TaxTMI 
TaxTMI 
2025 (12) TMI 1320
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....tretched to be made applicable to the proceedings at the stage of process of Liquidation, as contemplated under Chapter III of I & B Code, 2016." 2. There would be yet another question, which would incidentally emerge for consideration, namely: "With the insertion of Section 12A, under the I & B Code, 2016, has taken place by a subsequent enactment, by issuance of the Amending Act No. 26 of 2018, the legislature at its wisdom was conscious of the fact that the aspect of consideration of the withdrawal of an application was confined to be made applicable to the proceedings of CIRP contemplated under Section 7, 9 or 10 of I & B Code, 2016 and that is why it was only made as part of the provisions as applicable to Chapter II, which would be deemed exclusion of its applicability over the proceedings, reacting to stage of Chapter III.'' 3. Had the legislature felt that the powers vested by the insertion of Section 12A of the I & B Code, 2016, permitting withdrawal of an application, could be made applicable to the proceedings contemplated under Chapter III, i.e., liquidation, there would have been a specific and corresponding amendment by way of insertion in Chapter III a....
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....payment of Rs. 17 lakhs made as an advance towards the OTS proposal, which is stated to have been approved by Respondent No. 2. 9. It is the case of the Appellant that, in furtherance of enforcement of the covenants of the O.T.S. proposal, the Appellant deposited the balance amount of Rs.1,27,40,000/- on 15.09.2022, in accordance with the terms of the O.T.S. proposal, towards full and final settlement of the dues payable by the Corporate Debtor, on account of which the CIRP proceedings had been initiated by the order dated 26.04.2018. 10. The question that presently emerges for consideration is: As to whether such an O.T.S. proposal, which was crystallized on 13.09.2022, after the Corporate Debtor had been placed into liquidation proceedings under Chapter III, could at all be accepted in the absence of any specific provision prescribed under Chapter III permitting such withdrawal at the stage when the Corporate Debtor has been put into liquidation, which is an admitted position between the parties. The issue also arises as to whether, merely because the Appellant has deposited the amount in terms of the O.T.S. proposal, the terms of the O.T.S. proposal itself can be taken ....
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....rate Debtor has been directed to face liquidation. The Ld. Counsel for the Appellant has attempted to argue to the contrary, submitting that there is no express bar, and that withdrawal under Section 12A of the I & B Code, 2016, can still be resorted to even after the liquidation process has been set in motion. It is further submitted that the impugned order reflects complete non-application of mind and runs contrary to law. 15. If the contents of the application preferred by the Appellant before the Ld. Adjudicating Authority are examined, it is evident that the Appellant sought a direction to permit filing of the necessary application before the Ld. Tribunal for withdrawal of the liquidation process and to allow withdrawal of the liquidation proceedings initiated against the Corporate Debtor pursuant to the One Time Settlement entered into between Respondent No. 2 and the promoter guarantors with 100% voting rights, particularly in view of the fact that full and final payment had already been made, the last deposit having been made on 15.09.2022. 16. Apart from this, yet another foundation laid by the Appellant for the purpose of consideration of the application is that a "....
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....for withdrawal of the application under Section 7 of the I&B Code, the observation as made above or the order of liquidation passed by the Adjudicating Authority will not come in the way of Adjudicating Authority to pass appropriate order. Both the appeals are dismissed with aforesaid observations. No cost.'' 20. The reason assigned therein was that since such a person was not specifically barred under Section 29A of the I & B Code and had satisfied the demand of the Committee of Creditors, it was held that in proceedings initiated under Section 7 of the I & B Code, no impediment would be caused for the Ld. Adjudicating Authority to pass an appropriate order on an application seeking withdrawal of the proceedings under Section 12A of the I & B Code. 21. At this juncture, a tentative view is taken that the inference drawn in paragraph 5, holding that Section 12A of the I & B Code is not barred from being applied at the liquidation stage on the ground that it is not prohibited under Section 29A of the I & B Code, must be read in a harmonious construction. This construction must keep in mind the stage at which the said matter was being considered by the Co-ordinate Bench, partic....
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.... procedures contemplated for the NCLT and the NCLAT, while exercising adjudicatory authority under the provisions of the I & B Code, 2016, are regulated by judicial intervention and must be strictly confined within the framework of procedural and substantive law as envisaged under the I & B Code, 2016. It was ultimately concluded that the I & B Code is a thoughtful legislation enacted with a specific intention and object to be achieved. The Code seeks to avoid the introduction of any alien process at a stage of proceedings that has already been exhausted as contemplated under the statute, so that the basic intention and efficiency of the legislature are preserved. The legislature, based on its experience, sought to prevent judicial chaos that could arise if innovative or experimental interventions were permitted before the NCLT or NCLAT. It was observed that, at the very minimum, the Tribunal should not disturb or deviate from the foundational principles of the I & B Code, 2016, as such deviation would be detrimental to the intention of the framers of the law. The relevant paragraph 103 is extracted hereunder: "103. At this juncture, it is important to remember that the ex....
