NCLAT Missteps in Settlement Approval, Sidesteps CIRP Withdrawal Rules, Supreme Court Overturns Decision.

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....The NCLAT erred in invoking its inherent powers u/r 11 of the NCLAT Rules 2016 to approve a settlement between the second respondent and the Corporate Debtor, circumventing the prescribed procedure for withdrawal of CIRP u/s 12A and Regulation 30A. The inherent powers cannot override specific legal provisions exhaustively providing a procedure. The NCLAT failed to provide reasons for deviating from the withdrawal procedure or the urgency necessitating approval without following due process. Once CIRP commenced, it became a collective proceeding involving all creditors as stakeholders. The NCLAT inadequately addressed the appellant's objections regarding the ongoing ED investigation against the respondents and attempts by the Corporate Debto.........