Abhishek Singh vs. Huhtamaki PPL Ltd. & Anr.
DATE OF JUDGMENT:
28th March 2023
B.R. GAVAI; J., VIKRAM NATH; J.
Appellant: Abhishek Singh
Huhtamaki PPL Ltd. & Anr
Extent of Application of Section 12 A of IBC vis-à-vis Regulation 30A of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2018
12A. Withdrawal of application admitted under section 7,9 or 10 – The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of a ninety percent voting share of the committee of creditors, in such manner as may be specified.
Withdrawal of application. (1) An application for withdrawal under section 12A may be made to the Adjudicating Authority –
(a) before the constitution of the committee, by the applicant through the interim resolution professional;
(b) after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be:
Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applicant shall state the reasons justifying withdrawal after issue of such invitation.
(2) The application under sub-regulation (1) shall be made in Form-F A of the Schedule accompanied by a bank guarantee-
(a) towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33, till the date of filing of the application under clause (a) of sub-regulation (1); or
(b) towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub-regulation (1).
(3) Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt.
(4) Where an application for withdrawal is under clause (b) of sub-regulation (1), the committee shall consider the application, within seven days of its receipt.
(5) Where the application referred to in sub-regulation (4) is approved by the committee with ninety percent voting share, the resolution professional shall submit such application along with the approval of the committee, to the Adjudicating Authority on behalf of the applicant, within three days of such approval.
(6) The Adjudicating Authority may, by order, approve the application submitted under sub-regulation (3) or (5).
(7) Where the application is approved under sub-regulation (6), the applicant shall deposit an amount, towards the actual expenses incurred for the purposes referred to in clause (a) or clause (b) of sub-regulation (2) till the date of approval by the Adjudicating Authority, as determined by the interim resolution professional or resolution professional, as the case may be, within three days of such approval, in the bank account of the corporate debtor, failing which the bank guarantee received under sub-regulation (2) shall be invoked, without prejudice to any other action permissible against the applicant under the Code.
1. It was contended that on bare perusal, the relevant provisions clearly permit the settlement agreement before the constitution of CoC and the subsequent withdrawal of proceedings. Hence, once settlement was entered into, the NCLT committed a grave error in not allowing the withdrawal of proceedings. Reliance was placed by the Ld. Senior Counsel on the judgment of the Hon’ble Supreme Court in the case of Swiss Ribbons (P) Ltd. V. Union of India after which Regulation 30A was inserted.
2. Another contention was that NCLT erred in holding a consideration that the proceedings cannot be allowed to be withdrawn without hearing the other creditors. It was submitted that the third-party claims could not have been taken into consideration as by that time, CoC was not constituted and if the CoC had not been constituted the claims of other creditors would not come into play to defeat the settlement arrived at between the OC and the CD.
3. Next contention was in response to the objection taken by the IRP that the appellant as a suspended director transferred big amounts from the CD’s account during the period of the moratorium to his personal account as well as to third parties. It was submitted by the IRP that the amount transferred to his personal account was used to pay the OC under the settlement agreement. In this regard, it was submitted on behalf of Appellants that NCLT itself recorded a finding that the above objection taken by the IRP was not conclusively established and despite the said finding the NCLT was apparently influenced by the objection taken by the IRP.
4. Further, NCLT had no jurisdiction to declare that Regulation 30A of IBBI Regulations was not binding on it.
1. It was contended that the Appellant must have availed the alternative remedy by filing an appeal in NCLAT.
2. The IRP relying upon various judgments reiterated its submissions before the NCLT.
3. Another issue that was raised by the IRP was regarding the non-clearance of funds for expenditure incurred by the Appellant.
The Hon’ble Court observing that Regulation 30A of IBBI Regulations lay down the complete procedure for applications filed under it. The claim for expenses of IRP Professionals are also covered therein. Hence the court allowed the appeal and set aside the impugned order passed by the NCLT.