Pre-CoC withdrawal of insolvency process may be approved on IRP application after hearing concerned parties and considering settlement

An 8-day delay in filing the appeal was condoned because the explanation for late filing, including knowledge of the order and time taken to obtain the certified copy, was accepted in the circumstances. Withdrawal of a Section 7 corporate insolvency process was held permissible at the pre-CoC stage on the IRP's application, after hearing concerned parties and considering relevant factors, where the Committee of Creditors had not yet been constituted. A claimant whose claim was only filed and not admitted had no vested right to block the withdrawal, and the settlement supported approval of the request under Section 12A read with Regulation 30A and Rule 11.

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Issues: (i) Whether the delay of 8 days in filing the appeal deserved condonation; (ii) Whether withdrawal of the corporate insolvency process under Section 12A could be approved at the pre-CoC stage without the appellant's consent or hearing.

Issue (i): Whether the delay of 8 days in filing the appeal deserved condonation.

Analysis: The appeal was filed within the condonable period. The explanation offered for the short delay, including the date of knowledge of the order and the time taken to obtain the certified copy, was accepted as sufficient in the surrounding circumstances.

Conclusion: The delay was condoned.

Issue (ii): Whether withdrawal of the corporate insolvency process under Section 12A could be approved at the pre-CoC stage without the appellant's consent or hearing.

Analysis: Once the application under Section 7 was admitted, the proceeding became an in rem process. However, where the Committee of Creditors had not yet been constituted, withdrawal could still be considered on an application moved through the IRP after hearing concerned parties and considering relevant factors. The appellant's claim had only been filed and had not crystallised into an admitted right to participate in the withdrawal decision. The settlement supported the withdrawal request, and the Tribunal had jurisdiction to act under Section 12A read with Regulation 30A and Rule 11.

Conclusion: The withdrawal order was valid and no interference was called for.

Final Conclusion: The appellate challenge failed, and the withdrawal of the insolvency proceedings was upheld, while leaving the appellant free to pursue other remedies available in law.

Ratio Decidendi: At the stage before constitution of the Committee of Creditors, withdrawal of a Section 7 insolvency petition may be approved on the IRP's application after hearing concerned parties and considering relevant factors, and a claimant whose claim is only filed but not admitted has no vested right to block such withdrawal.

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