TaxTMI 
TaxTMI 
2026 (9) TMI 478
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....nafter referred to as 'Code') read with Regulation 30A of the CIRP Regulations seeking withdrawal of the CIRP of the Corporate Debtor was dismissed. The CIRP was initiated at the instance of Prime Impex (Operational Creditor)/Respondent No.3 on 16.08.2022, and Mr. Umang Jain appointed as the Resolution Professional. Axis Bank Limited, the financial creditor is the Respondent No.2 in these proceedings. FACTS OF THE CASE 2. The brief facts of the case relevant for the instant appeal are given below: i.) Prime Impex, the Operational Creditor, initiated the insolvency proceedings under Section 9 of the Code against Shalfeyo Industries Private Limited. The Corporate Insolvency Resolution Process ('CIRP') proceedings were admitted by the Adjudicating Authority on 16.08.2022, pursuant to which Mr. Umang Jain was appointed as the Interim Resolution Professional who was subsequently confirmed as Resolution Professional (RP). ii.) Pursuant to the public announcement, Axis Bank Limited submitted its claim as the sole Financial Creditor, and the (Committee of Creditors) was accordingly constituted with Axis Bank as its sole member. In the 1st CoC meeting held on 15.09.2....
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....ority. viii.) As the sole Financial Creditor had been fully paid, and that the only other creditor, Prime Impex, had also been offered full payment of its claim, the Appellant sought withdrawal of the CIRP under Section 12A of the IBC read with Regulation 30A of the CIRP Regulations. The withdrawal application in the form FA was filed as IA (IBC) No. 549/JPR/2024 in CP (IB) No. 79/9/JPR/2020 by the Appellant on 20.11.2024 in his capacity as the suspended director of the Corporate Debtor. ix.) The Adjudicating Authority, while considering IA (IBC) No. 549/JPR/2024, recorded that the application had been filed by Deepak Modi, a suspended director, seeking withdrawal under Section 12A; that the debt of the sole Financial Creditor was stated to have been settled; that the entire claim of the sole Operational Creditor amounting to Rs. 11.90 Lakhs had been offered through demand draft; and that the Appellant had undertaken to pay the RP's fees and expenses as determined by the Adjudicating Authority. x.) The Adjudicating Authority duly noted that the Appellant has fully paid the claims of Financial Creditors it has also offered 100% claims of the OCs claims....
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.... FA, requesting that the same be forwarded to the RP and placed before the CoC. However, the Operational Creditor declined to forward the Form FA, citing legal advice. Thereafter, the Appellant and the Operational Creditor also attempted to resolve the matter with the RP, but the RP declined the settlement and insisted that his fees and CIRP expenses be determined by the Adjudicating Authority. The Appellant has no objection to such determination. 5. It is therefore submitted that, as on date, the substantive claims have either been fully discharged or are capable of being satisfied, and the only surviving issue concerns the CIRP/RP expenses and the procedural steps necessary for closure. The Appellant has consistently expressed his willingness to make payment of any amount found legitimately payable. Even in relation to the RP's fees, the Appellant has stated that any additional amount which the Adjudicating Authority considers just and proper may be paid so as to bring the proceedings to a close. The Appellant accordingly submits that continued continuation of the CIRP serves no useful purpose when the Financial Creditor's dues stand settled, the Operational Creditor's claimed....
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....ion already pending before the Adjudicating Authority. However, even after repeated proceedings before the Adjudicating Authority, the matter did not progress towards resolution or revival of the Corporate Debtor and instead remained caught between the proposed liquidation, pending applications and the disputes raised by the parties. 9. Ld. Counsel submits that the subsequent developments make it clear that the CIRP has effectively reached a stalemate. The 10th CoC meeting records that the application filed by the Appellant under Section 12A seeking withdrawal of the CIRP had been dismissed by the Adjudicating Authority on 18.12.2024, while Axis Bank stated that the entire payment had already been received in its loan account and sought clarity regarding the return of the security documents. The discussions further recorded the competing positions concerning the payment made by the Appellant in his capacity as personal guarantor and the course to be followed for bringing the CIRP to an end. Significantly, during the said proceedings, the RP/Chairman of CoC recorded that there was no possibility of settlement, while the parties themselves discussed either closure of the CIRP or p....
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.... Regulations. In any event, Axis Bank cannot be fastened with costs incurred after its withdrawal from the CoC and cessation of its role in the CIRP. 15. Ld. Counsel submits that, in view of the statement recorded on 05.08.2026 by this Appellate Tribunal, Axis Bank has no objection to disposal of the appeal in terms of the proposed settlement, whereby the Appellant has offered Rs. 18,00,000/- to Respondent No. 3 along with CIRP costs as determined by the Learned Adjudicating Authority, and supports early closure of the CIRP. Submissions of Respondent No.3/ Prime Impex 16. Ld. Counsel for Operational Creditor submits that the application for closure of CIRP filed by the Appellant Under Section 12A of the Code was not compliant with Regulation 30A, as the Form FA relied upon was unsigned and merely a draft, and requisite bank guarantee towards CIRP costs was not furnished with application. The Learned Adjudicating Authority, therefore, rightly dismissed the application, in view of the law laid down by the Hon'ble Supreme Court in "Glass Trust Company LLC Vs. Byju Raveendran & Ors., reported in 2024 SCC OnLine SC 3032". 17. Ld. Counsel submits that, as recorded in the orde....
