TaxTMI 
TaxTMI 
2021 (8) TMI 1237
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....ek withdrawal of the Company Petition as the Insolvency Resolution professional (IRP) has delayed filing of the application under Section 12A of the Code. Submissions by the Applicant: 3. The Applicant was an employee of the Corporate Debtor from 01.04.2013. the Applicant was relieved from the services of the Corporate Debtor on 14.06.2019 without settlement of arrears of salary and other dues. Therefore, Applicants / Operational Creditor/ Petitioner along with various other ex-employees filed the Petitions u/s 9 of the Insolvency and Bankruptcy Code, 2016 (Code) before this Hon'ble Tribunal. This Bench while hearing the Petitions took up one Petition in respect of each Rolta Group Company for hearing and heard both the parties extensively on 16.04.2021and reserved for Orders. 4. This Bench proceeded to pass order dated 13.05.2021 admitting the present petition under Section 9 of the Code, initiating Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor and appointed Ms. Vandana Garg as IRP of the Corporate Debtor. 5. Thereafter, further negotiations took place between the parties and the Corporate Debtor through its promoter director Mr. Kamal Sing....
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.... In the present case, even the Committee of Creditors is also not formed and as such the approval of 90% voting share of the Committee of Creditors is also not required. Therefore, this Bench has to exercise its jurisdiction and allow withdrawal of the Applications filed by the Applicants / Operational Creditors u/s 12A of the Code. 13. It is submitted by the Applicant that the Financial Creditors and the ex-employees who have not yet filed their Petitions have their own course to recover the dues payable to them by the Corporate Debtor. 14. The Applicant mentions that the Hon'ble NCLAT in its Order dated 07.07.2021 in the matter of Anuj Tejpal v/s Rakesh Yadav & Oyo Hotels and Homes Pvt. Ltd. permitted the withdrawal of the Company Petitions which were admitted by the Hon'ble NCLT. Therefore, the ratio of the said judgement has to be followed by this Tribunal. Submissions by the Promoter: 15. The present Applications have been filed by the Applicants seeking withdrawal in terms of Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the respective Company Petitions, admitted by....
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....he list provided by the IRP, the Promoter has settled with all employees. For ease in reference, the list of such employees is provided hereinbelow: Sr. CP No. Employee Name Settlement Agreement date ROLTA INDIA LIMITED 1 1932/2019 Hiten Valia Joint Settlement Agreement dated 10.06.2021 2 1470/2020 Deepak Gupta Joint Settlement Agreement dated 10.06.2021 3 1466/2020 Anjali Sagar Kavishwar Joint Settlement Agreement dated 10.06.2021 4 38/2021 Sameer Anilkumar Lawande Joint Settlement Agreement dated 10.06.2021 5 1371/2020 Vipin Dayaram Yadav Joint Settlement Agreement dated 10.06.2021 6 151/2021 Jagdish A163/2021swath Joint Settlement Agreement dated 10.06.2021 7 163/2021 Mahesh Kumar Chalsani Joint Settlement Agreement dated 10.06.2021 8 1069/2021 Dinesh Gupta Joint Settlement Agreement dated 10.06.2021 9 409/2021 Laxmidhar Vinayakrao Gaopandey Settlement Agreement dated 24.06.2021 10 297/2021 Pradeep Kumar Sharma Joint Settlement Agreement dated 10.06.202 11 248/2021 Pawan Kumar Joint Settlement....
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....Supreme Court in the matter of Swiss Ribbons vs Union of India [(2019) 4 SCC 17], (Para 82 /Page 86) has recognised the right of an applicant to approach the Adjudicating Authority under Rule 11 of the said Rules and seek withdrawal prior to constitution of the COC. This obviously can have no other meaning than the right of an Applicant to apply for withdrawal without the consent of the creditors (Section 12A condition). 21. Concomitantly, Section 12A now read with the amended Reg. 30A in its current form envisages the withdrawal mechanism to be adopted in Pre-COC and Post-COC scenarios. Reg 30A(1) as amended is reproduced hereinbelow for reference: (1) An application for withdrawal under section 12A may be made to the Adjudicating Authority - (a) before the constitution of the committee, by the applicant through the interim resolution professional; (b) after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be: Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applic....