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....roceedings under Chapter III. It examined how far the provisions contained under Section 60(5), read with Rule 11 of the NCLT Rules, could be stretched in a far- fetched manner so as to sabotage the prescribed statutory procedure, which could have catastrophic consequences and allow vices to creep in, thereby defeating the very object of the Code. 26. It has been specifically observed, and is also well settled, though in the context of Section 151 of the Code of Civil Procedure, in the judgment reported in AIR 2004 SC 3992, paragraph 9, in the matter of Vareed Jacob V. Sosamma Geevarghese & Ors., that inherent powers should not invariably be attracted or applied in areas of law or procedure where the legislature has consciously provided specific parameters under the statute, as framed by the authors of the I & B Code, 2016. The relevant paragraph 9 is extracted hereunder: "9. In the case of Ram Chand & Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava [AIR 1966 SC 1899] it has been held by this Court that the inherent power of the court under Section 151 CPC is in addition to and complementary to the powers expressly conferred under CPC, but that power will not be exerci....
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....ic, such power cannot be exercised in that regard. The section confers on the court power of making such orders as may be necessary for the ends of justice of the court. Section 151 CPC cannot be invoked when there is express provision even under which the relief can be claimed by the aggrieved party. The power can only be invoked to supplement the provisions of the Code and not to override or evade other express provisions. The position is not different so far as the other statutes are concerned. Undisputedly, an aggrieved person is not remediless under the Act.'' 28. So far as the present controversy under the I & B Code, 2016 is concerned, there is no ambiguity in law. Once Section 12A of the I & B Code, 2016 was inserted subsequent to the promulgation of the principal legislation, prescribing withdrawal of proceedings under Sections 7, 9, or 10, it was done with a clear object and intent by confining its application exclusively to Chapter II, i.e., the CIRP stage. This leads to a logical inference that there was an intentional, intelligible, and conscious legislative distinction in not extending the provisions of Section 12A or any similar provision permitting withdrawal of ....
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.... the existence of any procedure under the statute by which the Appellant could be taken outside the ambit of liquidation. Once the stage of liquidation is reached by passing an order appointing the Liquidator and initiating the liquidation process, and that too after crossing the stage at which Section 12A of the I & B Code could have been invoked, the process cannot be pushed back de novo. 33. A nearly identical controversy arose for consideration before the Principal Bench of the NCLAT in Company Appeal (AT) (INS) Nos. 1425-1428 of 2024, in Asha Chopra & Ors. v. M/s. Hind Motors India Limited & Ors. The Three-Member Bench, while dealing with the aforesaid issue, framed specific questions pertaining to withdrawal of proceedings under Sections 7, 9, or 10 under the garb of Section 12A of the I & B Code, 2016. 34. The issue was examined in consonance with the scope of compromise or arrangement under Regulation 2B, as observed in paragraph 8 of the said judgment, which is extracted hereunder: "8. An Order of Liquidation is passed in Section 33 when before the expiry of the Insolvency Resolution Process, no Resolution Plan is received under Section 30(6) or Resolution P....
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.... where such compromise or arrangement is sanctioned by the Tribunal under subsection (6) of section 230: Provided that such cost shall be borne by the parties who proposed compromise or arrangement, where such compromise or arrangement is not sanctioned by the Tribunal under sub-section (6) of section 230." 35. Ultimately, based on the aforesaid analysis, the Tribunal observed that, in view of the statutory scheme of the I & B Code, 2016, and particularly the interplay between Section 12A, Section 33, and Regulation 2B of the Liquidation Regulations, an application under Section 12A of the I & B Code is not permissible during the liquidation period. Accordingly, the conclusion recorded in paragraph 15 of the judgment is extracted hereunder: "15. In view of the clear Statutory Scheme as delineated by 12A, Section 33 and Regulation 2B of the Liquidation Regulation, we are of the view that during Liquidation period, an Application under Section 12A is not permissible. In the facts of the present case, it is clear that former Director of the Corporate Debtor, Ashish Mohan Gupta, himself has challenged the Liquidation Order and also sought to submit a Scheme which w....