No appeal lies u/s 62 to SC against NCLAT order staying constitution of CoC: SC

Case Details: Ashok G. Rajani v. Beacon Trusteeship Ltd. - [2022] 142 taxmann.com 465 (SC)

Judiciary and Counsel Details

• • Indira Banerjee & J.K. Maheshwari, J.J

Facts of the Case

In the instant case, the question was placed before the Apex Court as to whether an appeal u/s 62 of IBC can be made to the Supreme Court against the NCLAT’ order which stayed the constitution of CoC so as to enable withdrawal of CIRP u/s 12A?

Supreme Court Held

The Supreme Court observed that Section 12A of the IBC clearly permits withdrawal of an application u/s 7 of the IBC that has been admitted on an application made by the applicant. The question of approval of the Committee of Creditors by the requisite percentage of votes, can only arise after the Committee of Creditors is constituted. Before the Committee of Creditors is constituted, there is no bar to withdrawal by the applicant of an application admitted u/s 7 of the IBC.

Further, the Supreme Court observed that Section 12A of the IBC enables the Adjudicating Authority to allow the withdrawal of an application admitted u/s 7, 9 or 10, on an application made by the applicant with the approval of 90% voting shares of the Committee of Creditors in such a manner as may be specified.

The Supreme Court held that the NCLAT was justified in staying the constitution of CoC and allowing the applicant to file application to NCLT u/s 12A for withdrawal of application where applicant and corporate debtor arrive at a settlement after CIRP application is allowed u/s 7, 9 or 10 of the IBC.

Further, the Adjudicating Authority (NCLT) was directed to take up the settlement application and decide the same in light of the observations made. Thus, there was no question of law which requires a determination by this Court. Accordingly, the appeal was to be dismissed.