2021 (12) TMI 12 - AT - Insolvency and Bankruptcy

Tribunal sets aside order, remands for fresh consideration, parties to present arguments. Pending applications closed, interim order vacated.

The Tribunal allowed the appeal, set aside the impugned order, and directed the Adjudicating Authority to restore the application to its file for fresh ... Seeking withdrawal of application - grievance of the Appellant is that the 1st Respondent had assumed the role of an ‘Adjudicating Authority’ applied his judicial mind and dismissed it prayer to place the information available with him before the ‘Adjudicating Authority’, as regards the withdrawal - Regulation 30A and 12A of the IBC, 2016 - HELD THAT:- The reality of the matter is that the Appellant, the Assignee of ‘JSB’, standing in the shoes of ‘JSBL’, will become an ‘Applicant’ in so far as the withdrawal is concerned as per Regulation 30A and 12A of the IBC, 2016. If the Regulation 30A(1)(a) is pressed into service then it is incumbent on the part of the Interim Resolution Professional/Resolution Professional to constitute the ‘Committee of Creditors’. Furthermore, in the instant case it can safely and securely be said that 1st Respondent/Resolution Professional by constituting ‘Committee of Creditors’ on 27.08.2020 as thwarted an endeavour of the Appellant in seeking a pre Committee of Creditors constitution withdrawal as per Regulation 30A(1)(a). Suffice it for this Tribunal to make a pertinent mention as the 1st Respondent/Resolution Professional, by constituting the Committee of Creditors after the submission of Form A, the 1st Respondent had acted not in tune with the intention of the Amendment dated 25.07.2019 brought in the CIRP Regulations, 2016. This ‘Tribunal’ keeping in mind a pivotal fact that the Appellant/Assignee of ‘JSBL’, is an ‘Applicant’ for the purpose of ‘CIRP Regulations’ and also considering the fact that the ‘person’ to whom debt has been legally assigned or transferred is also a ‘Financial Creditor’ as per Section 5(7) of the I&B Code, 2016, there is no impediment in Law for it to reap the benefit of amendment to Regulation 30A(1) of CIRP Regulations - this Tribunal interferes with the impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Mumbai) and set aside the same. Appeal allowed - decided in favor of appellant. Issues Involved:1. Validity of the Interim Resolution Professional's (IRP) actions.2. Compliance with Regulation 30A(1)(a) and 30A(3) of CIRP Regulations, 2016.3. Constitution of the Committee of Creditors (COC).4. Withdrawal of Corporate Insolvency Resolution Process (CIRP) application.5. Role and duties of the Resolution Professional (RP).Issue-wise Detailed Analysis:1. Validity of the Interim Resolution Professional's (IRP) Actions:The Appellant contended that the IRP acted unfairly by not presenting the withdrawal application before the Adjudicating Authority and instead constituting the COC on 27.08.2020, thereby thwarting the Appellant's attempt to withdraw the CIRP before the COC's constitution. The Tribunal noted that the IRP's actions were not in alignment with the intention of the Amendment dated 25.07.2019 brought in the CIRP Regulations, 2016, which aimed to facilitate withdrawal applications before the COC's constitution.2. Compliance with Regulation 30A(1)(a) and 30A(3) of CIRP Regulations, 2016:The Appellant argued that it had complied with Regulation 30A(1)(a) by submitting Form FA and a DD for Rs. 3 lakhs towards the CIRP cost before the COC's constitution. The Tribunal found that the Appellant, as an assignee of the original financial creditor, was entitled to seek withdrawal under Regulation 30A(1)(a). The IRP's insistence on a substitution application was deemed unnecessary and contrary to the regulations.3. Constitution of the Committee of Creditors (COC):The Tribunal observed that the IRP constituted the COC on 27.08.2020, despite the Appellant's submission of the withdrawal application on 26.08.2020. The Tribunal held that the IRP's action of constituting the COC after the submission of Form FA was not in tune with the intention of the regulations and thwarted the Appellant's attempt to withdraw the CIRP before the COC's constitution.4. Withdrawal of Corporate Insolvency Resolution Process (CIRP) Application:The Tribunal emphasized that the Appellant, as the assignee of the original financial creditor, stood in the shoes of the assignor and was entitled to seek withdrawal of the CIRP. The Tribunal referred to various judicial pronouncements, including the Hon'ble Supreme Court's observations in Swiss Ribbons Pvt Ltd vs. Union of India, which clarified that withdrawal applications could be allowed even after the issue of invitation for Expression of Interest under Regulation 36A in exceptional cases.5. Role and Duties of the Resolution Professional (RP):The Tribunal reiterated that the RP has only administrative powers and not adjudicatory powers. The RP's duty is to act as a facilitator of the resolution process and to submit applications and documents before the Adjudicating Authority or the COC. The Tribunal found that the IRP, in this case, had overstepped his administrative role by rejecting the withdrawal application and constituting the COC, thereby acting contrary to the provisions of the Code and the CIRP Regulations.Conclusion:The Tribunal allowed the appeal, set aside the impugned order passed by the Adjudicating Authority, and directed the Adjudicating Authority to restore IA No. 1198/2020 in CP(IB) No.3049/MB.IV/2019 to its file and pass orders afresh on merits, providing due opportunity to respective sides to raise all factual pleas, in accordance with law as expeditiously as possible. All pending IAs in the instant appeal were closed, and the interim order granted earlier was vacated.