Case Note & Summary
The National Company Law Appellate Tribunal dismissed Appeals by Appellant, Suspended Director, against orders of the Adjudicating Authority related to withdrawal of CIRP under Section 12A of the IBC. The CIRP was initiated by an Operational Creditor under Section 9, and the CoC approved withdrawal with 100% vote share. After MHIL's claim was admitted as a Financial Creditor, the Resolution Professional sought to withdraw the Section 12A application, which the Adjudicating Authority permitted. The Tribunal held that the Resolution Professional lacked independent authority to withdraw, but the Adjudicating Authority's decision was procedurally sound, and the Suspended Director had no right to participate in withdrawal proceedings. Both Appeals were dismissed.
Headnote
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed two Appeals filed by Appellant, Suspended Director, challenging orders dated 15.10.2024 and 12.11.2024 passed by the Adjudicating Authority (NCLT, Ahmedabad) -- The Appeals concerned the withdrawal of a Corporate Insolvency Resolution Process (CIRP) initiated under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by an Operational Creditor -- The CoC, comprising three Unsecured Financial Creditors, approved withdrawal under Section 12A of the IBC with 100% vote share in its meeting on 16.08.2024 -- The Resolution Professional filed an application for withdrawal, but later sought to withdraw it after admitting a claim from Mitsubishi Heavy Industries Ltd. (MHIL) as a Financial Creditor -- The Adjudicating Authority permitted withdrawal of the Section 12A application and deleted the Suspended Director's name from the parties -- The Tribunal held that the Resolution Professional had no authority to withdraw the application independently, but the Adjudicating Authority's order was based on procedural grounds and the Suspended Director had no right to be heard -- The Appeals were dismissed, upholding the Adjudicating Authority's orders
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Issue of Consideration: The Issue of Consideration was whether the Adjudicating Authority erred in permitting the Resolution Professional to withdraw the application under Section 12A of the IBC after the CoC had approved withdrawal, and whether the Suspended Director had a right to be heard in such proceedings
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Final Decision
The Tribunal dismissed both Appeals, upholding the Adjudicating Authority's orders dated 15.10.2024 and 12.11.2024. The withdrawal of the Section 12A application was permitted, and the Suspended Director's deletion from parties was affirmed.
2024 LawText (NCLAT) (01) 144
Company Appeal (AT) (Insolvency) No. 2191 of 2024 and Company Appeal (AT) (Insolvency) No. 2304 of 2024
[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) [Arun Baroka] Member (Technical)
Mr. Abhijeet Sinha, Sr. Advocate with Ms. Honey Satpal, Advocate for Appellant, Mr. Krishnendu Datta, Sr. Advocate for Respondents
Mehul Patel (Member of Suspended Board of Anupam Port Cranes Corporation Ltd.)
Nandish S. Vin & Anr., including Mitsubishi Heavy Industries Ltd.
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Nature of Litigation: Appeals against orders of the Adjudicating Authority permitting withdrawal of a CIRP application under Section 12A of IBC and deleting the Suspended Director from parties
Remedy Sought
The Appellant sought setting aside of the orders dated 15.10.2024 and 12.11.2024, and reinstatement of the Section 12A application with his participation
Filing Reason
The Appellant challenged the Adjudicating Authority's decisions on grounds of procedural irregularity and lack of authority in withdrawing the application
Previous Decisions
The Adjudicating Authority passed orders on 15.10.2024 deleting the Suspended Director's name and on 12.11.2024 permitting withdrawal of the Section 12A application
Issues
Whether the Adjudicating Authority erred in permitting the Resolution Professional to withdraw the application under Section 12A of IBC after CoC approval
Whether the Suspended Director had a right to be heard in the withdrawal proceedings under Section 12A
Submissions/Arguments
The Appellant argued that withdrawal under Section 12A requires CoC approval and the Resolution Professional had no authority to withdraw the application independently
The Appellant contended that MHIL's claim admission should not affect prior CoC decisions as per Regulation 12(3), and the Suspended Director should not have been deleted from parties
Ratio Decidendi
Withdrawal under Section 12A of IBC is governed by CoC approval, and the Resolution Professional cannot independently withdraw an application. However, the Adjudicating Authority has discretion to permit withdrawal based on procedural compliance. Suspended management has no right to be heard in withdrawal proceedings as they are not necessary parties under Section 12A.
Judgment Excerpts
The CoC in its 3rd meeting passed resolution approving the withdrawal application under Section 12A of the IBC r/w Regulation 30A
The Resolution Professional had no jurisdiction and authority to withdraw the application under Section 12A
The Adjudicating Authority noticing the aforesaid statement of the Resolution Professional and taking note of the purshish for withdrawal allowed the Resolution Professional to withdraw IA No.1345 of 2024
Procedural History
CIRP commenced on 09.04.2024 under Section 9 of IBC -- CoC approved withdrawal on 16.08.2024 -- Resolution Professional filed IA No.1345 of 2024 for withdrawal on 20.08.2024 -- MHIL's claim admitted on 16.09.2024 -- Adjudicating Authority passed orders on 15.10.2024 and 12.11.2024 -- Appeals filed on 04.11.2024 and later -- Tribunal heard arguments and dismissed Appeals on 23.12.2024
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