Pre-CoC insolvency withdrawal may be allowed using inherent powers, with reasonable fees payable to the interim resolution professional.

Before constitution of the Committee of Creditors, the Tribunal may allow withdrawal or settlement of a corporate insolvency resolution process by exercising inherent powers under Rule 11. The procedural mechanism under Section 12A of the Insolvency and Bankruptcy Code and Regulation 30A was treated as directory in that situation, because the consent framework did not arise without a constituted Committee of Creditors. The interim resolution professional was also found entitled to reasonable fees and expenses for work performed during the process, and a fair quantified amount was fixed on the facts where detailed expenditure particulars were not available. The insolvency proceedings were therefore terminated on settlement, subject to payment of the professional's costs.

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Issues: (i) whether withdrawal of the corporate insolvency resolution process could be permitted before constitution of the Committee of Creditors by invoking the Tribunal's inherent powers; (ii) whether the interim resolution professional was entitled to be paid fees and expenses for the period during which the process had operated.

Issue (i): whether withdrawal of the corporate insolvency resolution process could be permitted before constitution of the Committee of Creditors by invoking the Tribunal's inherent powers.

Analysis: Before constitution of the Committee of Creditors, the Tribunal may entertain a request for withdrawal or settlement in exercise of its inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016. The procedure contemplated under Section 12A of the Insolvency and Bankruptcy Code, 2016 and Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 was treated as directory in the circumstances, and the absence of a constituted Committee of Creditors meant that the consent mechanism under that framework did not arise.

Conclusion: The withdrawal was permitted and the insolvency petition was held to stand withdrawn.

Issue (ii): whether the interim resolution professional was entitled to be paid fees and expenses for the period during which the process had operated.

Analysis: The Tribunal accepted that the interim resolution professional had functioned for the relevant period and that reasonable remuneration and expenses had to be fixed for the work performed. In the absence of detailed expenditure particulars, a fair and reasonable fee was determined on the facts of the case.

Conclusion: The applicant was directed to pay the interim resolution professional the quantified fee and expenses fixed by the Tribunal.

Final Conclusion: The insolvency proceedings were terminated on the basis of settlement before constitution of the Committee of Creditors, while safeguarding payment of the interim resolution professional's reasonable costs.

Ratio Decidendi: Where the Committee of Creditors has not yet been constituted, withdrawal or settlement may be allowed by the Tribunal in exercise of inherent powers, and the procedural requirements for withdrawal under the Code do not operate as an absolute bar.

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