Ashok Sethi vs Ugro Capital Ltd. & Anr.

“IA/ 1629/2025 The present application has been preferred by the Corporate Debtor under Rule 11 of the NCLT Rules, 2016 for withdrawing CIRP. Learned Counsel for the Corporate Debtor submitted that in first round of litigation the order of commencement of CIRP passed by this Tribunal was reversed by Hon'ble NCLAT and in second round again when this Tribunal ordered commencement of CIRP the same was again challenged before the Hon'ble NCLAT and appeal is pending. Having made reference to the judgment of Hon’ble Supreme Court in GLAS Trust Company LLC S. BYJU Raveendran & Ors., he is submitted that none of the circumstances referred to in the said judgment of the Hon'ble Supreme Court can be met in the present case, as there is no RP in place. He also placed reliance upon the judgment of Hon'ble Supreme Court in STATE BANK OF INDIA & ORS VS. THE CONSORTTUM OF MR. MURARI LAL JALAN AND MR. FLORIAN FRITSCH AND ANR. and espoused that in order to do substantial justice this Tribunal is expected exercise its discretion. He relied upon Para 161 &163 of the judgment which reads thus.

"161.

We are conscious of our recent decision Glas Trust Company LLC v. Byju Raveendran and Others reported in 2024 SCC OnLine SC 3032, taking the view that the Court must be circumspect in deviating from the prescribed procedure, especially in the context of the BC, 2016. However, if such a deviation is made, then the Court must justify as to why the deviation was necessary to prevent the abuse of the process of the Court. The relevant observations are reproduced hereinbelow:

"70.

When a procedure has been prescribed for a particular purpose exhaustively, no power shall be exercised otherwise than in the manner prescribed by the said provisions. In such cases, the court must be circumspect in invoking its 'inherent powers' to deviate from the prescribed procedure. If such deviation is made, the court must justify why this was necessary to "prevent the abuse of the process of the Court".

71.

The need to be circumspect while invoking "inherent powers", when there is an exhaustive legal framework is amplified in the context of a legislation like the IBC. In Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd. (CoC), a two-judge bench of this Court, speaking through one of us (DY Chandrachud, J), affirmed this position and observed as follows:

"Any claim seeking an exercise of the adjudicating authority's residuary powers under Section 60(5) (c) IBC, NCLT's inherent powers under Rule 11 of the NCLT Rules or even the powers of this Court under Article 142 of the Constitution must be closely scrutinized for broader compliance with the insolvency framework and its underlying objective. The adjudicating mechanisms which have been specifically created by the statute, have a narrowly defined role in the process and must be circumspect in granting reliefs that may run counter to the timeliness and predictability that is central to the BC. Any judicial creation of a procedural or substantive remedy that is not envisaged by the statute would not only violate the principle of separation of powers, but also run the risk of altering the delicate coordination that is designed by the BC framework and have grave implications on the outcome of the CIRP, the economy of the country and the lives of the workers and other allied parties who are statutorily bound by the impact of a resolution or liquidation of a Corporate Debtor." (emphasis supplied)"

163.

We are of the considered view that where there exists extraordinary circumstances warranting the exercise of such powers in order to ensure that the very salutary purpose of the Code, 2016 is not frustrated, then the Court would be well-within its prerogative to exercise them to secure the object of the BC, 2016. If the proposition that there ought to be no exercise of the inherent powers where a procedure is laid down were to be blanketly accepted then it may have a very chilling effect whereby the very purpose of vesting this Court with inherent powers under Article 142 and Tribunals with Rule 11 of the NCLT Rules would be rendered otiose and meaningless."

Learned Counsel for the Creditor submitted that he is supporting the application preferred by the Corporate Debtor and the application may be disposed as withdrawn. Let the Non Applicant/ Creditor file an affidavit within one week. Learned Counsel for the Corporate Debtor should also file an affidavit indicating that the Corporate Debtor is not in default qua any other creditor. List the matter on 28.04.2025.