Case Note & Summary
The National Company Law Appellate Tribunal dealt with Company Appeal (AT) (Insolvency) No. 1366 of 2026, which arose from an order dated 23.07.2026 by the National Company Law Tribunal (NCLT), Mumbai, admitting Epic Yarns Private Limited into Corporate Insolvency Resolution Process (CIRP). The appellant, Aayush Prashant Agarwal, a suspended director of the corporate debtor, sought to terminate the CIRP following a settlement agreement reached with the operational creditor, Uma Export Limited. The settlement was formalized on 06.08.2026, after the CIRP had commenced. The appellant argued that since no Committee of Creditors (CoC) had been constituted and the sole financial creditor's claim had not been received, continuing the CIRP would serve no useful purpose. The Tribunal noted that the IRP had received a claim from the Employees Provident Fund Organisation amounting to Rs. 1,28,58,295. The Tribunal acknowledged the settlement agreement and the payments made, but highlighted that the procedure for withdrawal of an application under Section 12A of the IBC had become more stringent due to recent amendments. The Tribunal ultimately allowed the IRP to make an application to the NCLT for withdrawal under Section 12A and requested the NCLT to dispose of the application within 15 days. The appeal and the interim application were disposed of accordingly, with no order as to costs.
Headnote
A) Insolvency Law - Corporate Insolvency Resolution Process - Termination of CIRP - Insolvency and Bankruptcy Code, 2016, Section 12A - The Tribunal noted that a settlement agreement was reached after the initiation of CIRP, but the procedure for withdrawal has become more stringent post-amendment. The IRP was permitted to apply for withdrawal under Section 12A, and the NCLT was requested to dispose of the application within 15 days (Paras 4.6-5).
Issue of Consideration
Whether the Corporate Insolvency Resolution Process (CIRP) can be terminated following a settlement agreement between the parties after the initiation of CIRP.
Final Decision
The Tribunal allowed the IRP to apply for withdrawal of the CIRP under Section 12A of the IBC, 2016, and requested the NCLT to dispose of the application within 15 days. The appeal and interim application were disposed of with no order as to costs.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Corporate Insolvency Resolution Process
- settlement agreement
- withdrawal of application under Section 12A
