Withdrawal of CIRP Allowed by NCLT based on Settlement Agreement under Section 12(A)

The National Company Law Tribunal, New Delhi Bench, allowed the withdrawal of the Corporate Insolvency Resolution Process (CIRP) initiated against a Corporate Debtor, M/s. Callina Care Overseas Private Limited, under Section 12(A) of the Insolvency & Bankruptcy Code. The withdrawal was permitted based on a settlement agreement approved by the Committee of Creditors, despite concerns about the timing in relation to the expression of interest publication. The Tribunal's decision highlighted the discretionary nature of Regulation 30A and emphasized the need to interpret such regulations in conjunction with the main provisions of the Code.

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Issues: Application for withdrawal of Corporate Insolvency Resolution Process (CIRP) under Section 12(A) of the Insolvency & Bankruptcy Code, 2016.

In this judgment by the National Company Law Tribunal, New Delhi Bench, the issue revolved around an application filed under Section 12(A) of the Insolvency & Bankruptcy Code, 2016, seeking withdrawal of the Corporate Insolvency Resolution Process (CIRP) initiated by the Tribunal. The CIRP was initiated against a Corporate Debtor, Jaswant International Private Limited, with an Interim Resolution Professional initially appointed, later replaced by a Resolution Professional. The application for withdrawal was based on a settlement agreement reached between the Operational Creditor and the Corporate Debtor, which was unanimously approved by the Committee of Creditors (COC) in a meeting. The application highlighted that all necessary costs related to the CIRP had been paid, and there were no outstanding amounts. However, a key concern arose regarding the timing of the withdrawal application in relation to the publication of expression of interest and the expiration of 90 days from the initiation of CIRP.

The Tribunal considered a judgment by the Hon'ble Supreme Court in a similar matter, where it was noted that withdrawal post the invitation for expression of interest was restricted by Regulation 30A, even though Section 12A of the Insolvency & Bankruptcy Code did not explicitly mention such a restriction. The Supreme Court opined that the applicability of Regulation 30A should be analyzed on a case-to-case basis and could be construed as directory rather than mandatory. Based on this interpretation, the Tribunal allowed the withdrawal application, annulling the CIRP proceedings initiated on 31.01.2019 in relation to the Corporate Debtor, M/s. Callina Care Overseas Private Limited. Consequently, the Resolution Professional was discharged from their duties in relation to the Corporate Debtor.

Therefore, the judgment delves into the interplay between Section 12(A) of the Insolvency & Bankruptcy Code, 2016, and Regulation 30A regarding the withdrawal of the CIRP post the invitation for expression of interest. It emphasizes the need to analyze such regulations in conjunction with the main provisions of the Code and highlights the discretionary nature of such regulations based on the circumstances of each case. The decision ultimately allows for the withdrawal of the CIRP in light of the settlement agreement, adhering to the principles outlined in the Supreme Court judgment.

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