Brilliant Alloys Private Limited Vs. Mr. S. Rajagopal & Ors. - The court held that Regulation 30A has to be read along with Section 12A & can only be construed as directory depending on the facts of each case.

Supreme Court (14.12.2018) in Brilliant Alloys Private Limited Vs. Mr. S. Rajagopal & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 31557/2018] held that;

• The only reason why the withdrawal was not allowed, though agreed to by the Corporate Debtor as well as the Financial Creditor -State Bank of India and the Operational Creditor-Respondent No.3, is because Regulation 30A states that withdrawal cannot be permitted after issue of invitation for expression of interest. 

• According to us, this Regulation has to be read along with the main provision Section 12A which contains no such stipulation. 

• Accordingly, this stipulation can only be construed as directory depending on the facts of each case. 

 

Excerpts of the Order; 

The only reason why the withdrawal was not allowed, though agreed to by the Corporate Debtor as well as the Financial Creditor -State Bank of India and the Operational Creditor-Respondent No.3, is because Regulation 30A states that withdrawal cannot be permitted after issue of invitation for expression of interest. 

 

According to us, this Regulation has to be read along with the main provision Section 12A which contains no such stipulation. 

 

Accordingly, this stipulation can only be construed as directory depending on the facts of each case. 

 

Accordingly, we allow the Settlement that has been entered into and annul the proceedings.

 

The Special Leave Petition is disposed of accordingly.

 

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Blogger’s comments; Regulation 30A stands amended w.e.f. 25.07.2019 & amended regulation reads as under;

 

# 30 A. 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 FA 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 subregulation (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.]

 

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