Tribunal: Promoters can settle under Section 12A without ineligibility. Seizure of assets possible if linked to crime.

The Tribunal clarified that Section 29A does not apply to Section 12A applications, allowing promoters/shareholders to settle under Section 12A without being subject to ineligibility criteria. Enforcement authorities can seize assets if linked to crime, but promoters can pay creditors from personal assets not under seizure. Adverse remarks against the Resolution Professional were expunged, and fees will be paid by Andhra Bank on behalf of the CoC. The Resolution Professional will manage the company until Section 12A compliance. The liquidation order was set aside, permitting the withdrawal of the Section 7 application by Andhra Bank upon payment to stakeholders.

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Issues Involved:
1. Applicability of Section 29A of the Insolvency and Bankruptcy Code (I&B Code) to Section 12A applications.
2. Eligibility of promoters to file applications under Section 12A.
3. Role of the Enforcement Directorate and other authorities in relation to the assets of the Corporate Debtor.
4. Observations against the Resolution Professional.
5. Determination and payment of fees and resolution costs.
6. Management of the Corporate Debtor until compliance with Section 12A terms.

Detailed Analysis:

1. Applicability of Section 29A to Section 12A Applications:
The core issue was whether Section 29A, which deals with the ineligibility of a "resolution applicant," applies to applications for withdrawal under Section 12A. The judgment clarified that Section 29A is not applicable when considering an application under Section 12A. The Tribunal noted that Section 29A pertains to the eligibility criteria for submitting a resolution plan and does not extend to withdrawal applications approved by the Committee of Creditors (CoC) with more than 90% voting share.

2. Eligibility of Promoters to File Applications under Section 12A:
The Tribunal held that promoters/shareholders are entitled to settle the matter under Section 12A and can withdraw the application under Section 7 or 9 if approved by the CoC. The ineligibility criteria under Section 29A do not apply to such withdrawal applications. The Tribunal emphasized that the Adjudicating Authority (NCLT) erred in rejecting the application on the grounds of ineligibility under Section 29A, as the provision is not relevant for Section 12A applications.

3. Role of the Enforcement Directorate and Other Authorities:
The Tribunal acknowledged the submissions from the Enforcement Directorate (ED) and other authorities investigating the Corporate Debtor and its promoters. It was noted that if the assets of the Corporate Debtor are based on the proceeds of crime, the ED can seize such assets under the Prevention of Money Laundering Act, 2002 (PMLA). However, this does not prevent promoters from paying creditors from their individual assets, provided these assets are not subject to restraint by the ED.

4. Observations Against the Resolution Professional:
The Tribunal expunged all observations made against Mr. Sundaresh Bhat, the Resolution Professional, in the impugned order dated 8th May 2019. This decision was in line with setting aside the order of liquidation, thereby removing any adverse remarks against the Resolution Professional.

5. Determination and Payment of Fees and Resolution Costs:
The Tribunal directed the CoC to determine the fees and resolution costs of the Resolution Professional/Liquidator, which would be paid by Andhra Bank on behalf of the CoC. Andhra Bank may adjust these costs with other CoC members.

6. Management of the Corporate Debtor Until Compliance with Section 12A Terms:
The Tribunal ordered that until the terms and conditions under Section 12A are complied with, the Resolution Professional will manage the company, ensuring it remains a going concern and its assets are protected.

Conclusion:
The Tribunal set aside the order of liquidation and allowed the withdrawal of the application under Section 7 by Andhra Bank, subject to the payment of amounts by the promoters/shareholders to all stakeholders. The proceedings under PMLA and actions by other authorities will continue unaffected by this settlement. The appeals were disposed of with the aforementioned observations and directions.

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