The New Delhi bench of the National Company Law Appellate Tribunal ( NCLAT ) has held that the CIRP withdrawal application can be withdrawn by a resolution professional ( RP ) before the application is heard and allowed.
Mehul Patel, the suspended director of the corporate debtor, Board of Anupam Port Cranes Corporation Ltd. has filed these two appeals challenging two orders passed by the NCLT. These appeals stemmed from an application filed under Section 9 of the code by the operational creditor, which was admitted.
After the parties settled themselves, a Section 12A application was submitted. Following that, the RP acknowledged claims made by Mitsubishi Heavy Industries Ltd. ( MHIL ) as a financial creditor. As a result, the RP stated during the hearing that the operational creditor’s check had also been cashed.
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Following that, the RP notified the MHIL of the CoC’s decision on the CIRP withdrawal and the filing of an application under section 12A. The RP then acknowledged the MHIL’s claim, and it was verified at the hearing that the check made out to the operational creditor had been cashed.
In order to withdraw the application submitted under Section 12A, the Resolution Professional filed a purshish before the Adjudicating Authority, arguing that since MHIL’s claim was accepted, the CoC needed to be reconstituted. The Resolution Professional was able to withdraw IA No. 1345 of 2024 after the Adjudicating Authority took note of the Resolution Professional’s statement and the withdrawal request.
The appellant argued that the steps outlined in Section 12A must be followed in order to withdraw the CIRP, and that no withdrawal can be allowed in violation of the steps outlined, as the Supreme Court noted in the Glass Trust Case.
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Additionally, it was contended that the Resolution Professional lacked the jurisdiction and ability to withdraw the application under Section 12A because they were merely acting as the Operational Creditor’s representative.
In addition, it was stated that, according to Regulation 12 (3) of the CIRP Regulations, if a new financial creditor joins the committee after its claim has been admitted, this will not impact the legality of any decisions the committee has made before then.
Ultimately, it was argued that the Resolution Professional, who is a Suspended Director of the Corporate Debtor, must handle the Insolvency Process, including the application under Section 12A, and that the Appellant, who is a Suspended Director of the Corporate Debtor, has no part in the application under Section 12A submitted by the Resolution Professional.
The tribunal pointed out that Regulation 30A makes it quite evident that a withdrawal application must be submitted via the Resolution Professional or Interim Resolution Professional, as applicable.
The bench of Justice Ashok Bhushan (Judicial Member), Barun Mitra ( Technical Member ) and Arun Baroka ( Technical Member ) ruled that the withdrawal of the application under section 12A is attributed to a subsequent event that happened after August 16, 2024 namely the admission of the claims of the MHIL on September 16, 2024 which was previous to the hearing or approval of the section 12A application. The RP has rightly brought into the notice of the Adjudicating Authority on 17.09.2024 when application came for hearing that claim has been admitted and CoC has to be re-constituted.
The tribunal held that the Resolution professional had every jurisdiction to file purshish to withdraw the application. The Adjudicating authority has permitted withdrawal of Section 12A application under law.
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