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
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
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.
Law Points
- Withdrawal of Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code
- 2016 (IBC) requires approval from the Committee of Creditors (CoC) with 90% vote share -- Resolution Professional acts as a facilitator and does not have independent authority to withdraw an application under Section 12A -- Admission of a new financial creditor's claim after CoC approval for withdrawal does not invalidate prior CoC decisions as per Regulation 12(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations
- 2016 -- The Adjudicating Authority has discretion to permit withdrawal of an application under Section 12A based on procedural compliance and circumstances -- Suspended management has no right to be heard in withdrawal proceedings under Section 12A as they are not necessary parties
