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of <h1>Order to decide CIRP withdrawal under Regulation 30A(2)(a) within one week, leaving merits for independent adjudication</h1> NCLAT directed the adjudicating tribunal seized of I.A. No. 837 of 2024, concerning withdrawal of the CIRP under Regulation 30A(2)(a) (furnishing a bank ... Withdrawal of the CIRP of the CD which was admitted into CIRP - furnishing of bank guarantee or pay an amount towards CIRP costs, under Regulation 30A(2)(a) of the CIRP Regulations - HELD THAT:- The grievance of the Appellant shall be addressed by issuing a direction to the Tribunal, seized of the application bearing I.A No. 837 of 2024, in which the order has already been reserved, to decide the said application as early as possible but preferably within a period of one week. It is however made clear to the parties as well as to the Tribunal that while disposing of this appeal we have not made any observation anywhere in the order on the merit of the case - The Tribunal has to take the decision independently about the application in question pending before it for adjudication. Petition disposed off. ISSUES: Whether the classification of a creditor as an Operational Creditor or Financial Creditor under the Insolvency and Bankruptcy Code, 2016 (IBC) can be challenged and altered during the Corporate Insolvency Resolution Process (CIRP).Whether the Interim Resolution Professional (IRP) has the authority to reconstitute the Committee of Creditors (CoC) after its initial constitution.Whether the Tribunal is obliged to decide all applications heard and reserved on the same day simultaneously or may decide them separately.Whether the CIRP can be withdrawn or terminated on the basis of an application filed under Section 12A of the IBC.Whether a creditor has locus standi to maintain an appeal challenging actions taken post-settlement and during CIRP, including CoC meetings and resolutions. RULINGS / HOLDINGS: On classification of creditor: The Tribunal set aside the classification of the Applicant as an Operational Creditor and restored its status as a Financial Creditor, recognizing the claim as a 'financial debt' within the meaning of Section 5(8) of the IBC, thereby directing reconstitution of the CoC accordingly.On reconstitution of CoC: The Tribunal held that the reconstitution of the CoC carried out by the IRP on 31.08.2024 was invalid and set aside such reconstitution, restoring the CoC as constituted on 21.08.2024, and nullified all resolutions passed by the reconstituted CoC thereafter.On disposal of applications: The appellate court directed the Tribunal to decide the pending application (I.A No. 837 of 2024), which was heard and reserved along with other applications but not decided, preferably within one week, emphasizing that all applications reserved on the same day need not be decided simultaneously but should be disposed of expeditiously.On withdrawal of CIRP and costs: The appellate court did not pass any order on the merits of the application seeking withdrawal of CIRP and payment of CIRP costs under Regulation 30A(2)(a) of the CIRP Regulations, leaving the Tribunal to decide independently.On locus standi: The appellant was held to have locus to maintain the appeal since the settlement application was filed pre-CoC constitution, and the appellant's grievance pertained to actions taken during CIRP affecting its interests. RATIONALE: The Court applied the statutory provisions of the Insolvency and Bankruptcy Code, 2016, specifically Sections 5(8), 18(c), 21(2), 60(5), and 12A, along with Rules 11 and 32 of the NCLT Rules, 2016, and Regulation 30A(2)(a) of the CIRP Regulations.The Court relied on the principle that classification of creditors affects rights and voting shares in the CoC, and such classification must be in accordance with the Code's definitions and verified claims.The Court emphasized that the IRP's power to reconstitute the CoC is subject to the correctness of verification of claims and adherence to the Code, and wrongful reconstitution can be set aside to preserve the integrity of the CIRP process.The Court recognized the procedural principle that while multiple applications may be heard and reserved together, the Tribunal retains discretion to decide them separately, but must do so expeditiously to avoid prejudice.The Court refrained from expressing any opinion on the merits of the withdrawal application, maintaining the independence of the Tribunal's adjudicatory function and preserving the parties' rights to legal recourse.The Court acknowledged the Supreme Court's intervention and orders, including stay and directions regarding escrow of settlement amounts, which influenced the conduct of the CIRP and CoC meetings.
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