148.34 plus the 0.44 crore towards Bank guarantee outstanding is due to the Financial Creditor from the Corporate Debtor 30. At this juncture we have also gone through the MA/21/KOB/2019 filed by the Interim Resolution Professional certifying the constitution of the Committee of Creditors and also various steps he has taken after passing the orders of this Tribunal. ORDER 31. In the light of the above arguments of the Senior Counsel representing the Corporate Debtor, counsel representing the Financial Creditor as well as Operational Creditor, we pass the following Order. 32.After perusing the Hon'ble Supreme Court Judgement in Writ Petition (Civil) No.99 of 2018, it is clearly established: "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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 15,60,65,148.34 plus the 0.44 crore towards Bank Guarantee in the instant case while considering the withdrawal of the Form FA filed by the Interim Resolution Professional.
34. Accordingly, in the facts and circumstances of this case, we are not inclined to interfere with the CIR process initiated vide our Order dated 23.10.2019 and we allow the Interim Resolution Professional to continue with the CIR process as mandated by the IBC, 2016.
35. In the meantime, if the Corporate Debtor comes with the settlement of all the Creditors, the IRP can consider such proposal of Corporate Debtor and submit the settlement memo before this Tribunal for appropriate orders.
36. For the reasons stated above, the Interim Stay Order passed by this Tribunal on 21.11.2019 restraining the convening of the meeting of the Committee of Creditors proposed on 22.11.2019 is hereby vacated.
37. The Interim Resolution Professional is directed to comply with the Order dated 23.10.2019 of this Bench and submit his statement within two days. 38.Accordingly, all the aforesaid MAs are disposed of.
List on 6.12.2019 for the statement of the IRP.
Dated this the 2nd day of December 2019 X X X X Extracts X X X X X X X X Extracts X X X X
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