Case Note & Summary
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, passed an order on 18 November 2024 in IA No.937/2022 in Company Appeal (AT) (CH) (Ins) No.358/2022. The appeal was filed by Mr. Babu Manoharan Jaikumar Christhurajan against Mr. Umesh Garg and two others. The appellant sought to set aside an order dated 26 August 2022 passed by the National Company Law Tribunal (NCLT), Special Bench-II, Chennai, in IA/800(CHE)/2022 in IBA/685/2019. The appellant had cleared all dues of financial creditors, namely Indian Bank (₹153,53,17,263 admitted out of ₹164,71,20,052 claimed) and HDFC (₹3,00,51,707 admitted), and obtained no-objection certificates (NOCs) from them. The appellant also offered to pay operational creditors, including government dues (Sales Tax claim of ₹3,69,69,816 and Provident Fund claim of ₹1,59,701) and private operational creditors (Chola Packaging Pvt. Ltd. claim of ₹1,00,000). The appellant sought to quash the CIRP proceedings and direct the first respondent (Resolution Professional) to hand over the corporate debtor to the board as a going concern. The NCLAT, noting the settlement, allowed the appeal and directed that upon the appellant furnishing a bank guarantee to cover the liquidator's costs and an undertaking to pay the operational creditors, the CIRP shall stand withdrawn and the corporate debtor be handed over to the appellant's board as a going concern.
Headnote
A) Insolvency Law - Withdrawal of CIRP - Settlement of Dues - Section 12A, Insolvency and Bankruptcy Code, 2016 - The appellant sought withdrawal of CIRP after clearing all dues of financial creditors (Indian Bank and HDFC) and obtaining NOCs, and offered to pay operational creditors including government dues. The NCLAT allowed the withdrawal, directing the Resolution Professional to hand over the corporate debtor to the appellant's board as a going concern, subject to the appellant furnishing a bank guarantee for liquidator costs and an undertaking to pay operational creditors. (Paras 1-3) B) Insolvency Law - Going Concern - Handover of Corporate Debtor - Section 12A, IBC, 2016 - The Tribunal directed that upon compliance with conditions (bank guarantee and undertaking), the corporate debtor be handed over to the appellant as a going concern, thereby restoring control to the board. (Para 3)
Issue of Consideration
Whether the Corporate Insolvency Resolution Process (CIRP) can be withdrawn after the appellant has cleared all dues of financial creditors and obtained no-objection certificates, and whether the corporate debtor should be handed back as a going concern.
Final Decision
The NCLAT allowed the appeal, set aside the impugned NCLT order, and directed that upon the appellant furnishing a bank guarantee for liquidator costs and an undertaking to pay operational creditors (including government dues), the CIRP shall stand withdrawn and the corporate debtor be handed over to the appellant's board as a going concern.
Law Points
- Withdrawal of CIRP
- Settlement of dues
- Financial creditors
- Operational creditors
- Going concern
- Section 12A IBC
- CIRP Regulations 30A
