Operational Creditor's Application for Withdrawal Dismissed for Procedural Non-Compliance

The Tribunal dismissed the Operational Creditor's application seeking withdrawal under Rule 11, as it did not comply with the prescribed procedures of Section 12A and Regulation 30A of the IBC. Despite claiming settlement with the Corporate Debtor, the application was filed directly without involving the IRP, contrary to the specified withdrawal process. The Tribunal emphasized the necessity of following statutory provisions for withdrawal applications to maintain procedural fairness and legal compliance.

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Issues:
Withdrawal of application under Section 12A of IBC, 2016 and Regulation 30A of CIRP Regulations.

Analysis:
The judgment pertains to a CA filed by the Operational Creditor seeking withdrawal of the application under Rule 11 of the NCLT Rules, 2016. The Operational Creditor claimed to have settled the matter with the Corporate Debtor and requested permission to withdraw the case after recording the terms of settlement. The Operational Creditor argued that since a settlement had been reached, there was no need to involve the Insolvency Resolution Professional (IRP) or constitute the Committee of Creditors (COC) based on previous orders. The Tribunal examined the provisions of Section 12A and Regulation 30A, which govern the withdrawal of applications admitted under Section 7, 9, or 10 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal highlighted the specific procedures outlined for withdrawal applications before and after the constitution of the COC.

The Tribunal noted that Section 12A allows for the withdrawal of applications admitted under Section 7, 9, or 10 of the IBC, while Regulation 30A specifies the process for such withdrawals. The judgment emphasized that withdrawals are permissible under two circumstances: before the admission of the application and before the constitution of the COC, or after admission and after the COC's constitution and the IRP's appointment. In this case, the application was admitted, the IRP was appointed, and the Operational Creditor was directed to deposit a specified amount. However, the Operational Creditor directly filed the application under Rule 11 without involving the IRP, contrary to the prescribed procedures under Section 12A and Regulation 30A.

The Tribunal concluded that the Operational Creditor did not follow the mandated procedures for withdrawal under Section 12A and Regulation 30A. Despite citing previous decisions in support of their position, the Tribunal found that those cases differed from the present scenario. As the present application was not filed in accordance with the statutory provisions, the Tribunal deemed it not maintainable and dismissed the application accordingly. The judgment underscores the importance of adhering to the prescribed legal procedures for withdrawal applications under the IBC and CIRP Regulations to ensure compliance with the law and procedural fairness.

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