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....74 2 Operational Creditors 15.00 2.66 3 Workmen & Employees 567.00 86.41 Total 587.00 5523.81 28. It is further submitted by the IRP that the IBC Code or the judicial pronouncements by the Hon'ble Appellate Tribunal and Benches of this Tribunal do not discriminate on the basis of type of creditors when asking an ex-management to propose settlement with creditors in view of settlement with only the Petitioners. 29. Further, a bare perusal would show that there are about 600 employees in the three Corporate Debtors with total claims amounting to more than Rs. 100 crores. That the above is the factual position to bring on records the same is for perusal of this Tribunal. 30. That it may be mentioned here that only the three Petitions wherein admission orders dated 13.05.2021 have been passed for three Corporate Debtors are being withdrawn and remaining more than 70 Petitions are pending before various Benches are not being withdrawn despite settlement agreements with the operational creditors/employees. Further, there are no settlement agreements filed in Company Petitions filed by the following Financial Creditors and pending before....
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.... 6. Upon the Adjudicating Authority approving (i) withdrawal of the Admitted Company Petition under Interim Application No. 1196 of 2021 and (ii) withdrawal of the captioned Company Petition, Mr. Kamal Singh Kishan jointly and/or severally along with the Corporate Debtor agree to make payments in two tranches, in terms of the particulars specified under Schedule 1 as follows: a. The first tranche of payment i.e., 15% of the Settlement Amount after deduction of applicable of income tax more specifically mentioned in Schedule 1 hereinunder, shall be paid on the date of the Adjudicating Authority approving the withdrawal of the Admitted Company Petition and the captioned Company Petition, by handing a demand draft pr bank transfer to that effect, issued in the name of the Operational Creditor, to their authorized representative; b. The second tranche payment i.e., 85% of the Settlement Amount after deduction of applicable income tax, more specifically mentioned in Schedule 1 hereinunder, shall be paid on or before 30th July 2021 by way of demand draft or bank transfer to that effect, issued in the name of the Operational Creditor, to their authorized representative."....
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.... or (5). (7) Where the application is approved under sub-regulation (6), the applicant shall deposit an amount, towards the actual expenses incurred for 5 the purposes referred to in clause (a) or clause (b) of sub-regulation (2) till the date of approval by the Adjudicating Authority, as determined by the interim resolution professional or resolution professional, as the case may be, within three days of such approval, in the bank account of the Corporate Debtor, failing which the bank guarantee received under sub-regulation (2) shall be invoked, without prejudice to any other action permissible against the applicant under the Code. 37. The Hon'ble Supreme Court in the matter of Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors. [(2019) 4 SCC 17] clearly directed that interest of all stakeholders have to be considered while accepting or disallowing an application for withdrawal. 38. That the Hon'ble Supreme Court has recently in the matter of Indus Biotech Pvt. Ltd. vs. Kotak India Venture (Offshore) Fund & Ors. (2021 SCC OnLine SC 268) has clearly observed that when a petition under is admitted/triggered it becomes a proceeding in rem and even the credi....
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....akrishna Yadav vs. JNC Construction Pvt. Ltd. [C.P.(IB) No. 272(PB)/2019] vide its order dated ...07.2018, directed the Applicant and the Ex-management to propose a plan to settle all the claims received by IRP. 44. Not only the Hon'ble Supreme Court, NCLAT and NCLAT but also the bankruptcy law committee report 2018 which brought about changes in Section 12A, categorically discouraged settlement with individual Creditors. The Relevant Part is being reproduced: "...Para 29: it was agreed that once the CIRP is initiated, it is no longer a proceeding only between the applicant creditor and the corporate debtor but is envisaged to be a proceeding involving all creditors of the debtor. The 9 intent of the Code is to discourage individual actions for enforcement and settlement to the exclusion of the general benefit of all creditors. ..." Submissions by the Financial Creditor/Intervenor: 45. The Financial Creditors are filing these submissions to intervene and oppose the withdrawal U/s 12A of the IBC, 2016 of the CIRP initiated against Rolta India Ltd. 46. The Financial Creditors are a consortium of Public Sector Banks comprising of Union Bank of India (Lead Ba....
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....2021 in Company Appeal (AT) Insolvency No. 298 of 2021where the Ld. NCLAT. In the Financial Creditors' respectful submission, the said judgment is clearly distinguishable in the facts of its case. In this decision, the NCLAT permitted the said withdrawal only on the basis that there were claims lodged only by Operational Creditors and not Financial Creditors. This is evident from the following paragraph of the NCLAT's decision: "42. It is relevant to note that in the list of claims, totalling to 113, filed by the IRP, 110 are Operational Creditors. The claims of two Financial Creditors have been rejected." 52. It is submitted by the Financial Creditors that the Hon'ble NCLAT placed emphasis (in bold) on the aforesaid paragraph whilst passing the decision. As opposed to the aforesaid decision, in the present case, not only are there several Financial Creditors who have lodged their claims, there are Financial Creditors who are owed a debt in excess of Rs. 8,000 Crores. This by itself would be a sufficient ground to disallow the present application for withdrawal under Section 12A. 53. It is further submitted that in view of there being a large outstanding financial de....
