TaxTMI 
TaxTMI 
2022 (1) TMI 262
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.... Debtor) and Company Appeal (AT) (Insolvency) No. 893 of 2021 has been filed by Suspended Director of 'Primuss Pipes & Tubes Ltd.' (Corporate Debtor). These two Appeals have been filed against the same judgment dated 29.09.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench, Court-I in IA No. 267/2021. It shall be sufficient to notice the facts from the record of Company Appeal (AT) (Insolvency) No. 892 of 2021. The brief facts and sequence of the events of the case are:- An Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("Code" for short) was filed by the Appellant- 'M/s. Ashish Ispat Pvt. Ltd.' for initiating Corporate Insolvency Resolution Process (CIRP) against 'Primuss Pipes & Tubes Ltd.' (Corporate Debtor). By order dated 04.08.2021, the Adjudicating Authority admitted the Application and initiated the Corporate Insolvency Resolution Process of the Respondent Company. On 06.08.2021, the Interim Resolution Professional (IRP) made a Public Announcement in Form-A. On 25.08.2021, the Appellant and the Suspended Director/ erstwhile management of the Corporate Debtor amicably settled the dispute and executed a Memor....
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....' has been filed on 25.08.2021 i.e. before constitution of the Committee of Creditors. It is submitted that the requirement of obtaining consent of Committee of Creditors with ninety percent vote shall arise only when Application is filed after constitution of the Committee of Creditors. It is submitted that the dispute between 'M/s. Ashish Ispat Pvt. Ltd.', the Applicant who had filed Section 9 Application as well as the Corporate Debtor having settled by Memorandum of Understanding dated 25.08.2021, there is no requirement of proceeding of Corporate Insolvency Resolution Process any further. Learned Counsel for the Appellant submits that before constitution of Committee of Creditors, Application for withdrawal of Corporate Insolvency Resolution Process was fully maintainable and ought to have been allowed by the Adjudicating Authority without directing for obtaining consent of the Committee of Creditors. 3. Learned Counsel appearing for the Financial Creditor- 'M/s. Anjali Capfine Pvt. Ltd.' opposing the submission of the Learned Counsel for the Appellant contends that the I.A 267/2021 was adjourned on 06.09.2021 on the request of the Interim Resolution Professional, there was....
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....cation. (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 applicant shall state the reasons justifying withdrawal after issue of such invitation. (2) The application under sub-regulation (1) shall be made in Form FA of the Schedule accompanied by a bank guarantee- (a) towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33, till the date of filing of the application under clause (a) of subregulation (1); or (b) towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub-regulation (1). (3) Where an application for withdr....
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....ttee of creditors is constituted (as per the timelines that are specified, a committee of creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers Under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case." 11. The Hon'ble Supreme Court in the above judgment has observed that withdrawal of Application filed under Sections 7 and 9 was being permitted by the Hon'ble Supreme Court in exercise of jurisdiction under Article 142 even before any express provision was made in IBC and the Regulations. It is true that Section 12A mentions approval of ninety percent voting share of the Committee of Creditors. The ninety percent voting shares of the Committee of Creditors pre-supposes the constitution of Committee of Creditors, thus Section 12A requiring approval of ninety per....
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.... Drafts of Rs. 19 Lacs and Rs. 6 Lacs were handed over to the Appellant and the cheque of Rs. 38,74,000/- was also given. Cheque of Rs. 38,74,000/- was returned and subsequently the said payment was made by RTGS on 17.09.2021 i.e. before the order was passed by the Adjudicating Authority on 29.09.2021. The entire payment as per the Memorandum of Settlement having been paid, there is no debt of the Appellant- 'M/s. Ashish Ispat Pvt. Ltd.' due on the Corporate Debtor. 15. Learned Counsel for the Appellant has placed reliance on judgment of the Hon'ble Supreme Court dated 25.08.2021 in Civil Appeal No. 4993 of 2021- "Kamal K. Singh vs. Dinesh Gupta & Anr." in which case, the Application for withdrawal was rejected. In the above case also, the Committee of Creditors was not constituted when the Application was filed for withdrawal. The Hon'ble Supreme Court allowed the Appeal and set aside the order in rejecting the Application. In paragraphs 4, 5 & 6, following was made:- "(4) In the instant case, as noticed earlier, the applicant-respondent no.1 had made an application before the NCLT, Mumbai Bench, under Rule 11 of the NCLT Rules for withdrawal of company petition filed ....
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....tion 30-A is not mandatory but is directory for the simple reason that on the facts of a given case, an Application for withdrawal may be allowed in exceptional cases even after issuing the invitation for expression of interest under Regulation 36-A. 41. Rule 11 of NCLAT Rules, 2016 provides that 'Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal.' The Hon'ble Apex Court in 'Swiss Ribbons Pvt. Ltd. and Ors.' (Supra) has clearly discussed the stage and has observed that 'we make it clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case'. It is a well settled proposition of law that substantive law takes precedence over a Regulation and Section 12-A....