2025 (7) TMI 1781 - AT - IBC

Withdrawal of CIRP under Section 12A requires CoC approval if filed after CoC constitution per Regulation 30A(1)(a)

Riju Ravindran Suspended Director & Promoter of Think and Learn Pvt. Ltd. And Board of Control for Cricket in India Versus Pankaj Srivastava, IRP of Think and Learn Pvt. Ltd. & 3 Ors.

The NCLAT held that an application for withdrawal of CIRP under Section 12A filed before the constitution of the CoC does not require 90% CoC approval, ... Relevant date for filing of application for withdrawal of CIRP u/s 12A of IBC - application for withdrawal of CIRP submitted with form FA should be considered to have been filed before the constitution of the CoC on 21.08.2024 or it has to be considered as filed on 14.11.2024 that is the date of filing of the application by the IRP for settlement which is after the constitution of the CoC - HELD THAT:- Section 12A deals with the withdrawal of the application, filed under Section 7, 9 or 10 of the Code with the approval of 90% voting share of the CoC - Regulation 30A which came to be introduced in the regulations on 25.07.2019 has provided for both the scenarios i.e. filing of the application for withdrawal before the constitution of CoC and filing of the same after the constitution of the CoC. If the application under Section 12A is filed under Regulation 30A(1)(a) before the constitution of CoC then Section 12A which mandates the approval of such application for withdrawal by 90% voting share of the CoC shall not apply but if the application is filed after the constitution of the CoC then the provisions of Section 12A shall apply with full force. The contention of the Appellant not agreed upon that this Tribunal shall have to read only para 78 of the order of the Hon'ble Supreme Court in GLAS TRUST COMPANY LLC VERSUS BYJU RAVEENDRAN & ORS. [2024 (10) TMI 1185 - SUPREME COURT (LB)] and hold that the application for withdrawal, even though filed on 14.11.2018, has to be considered to have been filed before the constitution of the CoC because, the Hon'ble Supreme Court is stating the fact which existed at that time and in para 87 of the judgment it categorically deals with the factual situation because when the order of the Hon'ble Supreme Court was passed on 23.10.2024, the CoC had already been constituted on 21.08.2024 whereas the application form FA was filed on 14.11.2024 much thereafter - even if the IRP had erred in not submitting the application and replied on 19.08.2024 to the Appellant, expressing his difficulty in filing form FA during the pendency of the appeal before the Hon'ble Supreme Court for whatever reasons, the Appellant had the remedy to question the decision of the RP before the Tribunal by filing a miscellaneous application which he has failed to do. There are no merit in these two appeals, therefore, both the appeals are hereby dismissed. ISSUES: Whether an application for withdrawal of a Corporate Insolvency Resolution Process (CIRP) filed under Section 12A of the Insolvency and Bankruptcy Code, 2016 (IBC) and Regulation 30A of the CIRP Regulations should be treated as filed before or after the constitution of the Committee of Creditors (CoC) for the purpose of applicability of Regulation 30A(1)(a) or 30A(1)(b).Whether the Interim Resolution Professional (IRP) erred in not submitting the withdrawal application within three days as stipulated under Regulation 30A(3) when the applicant directed the IRP to file the application only after dismissal of a pending appeal before the Supreme Court.Whether the IRP was justified in refusing to act upon the withdrawal application and Form FA submitted by the operational creditor before the dismissal of the appeal and constitution of the CoC.Whether the appellant had the locus standi to challenge the withdrawal application and whether the appellant was denied an opportunity of hearing in violation of principles laid down by the Supreme Court regarding hearing of all concerned parties before approving withdrawal of CIRP.Whether the reconstitution of the CoC by the IRP was valid and whether the Tribunal erred in setting aside the reconstitution and restoring the earlier CoC. RULINGS / HOLDINGS: The application for withdrawal filed on 14.11.2024 by the IRP is to be considered as filed after the constitution of the CoC on 21.08.2024; therefore, Regulation 30A(1)(b) and Section 12A of the Code apply, requiring approval of ninety percent voting share of the CoC for withdrawal.The IRP did not err in delaying submission of the withdrawal application within three days under Regulation 30A(3) since the applicant explicitly instructed the IRP to file the application only after the Supreme Court appeal was dismissed, which was a reasonable direction.The IRP was justified in refusing to act on the withdrawal application and Form FA before the dismissal of the appeal and constitution of the CoC, as acting otherwise would have contravened the Supreme Court's stay order dated 14.08.2024.The appellant had the opportunity to be heard and was present throughout the hearing of the withdrawal application; the application for impleadment filed by the appellant was in the main petition and not in the withdrawal application, and no prejudice was caused by this procedural aspect.The Tribunal rightly set aside the reconstitution of the CoC carried out by the IRP on 31.08.2024 and restored the CoC constituted on 21.08.2024, as the reconstitution lacked validity. RATIONALE: The Court applied Section 12A of the IBC, which mandates that withdrawal of an application admitted under Sections 7, 9, or 10 requires approval of ninety percent voting share of the CoC, and Regulation 30A of the CIRP Regulations, 2016, which distinguishes between withdrawal applications filed before and after constitution of the CoC (Regulation 30A(1)(a) and 30A(1)(b)).The Supreme Court's judgment dated 23.10.2024 was interpreted in its entirety, noting that paragraph 78 describes the factual position before CoC constitution, while paragraph 87 acknowledges that the CoC was constituted during pendency of proceedings, thus requiring application of Regulation 30A(1)(b) for withdrawal filed post-CoC constitution.The Court emphasized that the date of filing the withdrawal application by the IRP is determinative, not the date of settlement or submission of Form FA to the IRP by the applicant.The IRP's refusal to act on the withdrawal application prior to dismissal of the Supreme Court appeal was consistent with the Supreme Court's stay order dated 14.08.2024, which mandated maintenance of the settlement amount in escrow and restrained actions that would render the stay ineffective.The Court underscored the quasi-judicial role of the Adjudicating Authority in considering withdrawal applications, requiring judicial mind and hearing of all concerned parties, as per the Supreme Court's directions, and found no violation of the appellant's right to be heard.The decision to set aside the IRP's reconstitution of the CoC and restore the earlier CoC was supported by the facts and consistent with the statutory framework governing CoC constitution and powers.