Partial Relief Granted in Insolvency Withdrawal Application, CoC Constitution Challenge Upheld

The application under Section 12A of the IB Code seeking withdrawal of the Corporate Insolvency Resolution Process was partially allowed, granting relief for dismissal of the process and discharge of the RP. The challenge to the CoC constitution was upheld, declaring it void ab initio due to lack of claimants, allowing the Operational Creditor to file a withdrawal application. The RP's delayed filing of Form FA without reason was criticized, along with the failure to inform the Adjudicating Authority promptly, resulting in wastage of time and resources. The judgment emphasized the importance of timely actions and efficient communication in insolvency proceedings.

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Issues:
1. Application filed under Section 12A of the IB Code, 2016 for withdrawal of Corporate Insolvency Resolution Process.
2. Challenge to the constitution of Committee of Creditors (CoC) by Suspended Management.
3. Delay in filing Form FA for withdrawal of Corporate Insolvency Process.
4. Failure to inform the Adjudicating Authority about the withdrawal application.

Analysis:
1. The application was filed under Section 12A of the IB Code, 2016 seeking withdrawal of the Corporate Insolvency Resolution Process. The Resolution Professional (RP) prayed for dismissal of the application, discharge as RP, review of certain orders, and any other relief deemed fit by the Adjudicating Authority. The application was partially allowed, granting relief only with respect to dismissal of the Corporate Insolvency Process and discharge of the RP.

2. The constitution of the CoC, with a sole member Mukeshbhai Desai, was challenged by the Suspended Management. The challenge was upheld, declaring the CoC constitution as void ab initio due to lack of other claimants and the Corporate Debtor being a going concern. The Operational Creditor was granted liberty to file a withdrawal application, leading to the subsequent filing by the RP.

3. The RP filed the withdrawal application along with Form FA dated 16.03.2020 after a significant delay of about four months. The delay in filing the form without providing any reason was noted as surprising. Additionally, the RP failed to mention the filing of Form FA during the pendency of the challenge to the CoC constitution, which led to wastage of time and resources.

4. The RP's failure to inform the Adjudicating Authority about the filing of Form FA and the withdrawal application during the pendency of the challenge to the CoC constitution was highlighted. The RP's actions were deemed unacceptable for wasting time, money, and resources. The application was disposed of with observations on the partial allowance of certain prayers while rejecting others.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal, including the withdrawal of the Corporate Insolvency Resolution Process, challenge to the CoC constitution, delay in filing necessary forms, and the RP's failure to inform the Adjudicating Authority in a timely manner.

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