Consent of CoC u/s 12A isn’t required when CIRP plea filed before constitution of CoC: NCLAT

Case Details: Asif Abdullah Dalwai v. Arun Bagaria, Interim Resolution Professional of Windals Auto (P.) Ltd.- [2022] 136 taxmann.com 292 (NCLAT- New Delhi)

Judiciary and Counsel Details

• • Justice Ashok Bhushan, Chairperson and Dr. Ashok Kumar Mishra, Technical Member
  • Ms. Prachi Johri and Lakshya Sachdeva, Advs. for the Appellant. 
  • Arun Bagaria and H.P. Kar for the Respondent.

Facts of the Case

In the instant case, an appeal was filed against the Order passed by the NCLT. The NCLT in its order had dismissed an application and directed the Insolvency Resolution Profession (IRP) to get the withdrawal of CIRP approved from the Committee of Creditors.

The appellant submitted that the Corporate Debtor was admitted into CIRP and a public announcement was made subsequently. Later on, an application was filed before NCLT for withdrawal of the CIRP under section 12A of IBC. Due to paucity of time, the application was listed but the matter could not be heard by the Tribunal. Thereafter, CoC was constituted and the first meeting of COC was held.

NCLAT Held

The Appellant submitted that the application was filed prior to the constitution of CoC, hence the approval of CoC is not required. It was also submitted that there were huge claim of Financial Creditors and hence the matter need to be sent back to the CoC for its consent.

Resolution Professional also filed a status report where the date of the application filed and the constitution of CoC has been stated.

The Appellate Tribunal referred the judgment in the matter of Ashish Ispat (P.) Ltd. v. Primuss Pipes and Tubes Ltd wherein the NCLT held that when the Application under section 12A of the Code had been filed prior to the Constitution of CoC there is no requirement of obtaining the consent of the CoC as required by section 12A of the Code.

In view of the aforesaid, the NCLAT observed that the Order passed by the NCLT for withdrawal application be placed before the CoC was uncalled for.

Setting aside the NCLT’s order, The NCLAT directed that the application filed by IRP under section 12A of the Code be considered and appropriate order was required to be passed by the NCLT as earlier as possible.

Case Review

• • Ashish Ispat (P.) Ltd. v. Primuss Pipes & Tubes Ltd. [Co. Appeal (AT) Ins. No. 892 of 2021, dated 7-1-2022] (para 6) followed.
  • National Engineering Industries Ltd. v. Windals Auto (P.) Ltd. [2022] 136 taxmann.com 291 (NCLT – Mum.) (para 8) Set aside [See Annex].

List of Cases Referred to

• • Ashish Ispat (P.) Ltd. v. Primuss Pipes & Tubes Ltd. [Co. Appeal (AT) Ins. No. 892 of 2021, dated 7-1-2022] (para 6).