TMI Blog2022 (2) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is a specific provision and procedure prescribed for withdrawal of an application admitted under section 7, 9 and 10 of IBC, before as well as after the constitution of CoC, in terms of Regulation 30A of CIRP Regulations 2016, which has been taken note of by the Hon'ble Supreme Court in the matter of Arun Kumar Jagtramka Vs Jindal Steel and Power Ltd. Anr. and the Hon'ble NCLAT has also held recently in the matter of Mr. Harish Raghavji Patel Vs. Shapoorji Pallonji Finance Pvt. Ltd. and Anr. [ 2021 (10) TMI 340 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] that the inherent power cannot be invoked to by-pass the procedure prescribed under the law, we are of the considered view that Rule 11 of NCLT Rules, 2016 shall not be invoked to in the instant case for withdrawal of CP (IB)-3013 (ND) 2019. The Application is accordingly dismissed. - IA No. 411 of 2022 in IB No. 3013/ND/2019 - - - Dated:- 1-2-2022 - Abni Ranjan Kumar Sinha, Member (J) And L.N. Gupta, Member (T) For the Appellant : Vaibhav Mahajan and Amit Kumar, Advs. For the Respondents : Ishwar Mohapatra and Vinod Chaurasia, Advs. ORDER L. N. Gupta, Member ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter of Swiss Ribbons Pvt. Ltd. Anr. Vs Union of India dated 25.01.2019 passed in Writ Petition no. 99 of 2018. The relevant portion of the judgement quoted by the Counsel is reproduced below: 52. ...We make it clear that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case. 7. In addition, reliance has also been placed on the Judgment of Hon'ble Supreme Court in the matter of Arun Kumar Jagtramka Vs Jindal Steel and Power Ltd. dated 15.03.2021 reported as (2021) 7 SCC 474, wherein the following was observed: 78. There is a fundamental fallacy in the submission. An application for withdrawal under Section 12-A is not intended to be a culmination of the resolution process. This, as the statutory scheme would indicate, is at the inception of the process. Rule 8 of the Adjudicating Authority Rules, as we have seen earlier, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 469(2) of Companies Act, 2013 which has not been so in the case of Section 239 and Section 240 of IBC, 2016 and, in our view, rightly so considering the fact that IBC, 2016 is a new legislation. Following this, we have looked into the validity of Regulation 30A of IBBI (CIRP) Regulations, 2016 made in terms of Section 240(1) of IBC, 2016 to a limited extent that such provision, being inconsistent to the provisions of the Code, cannot be applied in the facts and circumstances of the case in view of provisions of Section 240 of IBC, 2016. 21. Admittedly, NCLT is the Adjudicating Authority in terms of provisions of Section 5(1) of IBC, 2016. The Hon'ble Supreme Court, in the case of B.K. Educational Society, has also held that provisions of NCLT Rules, 2016 would be applicable while discharging of the functions by NCLT as Adjudicating Authority under IBC, 2016. Thus, having regard to provisions of Section 469(2) of Companies Act, 2013, NCLT can exercise its inherent jurisdiction under Rule 11 of NCLT Rules, 2016 for a situation not specifically covered under any provisions of IBC, 2016. It is needless to mention that NCLT Rules, 2016 are also applicable to IBC proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o regulations pertaining to the Electricity Act 2003, wherein the following is held: 59. Summary of Our Finding i) .... ii) .... iii) A regulation under Section 178 is made under the authority of delegated legislation and consequently its validity can be tested only in judicial review proceedings before the courts and not by way of appeal before the Appellate Tribunal for Electricity under Section 111 of the said Act.... (Emphasis supplied) 12. That the IRP has further placed reliance on the Judgment of Hon'ble Supreme Court in the matter of BSNL vs. Telecom Regulatory Authority of India, (2014) 3 SCC 222, wherein it is held that: In exercise of the power vested in it under Section 14(b) of the Act, TDSAT does not have the jurisdiction to entertain the challenge to the regulations framed by the Authority under Section 36 of the Act.... (Emphasis supplied) 13. That the IRP has also relied upon the Judgment of NCLT Delhi Court-V in the matter of POWER2SME Private Limited vs. Vandeu International Private Limited CA-98/C-V/ND/2019 in (IB)-1695 (ND) 2019 dated 17.12.2019, wherein an application filed under Rule 11 of NCLT Rules, 2016 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority may allow the withdrawal of an application which is admitted under Sections 7, 9 and 10, on an application made by the applicant with the approval of a 90 percent voting share of the CoC in such manner as may be specified. Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, on the other hand, contemplates that the NCLT, functioning as the Adjudicating Authority, may permit a withdrawal of an application made under Rule 4 (by the financial creditor), Rule 6 (by the operational creditor) or Rule 7 (by the corporate applicant) on the request made by the applicant before its admission. Regulation 30-A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 contains provisions for the withdrawal of an application. Under Regulation 30-A, as it originally stood, an application for withdrawal under Section 12-A was required to be submitted before the issuance of an invitation for the expression of interest under Regulation 36-A. In the decision of this Court in Swiss Ribbons (supra), which was rendered on 25 January 2019, it was contemplated that an application for withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case. 83. The main thrust against the provision of Section 12-A is the fact that ninety percent 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 percent, 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 percent, 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, NCLT, and thereafter, NCLAT can always set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta. Justice Rohinton F. Nariman, speaking for the three judge Bench of this Court, observed.... (Emphasis Supplied) 19. That we observe that the Applicants have selectively relied upon a portion of Para 74 of the aforesaid Judgement in order to invoke the Rule 11 of NCLT Rules, 2016. However, from the bare reading of para 73 and 74 of the Judgement, it is clear that these paragraphs deal with the distinction between a withdrawal simpliciter and the Scheme of Arrangement under Section 230 of Companies Act . The Hon'ble Apex Court has observed that an application for withdrawal under Section 12-A is not intended to be a culmination of the resolution process. It is in this context the Hon'ble Apex Court referred to para 82 of its judgement in Swiss Ribbons (Supra) on withdrawal of application, and observed that.... The decision of this Court in Swiss Ribbons (para 82 extracted above) stipulates that where the CoC has not yet been constituted, the NCLT, functioning as the Adjudicating Authority, may be moved directly for withdrawal which, in the exercise of its inherent powers under Rule 11 of the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also refer to the recent Judgment of Hon'ble NCLAT passed in the matter of Mr. Harish Raghavji Patel Vs. Shapoorji Pallonji Finance Pvt. Ltd. and Anr. in Company Appeal (AT) (Ins) No. 391 of 2021 dated 06.10.2021, wherein the following is held: 10. It is well settled that inherent power can be exercised only when no other remedy is available to the litigant and nowhere a specific remedy is provided by the statue. If an effective alternative remedy is available, inherent power will not be exercised, especially when the applicant may not have availed of that remedy. It is also settled law that inherent power cannot be invoked which intends to by-pass the procedure prescribed. The procedure prescribed under the law is to be followed strictly. 11. Rule 11 of NCLAT Rules, 2016 provides that the inherent power the Appellate Tribunal can be exercised to make any orders as may be necessary for meeting the ends of the justice or to prevent abuse of process of the Appellate Tribunal. This provisions suggest that such power can be exercised in the absence of express provisions of the Code or Regulation. 12. The procedure prescribed for withdrawal of the petition under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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