Tribunal rules withdrawal application in CIRP must be filed by original applicant & approved by 90% CoC voting share

The Tribunal held that the application for withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code must be filed by the original applicant and approved by 90% of the Committee of Creditors' voting share. Despite the Committee of Creditors approving the withdrawal with 100% voting share, as the application was not filed by the original applicant (Operational Creditor), the Tribunal deemed it not maintainable. Consequently, the Tribunal rejected the Interim Resolution Professional's request to allow the withdrawal of the Company Petition and dismissed the application.

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Issues Involved:
1. Objections raised by the Operational Creditor.
2. Application for withdrawal of CIRP under Section 12A of the Insolvency and Bankruptcy Code, 2016.
3. Constitution of the Committee of Creditors (CoC).
4. Non-inclusion of Axis Bank in the CoC.
5. Procedural aspects of filing Form FA.

Detailed Analysis:

1. Objections Raised by the Operational Creditor:
The Operational Creditor raised several objections against the application filed by the Interim Resolution Professional (IRP) under Section 12A of the Insolvency and Bankruptcy Code (IBC), 2016. The objections included:
- The IRP did not consider the claim of the Operational Creditor in its entirety.
- The application was filed in contravention of Section 12A read with Regulation 30A of the IBC 2016.
- The Form FA was filed incorrectly by the IRP.
- The IRP did not consider the claim of Axis Bank while constituting the CoC.

2. Application for Withdrawal of CIRP under Section 12A of the IBC 2016:
The IRP filed the application for withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the IBC 2016, read with Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016. The IRP argued that the withdrawal was in the interest of the Corporate Debtor to maintain it as a going concern. The CoC, constituted with the sole claim of the Financial Creditor (State Bank of India), approved the withdrawal with 100% voting share.

3. Constitution of the Committee of Creditors (CoC):
The CoC was constituted by the IRP on 05.10.2020, with the sole claim of the Financial Creditor, State Bank of India, amounting to Rs. 12,66,000/-. The first meeting of the CoC was held on 07.10.2020, where the CoC approved the settlement of the claim amount of State Bank of India and the withdrawal of the CIRP under Section 12A of the IBC 2016.

4. Non-Inclusion of Axis Bank in the CoC:
The IRP submitted that Axis Bank filed its claim on 23.09.2020, but the claim form was defective. The IRP communicated the defect to Axis Bank on 01.10.2020. By the time the CoC was constituted on 05.10.2020, Axis Bank had not rectified the defect. The claim of Axis Bank was against a Fixed Deposit maintained with the bank, and the status of the claim was discussed in the first CoC meeting on 07.10.2020.

5. Procedural Aspects of Filing Form FA:
The IRP argued that the Form FA was filed for the purpose of withdrawal of the CIRP process. The IRP had requested the Operational Creditor to sign Form FA, but the Operational Creditor refused. The IRP, therefore, signed Form FA in the interest of maintaining the Corporate Debtor as a going concern. The Operational Creditor contended that only the applicant could file Form FA, and the IRP was not empowered to file the withdrawal application without the applicant's consent.

Judgment:
The Tribunal held that the application for withdrawal of CIRP under Section 12A must be filed by the applicant who initiated the CIRP, and it must be approved by 90% of the voting share of the CoC. In this case, although the CoC approved the withdrawal with 100% voting share, the application was not filed by the original applicant (Operational Creditor). Therefore, the application filed by the IRP was not maintainable. The Tribunal rejected the prayer of the IRP to allow the withdrawal of the Company Petition and dismissed the application.

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