Facts of the case; the present case, the Petition filed by the Operational Creditor came to be admitted on July 16, 2020. Thereafter, the Corporate Debtor and Operational Creditor entered into Consent Terms dated July 27, 2020, i.e. prior to the constitution of the CoC.
Pursuant to the Consent Terms, the Corporate Debtor rendered full and final payment in favour of the Operational Creditor thereby discharging its obligations under the Consent Terms. Thereafter, the Operational Creditor filed an Application for withdrawal on July 30, 2020 praying for withdrawal of the Corporate Debtor’s CIRP.
At the hearing of the withdrawal application [IA /1130/2020 IN CP(IB) 4663 (MB) /2018] , the NCLT on 12.08.2020, dismissed the same in view of the fact that the withdrawal application ought to have been filed by the Interim Resolution Professional as mandated under Regulation 30A(1)(a) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
In the intervening period, the CoC came to be constituted on August 8, 2020. When the IRP placed a proposal for withdrawal before the CoC under Section 12A, the CoC resolved to reject such proposal notwithstanding the settlement between the Operational Creditor and the Corporate Debtor.
After hearing the parties, the NCLT passed an order ruling that the relevant date for considering withdrawal of CIRP is the date of the application and nothing else. Consequently, the NCLT permitted the Corporate Debtor’s CIRP to continue by replacing the IRP with a RP notwithstanding the prior full and final settlement between the Corporate Debtor and Operational Creditor.
Excerpts of the order;
# 1. This is an application filed by Union Bank of India this sole constituent of the Committee of Creditors of Sovika Aviation Services Pvt Ltd under section 22 (3) (b) of Insolvency and Bankruptcy Code seeking to replace the Interim Resolution Process (Mr. Jagdish Ahuja with Mr. Bijendra Kumar Jha) as Resolution Professional (RP) of the Corporate Debtor.
# 3. The present Application was considered at the hearings held on 29.09.2020 and 06.10.2020. On 29.09.2020 this Bench noted that there was an application bearing I.A. No. 1130/2020 IN C.P 4633/2018 filed by the Operational Creditor directly, seeking withdrawal of the CIRP initiated against the Corporate Debtor, without routing the application through the IRP appointed in the matter. Therefore, this Bench dismissed that application with liberty to the parties to file a fresh application in accordance with law. Mr. Jagdish Ahuja, IRP submits that the CoC was duly constituted on 08.08.2020 by which date he did not have any application for withdrawal of the CIRP in terms of section 12 (a) of the Court.
# 4. Mr. Nausher Kohli, Ld. Counsel for the Applicant/ CoC submits that in terms of the judgment of Hon’ble NCLAT in K C Sanjeev Vs. Solar Offset Printer Pvt Ltd (Company Appeal (AT) (Insolvency) No. 1427/2019) dated 28.02.2020, the relevant date for considering withdrawal of CIRP is the date of the application and nothing else. He further relied on paras 79 & 80 of the judgment of the Hon’ble Supreme Court in Swiss Ribbons (P) Ltd. Vs. Union Bank of India (2019) 4 SCC 17 to submit that the word of the CoC is not final and that Adjudicating Authority is free to take a view as regards withdrawal after considering all relevant circumstances.
# 5. The Bench has considered the matter in its entirety and perused the record. We have also heard Ld. Counsel appearing for the CoC, the Operational Creditor and the Corporate Debtor and also the IRP present in person.
# 6. It is seen from the record that at the second meeting of the CoC on 02.09.2020, it has been resolved to appoint Mr. Bijendra Kumar Jha as the RP of the Corporate Debtor in place of Mr. Jagdish Ahuja IRP. The Resolution has been passed with 100% voting share.
# 7. Accordingly, this Adjudicating Authority hereby grants approval for the appointment of Mr. Bijendra Kumar Jha (Registration IBBI/IPA-P00712/2017-18/11227) as Resolution Professional (RP) of Sovika Aviation Services Pvt Ltd, the Corporate Debtor.
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