TMI Blog2023 (1) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... nte with regard to the corporate debtor and its assets means that the withdrawal of Rs. 116.41 Crores by State Bank of India on 30.06.2021 was against this stay order and this amount should be put back in the account of the corporate debtor, and additionally the hold put by SBI on amount of Rs. 31.27 Crores which is in the the Trust and Retention Account should also be released so that the amount remains as an asset and under the control of the corporate debtor. Once the claim and interest of financial creditor-KKR India Financial Service Ltd. had been noticed by the Adjudicating Authority while considering the withdrawal application and protection was granted through stay of its own order on 30.06.2021, which was further reinforced by the order dated 12.07.2021 requesting restoration of status quo ante by this Tribunal, it would only be appropriate that the CIRP, which was initiated as a result of Section 9 Application vide Order dated 18.12.2020, be allowed to continue and run its due course as it would allow adequate and proper insolvency resolution of the corporate debtor. The Application for withdrawal of Section 9 Application filed is set aside and consequently th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 and order dated 19.07.2021 passed by the Adjudicating Authority in CP(IB) No. 276/7/NCLT/AHM/2020; a) Company Appeal (AT) Ins. No. 729 of 2022 has been filed by the Appellant-Sintex Plastics Technologies Ltd. wherein by order dated 29.06.2022, I.A. No. 413(AHM)2022 in I.A. 374(AHM)2022 filed by Suspended Management was rejected, IA/374(AHM)2022 was allowed and I.A./474(AHM)2022 in IA/374(AHM)2022 was disposed of in CP(IB) No. 759 of 2019 has been challenged and seeking order to set aside and quash the impugned order dated 29.06.2022 passed by the Adjudicating Authority; b) Company Appeal (AT) Ins. No. 730 of 2022 has been filed by the Appellant-Sintex Plastics Technology Ltd. through the Authorised Signatory-Mr. Amit Dineshchadra Patel challenging the order dated 29.06.2022 passed by the Adjudicating Authority in I.A. No. 380/2022 in CP(IB) No. 759 of 2019 seeking appropriate order setting aside and quashing the impugned order dated 29.06.2022 passed by the Adjudicating Authority Ahmedabad and staying the operation and implementation of impugned order dated 29.06.2022; c) Company Appeal (AT) Ins. No. 475 of 2021 has been filed by the Appellant-M/s. KKR India Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the operational creditor- Zielen Industry Pvt. Ltd., CIRP was initiated upon the admission of the said Application on 18.12.2020 along with appointment of IRP-Mr. Ketulbhai Ramubhai Patel. It is stated by the Appellant that the operational debt owed to the operational creditor by the corporate debtor-Sintex Plastics Technology Ltd. was settled on the basis of an MoU whereupon the holding company of the corporate debtor-Sintex Plastics Technology Ltd. filed an appeal before the Appellate Tribunal seeking withdrawal of the insolvency application under Section 9 filed by the operational creditor and set aside the admission order dated 18.12.2020 initiating CIRP. He has further stated that NCLAT dismissed the appeal filed by the Sintex Plastics Technology Ltd.-the holding company of the corporate debtor-Sintex BAPL Limited on 04.01.2021 holding that the Appellate Tribunal was not correct forum for filing the application for withdrawal of Section 9 Admission Order and simultaneously stayed the constitution of the Committee of Creditors (hereinafter referred to as CoC ) for a week upto 07.07.2021 which was further extended by the NCLT during the adjudication of the settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result of order dated 12.07.2021 in Company Appeal (AT) Ins. No. 475 of 2021, CIRP against the corporate debtor which was initiated as a result of application under Section 9 continues and the IRP is incharge of the management of the corporate debtor. This Appeal which challenged the order of withdrawal of Section 9 Application was finally disposed of vide order dated 27.07.2021 wherein Company Appeal (AT) Ins. No. 577 of 2021 was heard along with Company Appeal (AT) Ins. No. 475 of 2021. 6. The main issue that arises in the above stated appeals is whether the initiation of the first CIRP on the basis of Section 9 Application filed by the Zielen Industry Pvt. Ltd., which was later permitted to be withdrawn by order dated 29.06.2021 of the NCLT and which order was stayed vide order dated 12.07.2021 of the NCLAT with the IRP continuing to operate and manage the affairs of the corporate debtor, should be the effective CIRP against the corporate debtor or the CIRP initiated vide order dated 19.07.2021 passed by the Adjudicating Authority in CP(IB) No. 276 of 2020 filed under Section 7 of IBC should be the effective CIRP which insolvency resolution of the corporate debtor should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Application should be the correct CIRP and the amount withdrawn by the State Bank of India and by any other creditor should be deposited back in the account of the corporate debtor for a proper and appropriate insolvency resolution of the corporate debtor. He has buttressed his argument by pointing out that order dated 12.07.2021 of the appellate tribunal means that the corporate debtor s CIRP is continuing and with the constitution of CoC situation the other debt of financial creditors has also be considered in the insolvency resolution of the corporate debtor. 