Insolvency withdrawal after admission was refused because CIRP consequences and moratorium had already commenced.

Admission of an insolvency petition under the Insolvency and Bankruptcy Code makes the proceeding collective in rem and triggers the moratorium automatically under Section 14. The absence of an Interim Resolution Professional and non-constitution of the Committee of Creditors did not affect the legal consequences of admission, and procedural omission could not be relied on to avoid those consequences. Withdrawal under Section 12A was therefore refused because it would prejudice other creditors whose claims were already affected by commencement of CIRP, and the application was dismissed.

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Issues: Whether withdrawal of the insolvency petition under Section 12A of the Insolvency and Bankruptcy Code, 2016 could be permitted after admission of the petition and initiation of CIRP, where no Interim Resolution Professional was appointed and the Committee of Creditors had not been constituted.

Analysis: Once a petition under Sections 7 to 9 of the Insolvency and Bankruptcy Code, 2016 is admitted, the proceeding becomes a collective proceeding in rem and the moratorium under Section 14 operates automatically. The absence of appointment of an Interim Resolution Professional and constitution of the Committee of Creditors did not alter the legal effect of admission. The Tribunal also noted that the procedural omission could not be used by the parties to defeat the consequences of admission. In the circumstances, allowing withdrawal would prejudice other creditors whose claims had already been affected by the commencement of CIRP.

Conclusion: Withdrawal under Section 12A was not permitted and the application was dismissed.

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