CIRP withdrawal requires strict Section 12A compliance; material suppression and fraud justify recall of the withdrawal order.

Where withdrawal of CIRP is sought after constitution of the committee of creditors, strict compliance with Section 12A is mandatory, including the required approval threshold, and any material misstatement about the stage of proceedings amounts to suppression of material facts. Known homebuyers could not be excluded from participation where their allotment and payment records were already available in the debtor's records and the claim process was deficient, so they retained locus to challenge the withdrawal. The withdrawal order, having been obtained by fraud and suppression, was liable to recall in exercise of inherent jurisdiction, and the insolvency proceedings were restored for continuation before the Adjudicating Authority.

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Issues: (i) Whether the homebuyer-appellants had locus and could maintain the appeal despite not filing claims within the original claim period; (ii) Whether the withdrawal of the corporate insolvency resolution process was vitiated by fraud and suppression of material facts, warranting recall of the withdrawal order.

Issue (i): Whether the homebuyer-appellants had locus and could maintain the appeal despite not filing claims within the original claim period.

Analysis: The appellants were allottees in the real estate project and their agreements and payment records were available in the corporate debtor's own records. The public announcement and creditor-communication process were found to have been ineffective, and the resolution professional did not take adequate steps to identify and include the known homebuyers as financial creditors. The class of homebuyers could not be denied participation merely because they had not filed claims during the claim window where the omission was attributable to the deficient insolvency process.

Conclusion: The appellants had locus and the appeal was maintainable.

Issue (ii): Whether the withdrawal of the corporate insolvency resolution process was vitiated by fraud and suppression of material facts, warranting recall of the withdrawal order.

Analysis: The record showed that a committee of creditors had already been constituted and meetings had been held, yet the withdrawal application proceeded on the assertion that the matter was still at a pre-committee stage. Since withdrawal after constitution of the committee requires compliance with Section 12A and approval of 90% of the voting share, the misstatement about the non-formation of the committee was material. The omission of known homebuyers from the process, despite their availability from the debtor's records, further demonstrated suppression of material facts. The Tribunal also recognised that recall is available in exercise of inherent jurisdiction where an order is obtained by fraud.

Conclusion: The withdrawal order was vitiated by fraud and suppression of material facts and was liable to be recalled.

Final Conclusion: The impugned dismissal of the recall application was set aside, the withdrawal of insolvency proceedings was undone, and the corporate insolvency resolution process was restored for continuation before the Adjudicating Authority.

Ratio Decidendi: Where a withdrawal of CIRP is sought after constitution of the committee of creditors, strict compliance with Section 12A is mandatory, and any material misrepresentation or suppression that bypasses this requirement constitutes fraud on the tribunal and justifies recall in exercise of inherent jurisdiction.

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