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....e already pending against the Corporate Debtors, allowing the present withdrawal will evidently result in multiplicity of proceedings which ought to be avoided by this Tribunal. 59. In the present case, the ex-management / promoters of the Corporate Debtors have tried to argue that in view of the purported settlement with employees, this withdrawal should be permitted. In the Financial Creditors' respectful submission, firstly, all the dues of all the employees of the Corporate Debtors are not being settled. As submitted by the Resolution Professional, 177 no. of employees have lodged their claims against the Corporate Debtors and only some employees are being settled by the ex-management / promoters of the Corporate Debtors. Therefore, ex-facie, the purported settlement does not appear to be bona fide. Secondly and in any event, sympathy cannot over-ride law. Be that as it may, the interests of the employees would in any event be taken into consideration during the CIRP of the Corporate Debtors and they being Operational Creditors, will be entitled to their rights as provided for under the IBC. Considering the scheme of the Code and considering that CIRP proceedings are p....
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....otes that the total claim amount pertaining to the 567 employees of Rolta India translates into about Rs. 86.41/- crores. Therefore, Bench notes that even the settlement which has been proposed by the Promoter on the behalf of the Corporate Debtor Company keeps aside the majority of the Workmen Employees' claim which has been brought out by the IRP. The Bench also notes that the proposed settlement with the employees under the Joint Settlement Agreement will be done only after they withdraw the Petition. 63. Interestingly enough, it is the Corporate Debtor is willing to pay the major part of the dues to the employees only subsequent to withdrawal of Petition through the settlement jointly and/ or severally with the Employees. The Bench feels that this provides an escape route to both the promoter as well as to the Corporate Debtor Company to conveniently wriggle out of the partial mini settlement at any point of time. 64. The Bench is also aware of the fact that the present Application is not strictly speaking as per the procedure prescribed in Regulation 30A of the CIRP Regulations. The Regulation 30A of the CIRP Regulations requires that the Applicant have to put any applic....
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....full; (b) the following debts which shall rank equally between and among the following :- (i) workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and (ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; (c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date; (d) financial debts owed to unsecured creditors; (e) the following dues shall rank equally between and among the following---------- (2) ----------- (3).----------" 66. Therefore, the fact cannot be ignored while taking a decision, the Bench also has to take into account the interest of all stakeholders. Before taking this discussion further the Bench would like to rely upon some of the prominent Judgments in respect of the scope and ambit of Section 12A of IBC. The Hon'ble Supreme Court in "Swiss Ribbons Pvt. Ltd. vs. Union of India & Ors." [(2019) 4 SCC 17] clearly directed that interest of all stakeholders have to be considered while accepting or ....
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..... Under the Code, he may never get refund of the entire principal, let alone interest. This is because, the moment a petition is admitted under Section 7, the resolution professional must first advertise for and find a resolution plan by somebody, usually another developer which has then to pass muster under the Code, i.e. that it must be approved by at least 66 per cent of the Committee of Creditors and must further go through challenges before NCLT and NCLAT before the new management can take over and either complete construction or pay out for refund amounts. 26. The underlying principle, therefore, from all the above noted decisions is that the reference to the triggering of a petition under Section 7 of the IB Code to consider the same as a proceedings in rem, it is necessary that the Adjudicating Authority ought to have applied its mind, recorded a finding of default and admitted the petition. On admission, third party right is created in all the creditors of the corporate debtors and will have ergaomnes effect. The mere filing of the petition and its pendency before admission, therefore, cannot be construed as the triggering of a proceeding in rem. Hence, the admiss....
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.... withdrawal Application u/s.12A by the Operational Creditor. The Applicant, basing reliance on this had mentioned that, therefore, in their matter also withdrawal u/s.12A of the CIRP initiated against Rolta India Limited may be permitted. However, the bench notes that the facts of the case of Rolta India Limited are totally different from Oyo Hotels and Homes' matter. In Oyo Hotels' case NCLAT had permitted the said withdrawal only on the basis that their claims were lodged only by Operational Creditors and not by Financial Creditors as reflected in the following paragraph of NCLAT's decision:- "42. It is relevant to note that in the list of claims, totalling to 113, filled up by IRP, 110 are Operational creditors. The claims of 2 Financial Creditors have been rejected." The bench notes that in the above matter, the Hon'ble NCLAT had permitted withdrawal because, besides the Operational Creditors, there were no claims by the Financial Creditor. However, in the present case, the bench notes that there are several Financial Creditors and the total financial claim collated by the Insolvency Resolution Professional in the matter of Rolta India Ltd is upward of Rs. 5000 ....