10. The Learned Sr. Counsel for the Financial Creditor-KKR India Financial Services Ltd. has further submitted that once it is decided that the insolvency of the corporate debtor has to be resolved it is only appropriate and necessary that this resolution takes place in accordance with the objective and underlying spirit of the IBC by taking care of the interests of all the creditors and to achieve such an objective the effective date of initiation of CIRP should be the date of passing of the admission order given on the application under section 9 of the IBC. 11. The Learned Counsel for the Respondent-Sintex Plastics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since the Adjudicating Authority does not have jurisdiction to comment on the illegality of said provisions and therefore they should be expunged. He has referred to the Judgement of the Hon ble Delhi High Court in the matter of Insolvency and Bankruptcy Board of India Vs. State Bank of India Ors., W.P (C) No. 10189/2018 [2022/DHC/00524] in this regard wherein it is held that NCLT does not have the jurisdiction to decide whether any legal provision is ultra vires. 14. We have considered the arguments submitted on behalf of the parties and perused the pleadings submitted in all the Appeals 15. It is noted that the Adjudicating Authority admitted Section 9 Application filed by the operational creditor Zielem Industries Pvt. Ltd. against the corporate debtor-Sintex BAPL Limited on 18.12.2020. It is also noted that the operational creditor-Zielem Industries Pvt. Ltd. and the corporate debtor entered into a settlement which led to the filing of an Application bearing I.A. No. 18/AHM/2021 seeking withdrawal of the Section 9 admission order and closure of the CIRP. 16. We also note that the said withdrawal application was challenged in Company Appeal (AT) Ins. No. 475 of 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact has been noticed by the Adjudicating Authority in its Order dated 30.06.2021 while staying the operation of its own order dated 29.06.2021. Further when an appeal was filed against the withdrawal order dated 29/30.06.2021 which bears Company Appeal (AT) Ins. No. 475 of 2021, the Appellate Tribunal took note of the fact that other financial creditors and operational creditors had large claims pending for payment by the corporate debtor-Sintex BAPL Limited. Therefore, a stay on the impugned order dated 29.06.2021 given in Company Appeal (AT) Ins. No. 475 of 2021 restoration of status quo ante was also ordered with the stipulation that the IRP will continue to be in Management of the corporate debtor and CIRP would also continue. 19. We also find strength in the argument of Learned Sr. Counsel for the Financial Creditor-KKR India Financial Services Ltd. that if the CIRP under Section 9 Application is allowed to be closed, some creditors may have withdrawn amounts or received payments from the corporate debtor just as the SBI has done, which would be detrimental to the interest of the other creditors, particularly when another Section 7 Application filed by the KKR I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 passed by this Appellate Tribunal in Company Appeal (AT) Ins. No. 475 of 2021 whereby status quo ante was ordered to be restored with further stipulation that the CIRP shall continue with respect to the corporate debtor and the IRP shall remain in control of the management of the corporate debtor. The passing of stay orders of the withdrawal order is after acknowledging the situation that there are claims of other creditors including KKR Indian Financial Services Ltd. which are relevant for insolvency resolution of the corporate debtor, and further the pendency of section 7 application against the same corporate debtor also makes the situation and circumstance different in the present case. 22. Thus, in the light of the facts and circumstances of the present case and the stay orders whose effects are discussed in above-stated paragraphs passed by the Adjudicating Authority and the Appellate Tribunal subsequent to the permission of withdrawal of Section 9 Application, we are of the view that once the claim and interest of financial creditor-KKR India Financial Service Ltd. had been noticed by the Adjudicating Authority while considering the withdrawal application and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, a situation which is not covered under Section 12A cannot be covered by Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as well. Now, we have to look into the scheme, structure and object of provision of IBC, 2016 to find out whether inherent jurisdiction under Rule 11 of NCLT Rules, 2016 can be invoked in the facts of the case. It is also relevant to mention that neither under Section 12A of IBC, 2016, Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 there is no specific bar for application against invocation of Rule 11 of NCLT Rules, 2016 nor any other provisions exists under IBC, 2016 which covers a situation that prior to constitution of Committee of Creditors, if there happens a settlement and application for withdrawal of CIRP is filed, what can be done. Thus, considering all legal aspects, exercise of jurisdiction under Rule 11 of NCLT Rules, 2016 to the fact situation can not be doubted in any manner 24. We are of the view that above observations of the Adjudicating Authority in paragraph 17 of the impugned order dated 29.06.2021 were avoidable for the reason that NCLT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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