The NCLAT permitted the withdrawal of the CIRP under Section 12A following the acceptance of the OTS settlement, ensuring the Corporate Debtor continued as a going concern.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench headed by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal and held that a Section 7 application under the IBC may be withdrawn through a Section 12A application filed by the Financial Creditor via the IRP, provided the OTS proposal has been accepted and all dues are cleared. The Tribunal emphasized compliance with CIRP regulations, allowing objections from other creditors and ensuring the Corporate Debtor's continuity as a going concern during the withdrawal process.
The National Company Law Appellate Tribunal (NCLAT) disposed of an appeal concerning the admission of a Section 7 application under the Insolvency and Bankruptcy Code, 2016. The appeal arose from an order of the Adjudicating Authority dated 21.06.2024, admitting the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on a default of ₹43.23 crore claimed by the Indian Bank. During the pendency of the appeal, the appellant submitted a One-Time Settlement (OTS) proposal to the Indian Bank, which was later accepted, and a no-dues certificate was issued on 01.01.2025 following full payment under the OTS.
The NCLAT directed the Financial Creditor, the Indian Bank, to file a withdrawal application under Section 12A of the IBC through the Interim Resolution Professional (IRP), as per Regulation 30A of the CIRP Regulations, 2016. The Tribunal noted that any additional objections by other Financial Creditors, such as Union Bank of India and Bank of Baroda, whose dues were not settled, could also be raised during the withdrawal process. It clarified that CIRP costs incurred would need to be accounted for in the Form FA submitted to the IRP.
Acknowledging that the Committee of Creditors (CoC) had not yet been constituted, the NCLAT directed that further steps, including the withdrawal of the CIRP, should be completed within a specified timeline. The IRP was tasked with continuing the Corporate Debtor as a going concern until further orders by the Adjudicating Authority. The Tribunal emphasized procedural compliance and provided clear instructions to expedite the resolution process, ensuring that the interests of all stakeholders, including dissenting creditors, were addressed. The appeal was accordingly disposed of.
Mr. Krishnendu Datta, Sr. Advocate with Mr. Pulkit Deora and Ms. Alina Merin, Advocates represented the Appellant
Mr. Deepak Saxena, Mr. Shivanjali Mane and Mr. Kaushal Ameta, Advocates appeared for the Union Bank of India.
Mr. Kushal Bansal and Mr. Anish Ahlawat, Advocates appeared for the RP.
Mr. Rajesh Kumar Gautam, Mr. Anant Gautam, Mr. Dinesh Sharma, Mr. Deepanjal Chaudhary and Mr. K. Nilesh Sahay, Advocates appeared for the Indian Bank.
Mr. Prakash Shinde and Ms. Niyati Merchant, Advocates appeared for the Intervenor (Bank of Baroda).
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