Application to terminate Insolvency Resolution Process dismissed for procedural non-compliance.

The application to terminate the Insolvency Resolution Process was dismissed as not maintainable by the Tribunal. Despite a settlement between the Corporate Debtor and Operational Creditor, the application was filed by the Suspended Board of Directors, not the authorized applicant. The Tribunal emphasized compliance with Section 12A and Regulation 30A, requiring withdrawal applications to be filed through the Interim Resolution Professional by the initiating party. Consequently, the application was deemed not maintainable based on procedural non-compliance.

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Issues Involved:
1. Termination of the Insolvency Resolution Process (CIRP).
2. Settlement between the Corporate Debtor and Operational Creditor.
3. Legal provisions regarding withdrawal of insolvency applications.
4. Role and procedure involving the Interim Resolution Professional (IRP).
5. Maintainability of the application filed by the Suspended Board of Directors.

Issue-wise Detailed Analysis:

1. Termination of the Insolvency Resolution Process (CIRP):
The promoters, shareholders, and suspended directors of the Corporate Debtor filed an application to terminate the Insolvency Resolution Process initiated on 13-02-2020. They argued that the outstanding amount owed to the Operational Creditor had been amicably settled, and the Operational Creditor had no further grievances. The Tribunal noted that under the law settled by the Hon'ble Supreme Court in the case of Swiss Ribbons, it is empowered to terminate the Resolution Process based on a settlement before the Committee of Creditors (CoC) meeting.

2. Settlement between the Corporate Debtor and Operational Creditor:
The application highlighted that the Corporate Debtor and Operational Creditor had entered into a Settlement Agreement on 26.02.2020, which included the payment of Rs. 6,00,000 to the Operational Creditor. The Operational Creditor agreed to withdraw the insolvency petition and support the termination of the CIRP. The Tribunal examined the terms of the settlement and noted that the Operational Creditor had no objections to the termination of the CIRP.

3. Legal provisions regarding withdrawal of insolvency applications:
The Tribunal referred to Section 12A of the Insolvency and Bankruptcy Code, 2016, which allows the withdrawal of an application admitted under Sections 7, 9, or 10 with the approval of ninety percent voting share of the CoC. Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, outlines the procedure for withdrawal, including the requirement for the application to be filed through the IRP.

4. Role and procedure involving the Interim Resolution Professional (IRP):
The IRP submitted that he had already received claims from Financial Creditors and resolution plans after the constitution of the CoC. He contended that the application was filed without informing him, which was against Regulation 30A, mandating that such applications be filed through the IRP. The Tribunal emphasized that the application for withdrawal should be submitted by the applicant who initiated the insolvency process, through the IRP, using Form FA.

5. Maintainability of the application filed by the Suspended Board of Directors:
The Tribunal observed that the present application was filed by the Suspended Board of Directors of the Corporate Debtor, not by the Operational Creditor who initiated the insolvency proceedings. According to Section 12A and Regulation 30A, only the applicant who filed the original insolvency application is authorized to file for withdrawal. As the application was not filed in accordance with these provisions, it was deemed not maintainable.

Conclusion:
The Tribunal concluded that the present application did not comply with the specific provisions of Section 12A and Regulation 30A of the CIRP Regulations. Consequently, the application was dismissed as not maintainable.

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