Case Note & Summary
The case involves an appeal filed by S. Srinivasan, a Personal Guarantor of M/s. Sri Venkatram Spinners Pvt. Ltd., against an order of the National Company Law Tribunal (NCLT), Chennai, dated 03.06.2024. The State Bank of India (SBI), the Financial Creditor, had originally filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) before the NCLT in CP(IB)/94(CHE)/2024, seeking initiation of Insolvency Resolution Process (IRP) against the Personal Guarantor. Subsequently, on 31.05.2024, SBI filed an application/memo seeking withdrawal of the said petition. The NCLT allowed the withdrawal with liberty to file a fresh application in accordance with law, and rendered pending interlocutory applications infructuous. The Personal Guarantor challenged this order, arguing that he had a right to object to the withdrawal. The NCLAT examined the issue and held that the Financial Creditor, as dominus litis (master of the suit), has the absolute right to withdraw the petition before its admission. The Personal Guarantor, being the respondent, has no vested right to compel the creditor to continue the proceedings against his own wish. The appeal was dismissed as devoid of merit, with no order as to costs.
Headnote
A) Insolvency and Bankruptcy Code - Withdrawal of Petition - Dominus Litis - Section 95 of Insolvency and Bankruptcy Code, 2016 - The Financial Creditor, as dominus litis, has the right to withdraw the petition filed under Section 95 before admission. The Personal Guarantor, being the respondent, has no vested right to continue the proceedings against the creditor's wish. The NCLT's order permitting withdrawal with liberty to file afresh is valid and does not cause any prejudice to the appellant. (Paras 5-7) B) Insolvency and Bankruptcy Code - Personal Guarantor - Locus Standi - Section 95 of Insolvency and Bankruptcy Code, 2016 - A Personal Guarantor cannot challenge the withdrawal of a Section 95 petition by the Financial Creditor as he has no independent right to insist on the continuation of insolvency proceedings against himself. The appeal is devoid of merit and dismissed. (Paras 6-7)
Issue of Consideration
Whether the Personal Guarantor (Appellant) has a right to object to the withdrawal of a Section 95 petition by the Financial Creditor (State Bank of India) and whether the NCLT was correct in permitting such withdrawal with liberty to file afresh.
Final Decision
The appeal is dismissed as devoid of merit. No order as to costs. The NCLT order dated 03.06.2024 permitting withdrawal of the Section 95 petition with liberty to file afresh is upheld.
Law Points
- Dominus Litis
- Right to Withdraw
- Section 95 IBC
- Personal Guarantor
- No Vested Right in Respondent