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....P itself. In the CoC proceedings, the Financial Creditor had noted that the CIRP had been initiated for a claim of only about Rs. 12 lakhs and had continued for a considerable period. The Financial Creditor had also taken an initiative for conciliation and settlement between the parties. The Appellant had made different settlement offers, including an offer to settle the entire claim of the Operational Creditor, though those efforts did not result in a final settlement at that stage. 24. The application filed by the Appellant under Section 12A was ultimately dismissed by the Adjudicating Authority by order dated 18.12.2024, principally on the ground that the statutory procedure contemplated under Section 12A of the Code read with Regulation 30A of the CIRP Regulations, 2016 had not been complied with. In particular, the Adjudicating Authority noted the requirement relating to Form FA, approval of the CoC and the CIRP-cost related security/Bank Guarantee. We are conscious that these statutory requirements cannot ordinarily be ignored and that the present proceedings cannot be closed by a simple order allowing withdrawal under Section 12A. 25. However, during the pendency of th....
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....ch had earlier prevented the settlement from being completed, is not being left unresolved by the Appellant; rather, the Appellant has expressly agreed to abide by whatever amount is determined by the Adjudicating Authority in IA No. 160/2023. 28. When the entire factual position is considered together, certain peculiarities of this CIRP Proceeding become clear, which are given below: i. The CIRP was initiated essentially on a relatively small operational debt of about Rs. 11.90 lakhs. ii. The sole Financial Creditor, Axis Bank, has already been paid in full. iii. The sole Operational Creditor is being offered Rs. 18 lakhs against its original claim of Rs. 11.90 Lakhs as full and final settlement. There is no other creditor in the instant proceedings. iv. There is no resolution plan presently available, which can take the Corporate Debtor towards resolution. v. The Appellant has agreed to pay the CIRP Costs, which is pending adjudication in IA No. 160/2023 before the Ld. Adjudicating Authority. This clearly shows that no useful purpose is being served by keeping this CIRP alive, except for wastage of precious time of this Appellate....
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....ng to make a payment of Rs. 17 lakhs to the Operational Creditor as full and final settlement. Subsequently, during the hearing on 05.08.2026 the Ld. Counsel for Applicant under instructions of his client stated that he is ready to pay Rs. 18 lakhs to the Operational Creditor/ Respondent No.3 which was agreed to by Ld. Counsel for Respondent No. 3 as full and final settlement of his claim. Ld. Counsel for Appellant further stated that he is also willing to pay the CIRP Cost which would be determined by the Adjudicating Authority. 32. In these proceedings, we note that the claims of all the creditors have now been settled. The CIRP Cost is to be determined by the Adjudicating Authority and the Appellant has agreed to pay the amount, which would be determined by the Adjudicating Authority. However, the CIRP Process has effectively reached a procedural stalemate, as the Form FA cannot be filed in the present situation due to peculiar situation prevailing, wherein the CIRP Cost is not crystallised and there is a dispute regarding the same between the Appellant and RP, which is pending with Adjudicating Authority. The amount for Bank Guarantee to be attached with Form FA cannot be de....
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....at I am one of the Suspended Director/Shareholder of the Corporate Debtor, namely, Shalfeyo Industries Private Limited ('R.No.1/CD') and I had filed the above captioned Company Appeal. As such, am fully competent to file and swear the present Affidavit. 2. That, the above captioned Company Appeal was preferred by the deponent against the order dated 18.12.2024 ('Impugned Order') passed by the Hon'ble NCLT, Jaipur Bench, whereby the IA (IBC) No. 549/JPR/2024 preferred by the deponent under Section 12A of the Code of 2016 read with Regulation 30A of the IBBI (IRPCD) Regulations, 2016 seeking the withdrawal of the CP (IB) No. 79/9/JPR/2020 came to be dismissed. 3. That the brief facts of the subject matter are that, vide order dated 16.08.2022, the CP (IB) No. 79/9/JPR/2020 preferred by the R.No.3 under Section 9 of the Code of 2016 for a sum of Rs. 11.90 Lakhs came to be admitted and the CIRP was triggered against the CD/R.No.1. 4. That in furtherance of the above, the R.No.2, only FC had filed the claim of Rs. 1.04 Crore and the R.No.3 at whose behest the CIRP was triggered had filed the claim of Rs. 11.90 Lakhs only. Destak Mod Jun 29 JUL 202....