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Issues: (i) Whether the interim resolution professional was bound to submit the withdrawal application to the adjudicating authority within three days of receiving Form FA, and whether delay could be justified because claims from creditors were still being received. (ii) Whether withdrawal of the corporate insolvency resolution process could be permitted before constitution of the committee of creditors, and whether the adjudicating authority could direct settlement of claims of creditors not before it or treat the filing as misconduct.
Issue (i): Whether the interim resolution professional was bound to submit the withdrawal application to the adjudicating authority within three days of receiving Form FA, and whether delay could be justified because claims from creditors were still being received.
Analysis: Section 12A of the Insolvency and Bankruptcy Code, 2016, read with Regulation 30A(3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, requires the interim resolution professional to place the withdrawal application before the adjudicating authority within three days of receipt. The pendency of the last date for filing claims does not dilute that obligation once Form FA is received. The withdrawal request having been moved within the prescribed time, the procedural duty stood complied with.
Conclusion: The interim resolution professional was duly bound to file the withdrawal application within three days, and the filing was treated as valid compliance with the governing procedure.
Issue (ii): Whether withdrawal of the corporate insolvency resolution process could be permitted before constitution of the committee of creditors, and whether the adjudicating authority could direct settlement of claims of creditors not before it or treat the filing as misconduct.
Analysis: Before constitution of the committee of creditors, withdrawal or settlement may be considered by the adjudicating authority in exercise of its inherent powers. The proceeding remains collective in nature, but the absence of a constituted committee does not bar withdrawal. The adjudicating authority was held not to possess power, while allowing withdrawal, to compel settlement of all other outstanding claims. On the facts, no misconduct was found in the interim resolution professional's conduct in filing the application within time.
Conclusion: Withdrawal of the insolvency process was permitted before constitution of the committee of creditors, no direction for settlement of third-party claims was sustained, and no misconduct was found against the interim resolution professional.
Final Conclusion: The corporate insolvency resolution process was withdrawn and the company was released from CIRP, with the impugned cost direction set aside.
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