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Issues: (i) Whether the objecting operational creditors had locus to oppose withdrawal of the CIRP application under section 12A before constitution of the Committee of Creditors. (ii) Whether withdrawal of the CIRP was permissible on the basis of settlement and Form FA, with the interim resolution professional having been paid in full.
Issue (i): Whether the objecting operational creditors had locus to oppose withdrawal of the CIRP application under section 12A before constitution of the Committee of Creditors.
Analysis: Withdrawal of insolvency proceedings before constitution of the Committee of Creditors is governed by the tribunal's power to permit or settlement on an assessment of the relevant facts. The objections were treated as not creating a bar to consideration of the withdrawal request, particularly when the insolvency process had not progressed to the stage of creditor committee constitution and the objectors could pursue their own pending section 9 proceedings independently.
Conclusion: The objection to maintainability was rejected and the objectors were held not to prevent consideration of the withdrawal application.
Issue (ii): Whether withdrawal of the CIRP was permissible on the basis of settlement and Form FA, with the interim resolution professional having been paid in full.
Analysis: The settlement between the operational creditor and the suspended directors, the filing of Form FA, and payment of the interim resolution professional's fees constituted sufficient material for allowing withdrawal. The decision proceeded on the settled principle that, before constitution of the Committee of Creditors, the tribunal may permit withdrawal in exercise of its inherent powers after considering the relevant facts and the interests of stakeholders.
Conclusion: Withdrawal of the CIRP was allowed, the corporate insolvency process stood withdrawn, and the interim resolution professional was discharged.
Final Conclusion: The insolvency resolution process was terminated on the basis of settlement, while the objections were dismissed with costs, leaving the corporate debtor outside the rigours of the insolvency process.
Ratio Decidendi: Before constitution of the Committee of Creditors, the adjudicating authority may allow withdrawal of insolvency proceedings on settlement if the relevant facts support such course, and third-party objections do not by themselves defeat the withdrawal request.
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