Section 12A withdrawal requires creditor action; Tribunal cannot compel insolvency withdrawal on an unfinalised settlement.

Withdrawal of an admitted insolvency application under Section 12A of the Insolvency and Bankruptcy Code can be sought only by the creditor who filed the proceeding, with the required committee approval, and the Tribunal's inherent powers cannot be used to compel withdrawal at the corporate debtor's instance. Rule 11 of the NCLT Rules does not override that statutory withdrawal mechanism. On the facts, the parties had only negotiated a possible settlement and no final signed settlement was shown, so the Tribunal declined to direct acceptance of the draft terms or compel withdrawal, while allowing the parties to continue settlement discussions in accordance with law.

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Issues: Whether the corporate debtor could invoke the Tribunal's inherent powers to compel the operational creditor to file a withdrawal application under Section 12A of the Insolvency and Bankruptcy Code, 2016 on the basis of an alleged settlement, and whether the Tribunal could direct the parties to proceed on an unsigned draft settlement.

Analysis: Section 12A permits withdrawal of an admitted insolvency application only on an application made by the applicant with the approval of the committee of creditors. The Tribunal held that the expression "applicant" in this context refers to the creditor who instituted the insolvency proceeding and not the corporate debtor. It further held that Rule 11 of the National Company Law Tribunal Rules, 2016 can be invoked only where the underlying relief is otherwise maintainable and cannot be used to override the specific withdrawal mechanism in Section 12A. On the facts, the correspondence showed negotiations and an attempted settlement, but the Tribunal found that the settlement was not unequivocally finalised or signed. The Tribunal also declined to compel the operational creditor to accept the draft terms or to forgo claims that had not been lawfully settled.

Conclusion: The corporate debtor was not entitled to a direction compelling withdrawal under Section 12A, but was permitted to pursue further settlement talks with the operational creditor, who was left free to consider such proposal in accordance with law.

Final Conclusion: The application was only partially accepted to the limited extent of permitting further settlement efforts, while the prayer for a coercive direction to withdraw the insolvency proceedings was not granted.

Ratio Decidendi: Withdrawal of an admitted insolvency application can be sought only by the applicant creditor under the statutory mechanism in Section 12A, and the Tribunal's inherent powers cannot be used to compel withdrawal on the basis of an unfinalised settlement.

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