Last Updated on March 30, 2023 by Administrator
In ruling on an appeal filed in Abhishek Singh v. Huhtamaki Ppl Ltd. & Anr., the Bench of Justices B.R. Gavai and Vikram Nath held that Section 12A of the Insolvency and Bankruptcy Code, 2016 (“IBC”) does not prohibit entertaining requests for the Corporate Insolvency Resolution Process (“CIRP”) to be withdrawn even before the creation of the Committee of Creditors (“CoC”). Additionally, while both sections do not conflict, Regulation 30A of the CIRP Regulations advances the goals of Section 12A of the IBC.
In the case, Fruit beverage production and marketing are the businesses that Manpasand Beverages Ltd. (“Corporate Debtor”) engages in. The Corporate Debtor previously received packing supplies from Huhtamaki PPL Ltd. (“Operational Creditor”). In response to a default of Rs. 1,31,00,825/-, the Operational Creditor submitted a petition under Section 9 of the IBC to initiate CIRP against the Corporate Debtor. On 01.03.2021, the NCLT acknowledged the appeal and began CIRP proceedings against the corporate debtor.
The Parties engaged into Settlement two days after the start of CIRP, before the Committee of Creditors (“CoC”) had even been established. The Corporate Debtor had five days to settle the Rs. 95.72 Lakhs required by the Settlement Terms. In the interim, the Corporate Debtor had appealed the Order dated 01.03.2021 to the National Company Law Appellate Tribunal (“NCLAT”), which was dropped, with the option to re-file the appeal in the event the settlement fell through. Until the NCLT rules on the motion made pursuant to Section 12A of the IBC, the NCLAT also postponed the formation of the CoC. The CoC was created by the IRP on April 15, 2021. In light of these events, the Suspended Director of Corporate Debtor (“Appellant”) appealed the NCLT order dated April 13, 2021 before the Supreme Court.
Supreme in its decision said that Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2018 imposes obligations on NCLT. As well as even before the CoC is established, Section 12A of the IBC does not prevent considering petitions for withdrawal.
The 13.04.2021 NCLT ruling has been revoked. The IRP’s withdrawal motion under Regulation 30A was approved by the Bench. The corporate debtor’s creditors, however, would be unaffected by the ruling and could continue to assert their claims through the proper channels.
Case Title: Abhishek Singh v. Huhtamaki Ppl Ltd. Ors
Written by: Srijan raj
