NCLT Chennai: Liberty to Approach COC for Settlement under IBC Section 12A

The National Company Law Tribunal, Division Bench (Court-I), Chennai addressed the liberty granted to approach the Committee of Creditors (COC) for settlement under Section 12A of the Insolvency and Bankruptcy Code, 2016. The Tribunal noted the Supreme Court's order allowing the applicant to withdraw the application with liberty to approach the COC for settlement. The Tribunal directed the Resolution Professional (RP) to assess the Section 12A Application to be filed by the Corporate Debtor following the Supreme Court's directive. Additionally, the Tribunal highlighted the suspension of funds provided by HDFC Bank to the Corporate Debtor post judgment by the Supreme Court and emphasized the RP's obligation to file an affidavit detailing the COC's status.

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Issues: Liberty to approach COC for settlement under Section 12A of IBC, funds provided by HDFC Bank to Corporate Debtor, suspension of facility post judgment by Supreme Court, RP's obligation to file affidavit on COC status.

In the judgment by the National Company Law Tribunal, Division Bench (Court-I), Chennai, the Tribunal addressed the issue of liberty granted to approach the Committee of Creditors (COC) for settlement under Section 12A of the Insolvency and Bankruptcy Code, 2016. The Tribunal noted the order of the Hon'ble Supreme Court allowing the applicant to withdraw the application with liberty to approach the COC for settlement. This liberty was granted in light of the Supreme Court's order dated 19.03.2021 in a specific case, as mentioned in the interim counter filed by the Learned Senior Counsel. The Tribunal directed the Resolution Professional (RP) to apply his mind regarding the Section 12A Application to be filed by the Corporate Debtor following the Supreme Court's directive.

Regarding the funds provided by HDFC Bank to the Corporate Debtor, the Tribunal acknowledged that HDFC Bank had made available funds amounting to Rs. 36 Crore to the Corporate Debtor as per the order of dismissal by the Hon'ble NCLAT. It was highlighted that post the judgment by the Supreme Court on 03.03.2021, the facility provided by HDFC Bank was suspended. Despite no default in repayment by the Corporate Debtor till then, the facility was put on hold following the Supreme Court's decision. The Tribunal took note of the surprise expressed by HDFC Bank in light of the judgment and emphasized the need for the RP to assess the situation and the COC status in line with the Supreme Court's directions.

The Tribunal emphasized the RP's obligation to file an affidavit within five days, detailing the current status of the COC and its members before the Tribunal. This directive was issued to ensure transparency and to facilitate further consideration of the matter on 30.03.2021. The RP was tasked with providing a comprehensive update on the COC's composition and status, enabling the Tribunal to proceed with a well-informed decision based on the developments following the Supreme Court's order and the actions taken by the parties involved.

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