Supreme Court allows withdrawal of CIRP after issue of invitation for expression of interest
By EDITORIAL TEAM INSOL INDIA Posted On : January 15, 2019
In Brilliant Alloys Private Limited vs. Mr. S. Rajagopal and Others, the apex court in an appeal arising out of an impugned final judgment passed by the National Company Law Tribunal, Chennai bench (“NCLT”) allowed withdrawal of corporate insolvency resolution process (“CIRP”) under Insolvency and Bankruptcy Code 2016 (“IBC”) even after the issue of invitation for expression of interest.
An application for withdrawal of CIRP against the corporate debtor was filed by the resolution professional under Section 60 (5) of the IBC on the ground that all claims of operational and financial creditors of the corporate debtor are settled. Since the settlement happened after the issue of invitation for expression of interest, the application for withdrawal was filed under Section 60 (5) of the IBC instead of Section 12A.
Section 12A of IBC provides that CIRP can be withdrawn after its admission, if approved by 90% (ninety percent) voting share of the committee of creditors (“CoC”). Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) imposes that a withdrawal application can be filed before issue of invitation for expression of interest under Regulation 36A. NCLT had dismissed the application for withdrawal since the conditional clause could not be ignored.
The Supreme Court set aside the order of NCLT and held that Regulation 30A of the CIRP Regulations is to be read along with the main provision Section 12A of the IBC, which contains no such condition. The condition under Regulation 30A can only be considered as directory in nature depending on the facts of each case.