Tribunal dismisses applications for breaching CoC rules under Insolvency and Bankruptcy Code

The Tribunal dismissed both IA/298/CHE/2021 and IA/601/CHE/2021, ruling that the Interim Resolution Professional did not breach any orders in forming the Committee of Creditors (CoC). The Corporate Debtor's settlement with the Operational Creditor after the CoC's constitution without adhering to the required procedures under Section 12A of the Insolvency and Bankruptcy Code, 2016 rendered the applications unenforceable attempts to delay the Corporate Insolvency Resolution Process.

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Issues Involved:
1. Whether the constitution of the Committee of Creditors (CoC) by the Interim Resolution Professional (IRP) was in violation of the orders passed by the Tribunal and the Appellate Tribunal.
2. Whether the Application filed under Section 12A of the Insolvency and Bankruptcy Code (IBC), 2016 is maintainable.

Detailed Analysis:

Issue 1: Constitution of the Committee of Creditors (CoC) by the IRP
- The Corporate Debtor filed IA/298/CHE/2021 under Section 12A of IBC, 2016 seeking withdrawal of the insolvency application. The Hon’ble NCLAT had granted the Corporate Debtor ten days to file the Section 12A application and stayed the constitution of the CoC if not already constituted.
- The Corporate Debtor filed the application within the stipulated time. However, the IRP constituted the CoC on 12.04.2021, citing the expiration of the ten-day period.
- The Operational Creditor objected, stating that the Corporate Debtor filed the application without settling the debt and without the required Form-FA.
- The Tribunal noted that the CoC was constituted due to the uncertainty over the application and the non-settlement of the debt by the Corporate Debtor. The Corporate Debtor settled the debt only on 26.04.2021, after the CoC was constituted.
- The Tribunal concluded that the constitution of the CoC on 12.04.2021 was not illegal or unconstitutional as there was no stay in operation on that date.

Issue 2: Maintainability of the Application under Section 12A of IBC, 2016
- The Corporate Debtor’s application under Section 12A was not accompanied by Form-FA and faced objections from the Operational Creditor for being filed directly without settling the debt.
- The Tribunal observed that the Hon’ble NCLAT had granted ten days for filing the Section 12A application, and the matter should have been settled within that time.
- The Tribunal noted that since the CoC was constituted, any settlement proposal should have been placed before the CoC and required 90% approval from its members.
- The Tribunal held that the application under Section 12A without the requisite approval from the CoC was not maintainable. The applications were deemed attempts to delay the CIRP process.

Conclusion:
- The Tribunal dismissed both IA/298/CHE/2021 and IA/601/CHE/2021, noting that the IRP had not violated any orders in constituting the CoC and that the Corporate Debtor’s settlement with the Operational Creditor occurred post-constitution of the CoC without following the mandated procedure under Section 12A of IBC, 2016.

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