Tribunal Upholds CIRP Withdrawal Order under Section 12A, Confirms CoC Approval

The Tribunal upheld the impugned order allowing withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A. The decision was based on the approval of withdrawal in the Committee of Creditors meeting with 92% voting in favor, meeting the requirements of the I&B Code. The Tribunal found that legal procedures and principles of natural justice were followed, rejecting claims of non-adherence. The validity of claims and voting rights in the CoC were upheld, and the Tribunal affirmed its limited jurisdiction to interfere with CoC decisions, ultimately dismissing the appeal and closing the related stay application.

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Issues Involved:
1. Legitimacy of the Impugned Order Allowing Withdrawal of CIRP under Section 12A.
2. Compliance with Legal Procedures and Principles of Natural Justice.
3. Validity of Claims and Voting Rights in the Committee of Creditors.
4. Jurisdiction and Authority of the Adjudicating Tribunal.

Summary:

Legitimacy of the Impugned Order Allowing Withdrawal of CIRP under Section 12A:
The Appellant, M/s. Mayuras Industrial Services, challenged the impugned order dated 02.11.2022 by the Adjudicating Authority/NCLT, which allowed the withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A. The Tribunal noted that the withdrawal was approved in the CoC meeting held on 06.06.2022 with 92% voting in favor, satisfying the requirement under Section 12A of the I&B Code, 2016.

Compliance with Legal Procedures and Principles of Natural Justice:
The Appellant argued that the Adjudicating Authority passed the order mechanically without considering the legal points and facts, and without the consent of the Appellant. The Appellant claimed that the principles of natural justice were not adhered to, as their objections were not recorded, and the order was passed without due process. However, the Tribunal found that the Adjudicating Authority had followed due process as per Rule 8 of the Insolvency & Bankruptcy (Application to Adjudicating Authority Rules), 2016.

Validity of Claims and Voting Rights in the Committee of Creditors:
The Appellant contended that claims by M/s. SS Metal Co and M/s. Amsa Agencies & Services were admitted without proper condonation of delay, affecting the voting rights. The Tribunal observed that the CoC, in its third meeting on 06.06.2022, approved the settlement agreement and resolved to withdraw the CIRP with 92% voting rights, which included the claims admitted by the Resolution Professional.

Jurisdiction and Authority of the Adjudicating Tribunal:
The Appellant argued that the Tribunal had no equity jurisdiction to pass suo moto orders without following the due process prescribed under the I&B Code. The Tribunal highlighted that its jurisdiction under Section 12 is limited and it must allow withdrawal if the CoC approves it with more than 90% voting share. The Tribunal referenced the Supreme Court's judgment in Vallal RCK V M/s. Siva Industries and Holdings, emphasizing non-interference with the commercial wisdom of the CoC.

Conclusion:
The Tribunal concluded that the Adjudicating Authority/NCLT, Division Bench II, Chennai, had rightly allowed the application for withdrawal of CIRP under Section 12A, as the conditions were met and the process was free from legal infirmities. The appeal was dismissed, and the connected IA 45/2023 (for stay) was closed.

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