Tribunal Allows Company Petition Withdrawal & Partial Resolution Plan, Emphasizes Equitable IBC Interpretation

The Tribunal allowed the withdrawal of the Company Petition under Section 12A of the IBC, subject to a litigation cost. The withdrawal of the Resolution Plan was partially allowed with a forfeiture of half the earnest money deposit. The OTS offer by the ex-director was found to be beneficial for all stakeholders, ensuring full recovery of the debt. The Tribunal emphasized the importance of a practical and purposive interpretation of the IBC provisions to achieve equitable results.

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Issues Involved:
1. Withdrawal of Company Petition under Section 12A of IBC.
2. Withdrawal of Resolution Plan by the Resolution Applicant.
3. Offering of One Time Settlement (OTS) by ex-director of the Corporate Debtor.

Issue-Wise Detailed Analysis:

1. Withdrawal of Company Petition under Section 12A of IBC:
The primary issue was whether the applicant who filed a petition under Section 10 of the Insolvency and Bankruptcy Code (IBC) could withdraw the same under Section 12A. The applicant, a member of the suspended Board of Directors of SBM Paper Mills, sought to withdraw the petition and offered a One Time Settlement (OTS) to the sole financial creditor, Allahabad Bank. The Tribunal noted that Section 12A allows withdrawal of applications with the approval of 90% voting share of the Committee of Creditors (CoC). The applicant had made an improved OTS offer of Rs. 17 crores, which was later increased to Rs. 18 crores, and deposited Rs. 1 crore as upfront payment. The Tribunal found that the withdrawal was beneficial for all stakeholders, as it ensured 100% recovery of dues without a haircut. The Tribunal allowed the withdrawal application, subject to a litigation cost of Rs. 5,00,000 to be paid to MCA/NCLT.

2. Withdrawal of Resolution Plan by the Resolution Applicant:
The second issue was whether the Resolution Applicant, M/s. Khandesh Roller Flour Mills Pvt. Ltd., could withdraw its Resolution Plan, which had already been approved by the CoC. The Tribunal noted that allowing such a withdrawal could lead to liquidation, which was not in the best interest of the stakeholders. The Tribunal emphasized that such attempts should be discouraged and partially forfeited the earnest money deposit of Rs. 50 lakhs, retaining Rs. 25 lakhs for CIRP costs and related expenses. The Tribunal denied the complete return of the earnest money to the Resolution Applicant.

3. Offering of One Time Settlement (OTS) by ex-director of the Corporate Debtor:
The third issue was whether the ex-director of the Corporate Debtor, who was qualified under Section 29A of the IBC, could offer an OTS to the financial creditor. The Tribunal noted that the applicant was not a "wilful defaulter" and had the control and supervision over the financial affairs of the Corporate Debtor. The CoC and Allahabad Bank found the OTS offer more economically advantageous compared to the Resolution Plan. The Tribunal concluded that the OTS proposal was in the best interest of the Corporate Debtor and all stakeholders, ensuring 100% recovery of the debt.

Conclusion:
The Tribunal allowed the withdrawal of the Company Petition under Section 12A of the IBC, subject to a litigation cost. The withdrawal of the Resolution Plan was partially allowed with a forfeiture of half the earnest money deposit. The OTS offer by the ex-director was found to be beneficial for all stakeholders, ensuring full recovery of the debt. The Tribunal emphasized the importance of a practical and purposive interpretation of the IBC provisions to achieve equitable results.

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