Tribunal Approves CIRP Withdrawal After Settlement; Operational Creditor Penalized for Procedural Errors.

The Tribunal permitted the withdrawal of the CIRP following a settlement between the Operational Creditor and the Corporate Debtor, imposing a cost on the Operational Creditor for procedural lapses. The IRP's request to expunge remarks of negligence was denied, underscoring the necessity for diligence and responsibility in the IRP's duties.

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Issues Involved:
1. Conduct of the Operational Creditor and its impact on the CIRP.
2. Appointment and awareness of the IRP.
3. Communication of the Tribunal's Order.
4. Extension of the CIRP period.
5. Withdrawal of the CIRP under Section 12A of IBC, 2016.
6. Remarks against the IRP and their expungement.
7. Role and responsibilities of the IRP.
8. Invocation of legal maxims and their applicability.

Detailed Analysis:

1. Conduct of the Operational Creditor and its impact on the CIRP:
The Tribunal noted that the Operational Creditor's actions subverted the entire Corporate Insolvency Resolution Process (CIRP). The Operational Creditor failed to communicate the initiation of the CIRP to the Interim Resolution Professional (IRP), leading to significant delays and inefficiencies in the process.

2. Appointment and awareness of the IRP:
The Tribunal admitted the petition filed by the Operational Creditor and initiated the CIRP against the Corporate Debtor on 14.03.2019. The Tribunal appointed Mr. Rajagurusami Maheswaran as the IRP from an empanelled list provided by the Insolvency and Bankruptcy Board of India (IBBI), as no IRP was proposed by the Operational Creditor.

3. Communication of the Tribunal's Order:
The Tribunal's Order, including the appointment of the IRP, was communicated to the parties on 19.03.2019. However, the IRP claimed that the email containing the Order was lodged in the "SPAM Folder" of his mailbox, leading to his unawareness of the appointment until November 2019.

4. Extension of the CIRP period:
The IRP sought an extension of the CIRP period, arguing that the communication delay warranted an exclusion of 275 days from the CIRP timeline. The Tribunal, in its Order dated 09.03.2020, declined the extension, citing "all-round dereliction of duty" and negligence by both the Operational Creditor and the IRP.

5. Withdrawal of the CIRP under Section 12A of IBC, 2016:
The Operational Creditor and the Corporate Debtor reached a settlement, and the Operational Creditor filed for withdrawal of the CIRP under Section 12A of IBC, 2016. The Tribunal allowed the withdrawal, noting that the Operational Creditor had received a full and final settlement of Rs. 4,00,000/-. However, the Tribunal directed the Operational Creditor to remit Rs. 10,000/- to the "PM CARES FUND" for failing to timely inform the IRP.

6. Remarks against the IRP and their expungement:
The IRP sought to expunge remarks of "dereliction of duty and absolute negligence" made against him in the Tribunal's Order dated 09.03.2020. The Tribunal reiterated that the IRP's failure to check his email diligently resulted in significant delays, and thus, the remarks were justified and could not be expunged.

7. Role and responsibilities of the IRP:
The Tribunal emphasized the critical role of the IRP in the CIRP process, highlighting the duties under Sections 17 and 18 of IBC, 2016. The IRP's inaction and failure to constitute the Committee of Creditors (CoC) in a timely manner were seen as serious lapses impacting the CIRP's progress.

8. Invocation of legal maxims and their applicability:
The IRP invoked the maxim "actus curiae neminem gravabit" (acts of the court should prejudice none) to argue that the delay was due to the Tribunal's communication landing in the spam folder. The Tribunal rejected this plea, citing precedents where similar excuses were not accepted, and held that the IRP's negligence in checking his email was the primary cause of the delay.

Conclusion:
The Tribunal allowed the withdrawal of the CIRP but imposed a cost on the Operational Creditor for procedural lapses. The IRP's application to expunge remarks against him was dismissed, reinforcing the importance of diligence and responsibility in the role of an IRP.

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