The NCLAT New Delhi bench has held that a Resolution Professional (RP) is authorized to withdraw a CIRP withdrawal application under Section 12A of the Insolvency and Bankruptcy Code (IBC) before the application is heard and allowed.
The decision was delivered in the context of an appeal filed by the suspended director of a corporate debtor challenging orders passed by the NCLT. The appeal arose from a Section 9 application filed by an operational creditor, which was admitted, followed by a settlement between the parties and the filing of a Section 12A withdrawal application.
The Resolution Professional informed the Adjudicating Authority that Mitsubishi Heavy Industries Ltd. (MHIL), a financial creditor, had filed claims that were admitted, and the cheque issued to the operational creditor had been encashed. Consequently, the RP filed a purshish to withdraw the Section 12A application, citing the need to reconstitute the CoC due to MHIL’s inclusion. The Adjudicating Authority allowed the withdrawal of the Section 12A application.
The appellant contended that the RP lacked jurisdiction to withdraw the Section 12A application, arguing that the procedure prescribed under Section 12A and Regulation 30A of the IBC had not been followed. It was also argued that the RP acted beyond their authority, as the withdrawal was contrary to the Supreme Court’s ruling in the GLAS Trust Company LLC v. BYJU Raveendran & Ors (2024) case. The appellant further submitted that the inclusion of MHIL in the CoC, with a 92.35% voting share, invalidated the earlier CoC decision permitting withdrawal, as the inclusion required the CoC to be reconstituted.
The Tribunal rejected the appellant’s arguments, holding that the RP has the authority under Regulation 30A to file a withdrawal application, as the insolvency process becomes an in rem proceeding upon admission. The Tribunal observed that the RP’s actions were consistent with the statutory framework and judicial precedents, including the Supreme Court’s interpretation of Section 12A. It was noted that Regulation 12(3) ensures that decisions taken by the CoC before the inclusion of a new creditor remain valid, and the validity of the earlier decision was not challenged in this case.
The Tribunal concluded that the withdrawal of the Section 12A application was necessitated by the subsequent admission of MHIL’s claim and the requirement to reconstitute the CoC. The RP acted within their jurisdiction in filing the purshish, and the withdrawal was permitted in accordance with law. The appeal was dismissed, affirming the RP’s authority and adherence to procedural requirements under the IBC.
Mehul Patel (Member of Suspended Board of Anupam Port Cranes Corporation Ltd.) Vs. Nandish S. Vin & Anr.
Company Appeal (AT) (Insolvency) No.2191 of 2024
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