TMI Blog2021 (9) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... resolved to withdraw the CIRP proceedings and by virtue of withdrawal of CIRP proceedings, the Corporate Debtor now is a going concern. NCLT vide order dated 6.7.2021, passed in the application (I.A.No.540/CHE/2021) filed by D.Ramjee, has rightly held that from the date of the order dated 4.6.2021, after the withdrawal of CIRP proceedings, the powers and management of the Corporate Debtor were handed over to the Directors of the Corporate Debtor and from that date RP and CoC in relation to the Corporate Debtor had become functus officio. NCLT has rightly disposed of the application filed by D.Ramjee having rendered infructuous. Appeal disposed off. - CIVIL APPEAL NO. 1792 OF 2021 CIVIL APPEAL NO. 2901 OF 2021 - - - Dated:- 15-9-2021 - JUSTICE L. NAGESWARA RAO , JUSTICE B. R. GAVAI And JUSTICE B. V. NAGARATHNA For the Appellant : Mr. Balaji Srinivasan, AOR 5.1 Mr. Ritin Rai, Sr. Adv. Mr. S. Santanam Swaminadhan, Adv Mr. Kartik Malhotra, Adv Ms. Abhilasha Shrawat, Adv Mrs. Aarthi Rajan, AOR For the Respondent : Caveator-in-person, AOR R-1/applicant in 5.1 Mr. KV Vishwanathan, Sr. Adv. Mr. Arvindh Pandian, Sr. Adv. Mr. Balaji Srinivasan, AOR Ms. Garima Jain, Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alary regularly, he sought to get relieved from the services with effect from 30.9.2006 and sought for settlement of his salary dues. However, it is his case that as the Corporate Debtor requested him to continue in the service, he continued to do so on a salary which was much less than the one he was entitled to. On 31.5.2013, D. Ramjee officially retired after serving for 49 years. In February, 2015, the Management of the Corporate Debtor was taken over by one Subasri Realty Limited, thereby acquiring the shareholding of the earlier promoters, M. Sivaram and his family. According to D. Ramjee, the new Management disowned itself from the admissions of previous management pertaining to settlement of arrears of salary. On 27.2.2017, Ramjee issued a Demand Notice under Section 271(1)(a) of the Companies Act, 2013 read with Section 8(1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the IBC ) calling upon the Corporate Debtor to pay dues of outstanding salary amounting to ₹ 2,60,68,883/along with interest at the rate of 12%. On failure of the Corporate Debtor to comply with the notice, D. Ramjee filed an application under Section 9 of the IBC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application under Section 9 of the IBC. It is pertinent to note that D. Ramjee had also filed an application for permission to file an appeal being D. No.34836 of 2018, which came to be rejected by this Court by the same judgment and order dated 3.3.2021. In the meantime, Subasri Realty Limited, a major shareholder of the Corporate Debtor filed a Miscellaneous Application No. 480 of 2021 in Civil Appeal No.187 of 2019 before this Court seeking to compromise with respondent No. 3. This Court vide order dated 19.3.2021 granted liberty to the said applicant to approach CoC for settlement under Section 12A of the IBC. Vide order dated 22.4.2021, NCLT directed RP to convene a meeting of CoC consisting of the members, who constituted CoC originally in the year 2017. Being aggrieved thereby, the erstwhile Director of the Corporate DebtorK. N. Rajakumar, had preferred an appeal being Company Appeal (AT)(CH)(Ins) No. 48 of 2021 before NCLAT. The said appeal came to be dismissed by NCLAT vide order dated 30.4.2021, which in turn has been challenged in Civil Appeal No. 1792 of 2021 and Civil Appeal No.2901 of 2021. CoC vide its resolution dated 25.5.2021 passed in its 8th meet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational creditors. Further relying on Section 25(2)(e) of the IBC, it is submitted that in recognition of the principle that a creditor must continue to have a valid claim to be a member of CoC, it is mandated that RP should maintain an updated list of claims. It is further submitted that Section 24(6) of the IBC provides that the voting share shall be based on the financial debts owed. Relying on various provisions of the IBC and the 2016 Regulations, it is submitted that the composition of CoC must change on the basis of the updated claims of the creditors and whenever the claims of the creditors undergo any change, the composition of CoC must change accordingly. It is therefore submitted that since the Corporate Debtor does not have any financial creditors, CoC ought to have been constituted of operational creditors, wherein D. Ramjee would have a substantial voting right. It is further submitted on behalf of D. Ramjee that the contention of K.N. Rajakumar that since the Corporate Debtor has taken finance from HDFC Bank (respondent No.2 in Civil Appeal No.1792 of 2021 and respondent No.4 in Civil Appeal No.2901 of 2021), CoC should consist only of HDFC Bank, is without mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Purshottam Lal Kaushik (1981) 2 SCC 84 and K.I. Shephard and others v. Union of India and others (1987) 4 SCC 431 . 12. At this juncture, it would be relevant to refer to Section 12A of the IBC, which reads thus: 12A. 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. 13. It could thus be seen that the Adjudicating Authority is entitled to withdraw the 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 CoC. 14. It is not in dispute that the resolution of CoC approving withdrawal of CIRP proceedings was supported by the requisite voting majority. NCLT after considering the resolution passed by CoC in its 8th meeting held on 25.5.2021 has allowed the application filed by K.N. Rajakumar vide order dated 4.6.2021. 15. This Court in the case of Ghanashyam Mishra and Sons Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Corporate Debtor has already settled the issue with the erstwhile financial creditors, who have resolved to withdraw the CIRP proceedings and by virtue of withdrawal of CIRP proceedings, the Corporate Debtor now is a going concern. 18. Insofar as the appeal filed by D. Ramjee is concerned, we have already observed that the order of NCLAT dated 2.8.2017 allowing the appeal filed by the Corporate Debtor and setting aside the order dated 13.6.2017 passed by NCLT in D. Ramjee s application under Section 9 of the IBC has admittedly not been challenged by D. Ramjee. In pursuance of the assurance given before NCLAT, an amount of ₹ 18,50,000/was also paid to D. Ramjee towards arrears of salary by the Corporate Debtor. The application for permission to file an appeal filed by D. Ramjee before this Court has been rejected by this Court vide judgment and order dated 3.3.2021. 19. In that view of the matter, we find that insofar as D. Ramjee is concerned, the issue has attained finality as on 2.8.2017 when the appeal filed by the Corporate Debtor came to be allowed by NCLAT. We find that NCLT vide order dated 6.7.2021, passed in the application (I.A.No.540/CHE/2021) filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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