Case Note & Summary
The appeal arose from an order dated 18.12.2024 by the National Company Law Tribunal, Jaipur, dismissing an application for withdrawal of the Corporate Insolvency Resolution Process (CIRP) initiated against Shalfeyo Industries Private Limited by Prime Impex. The CIRP was initiated on 16.08.2022 due to a claim of approximately Rs. 11.90 lakhs. The Appellant, Deepak Modi, a suspended director, sought to withdraw the CIRP after settling the claims of the sole Financial Creditor, Axis Bank, and offering full payment to the Operational Creditor, Prime Impex. However, the Adjudicating Authority dismissed the application on grounds of non-compliance with the statutory procedure under Section 12A of the Insolvency and Bankruptcy Code, 2016, which required the application to be filed through the Resolution Professional and with the approval of the Committee of Creditors (CoC). The Appellant argued that the CIRP had reached a stalemate and that continued proceedings served no useful purpose. The Respondents contended that the CIRP was prolonged due to disputes and that the Appellant's claims were distorted. The Appellate Tribunal noted that the claims of all creditors had been settled and that the CIRP process had effectively reached a stalemate. It concluded that keeping the CIRP alive would waste resources and directed the closure of the CIRP, subject to the Appellant paying Rs. 18 lakhs to Prime Impex and the determination of CIRP costs by the Adjudicating Authority.
Headnote
A) Insolvency Law - Withdrawal of CIRP - Compliance with Procedure - Insolvency and Bankruptcy Code, 2016, Section 12A - The Adjudicating Authority dismissed the withdrawal application as it was filed by a suspended director and not through the Resolution Professional, failing to meet the statutory requirements. Held that compliance with the procedure is mandatory for withdrawal under Section 12A (Paras 24-30).
Issue of Consideration
Whether the Appellant could withdraw the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code, 2016.
Final Decision
The Appellate Tribunal closed the CIRP proceedings against Shalfeyo Industries Pvt. Ltd., directing the Appellant to pay Rs. 18 lakhs to Prime Impex and for the Adjudicating Authority to determine CIRP costs within four weeks.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 12A
- Regulation 30A
- Corporate Insolvency Resolution Process
- withdrawal of CIRP
- compliance with statutory requirements
