M/s. Kgeyes Nelsun Arges Developers vs M/s. Vees Properties Limited

(Hybrid Mode) 13.02.2026: Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):

The Appellant who has come up before this Appellate Tribunal is with a case, details of which are given below:

The Appellant being a land owner, had entered into a Joint Development Agreement dated 23.11.2007, with the Respondent No. 1 / Corporate Debtor (i.e. M/s. Vees Properties Limited). As per the terms of Joint Development Agreement, the parties were under an obligation that, upon the contribution of the land by the Appellant, he would be entitled to 45% share in the Project profits. During the implementation of the Project, M/s. Reliance Value Services Pvt. Ltd., being the Financial Creditor, filed an Application under Section 7 of I & B Code, 2016, for initiation of CIRP against M/s. Vees Properties Ltd. The said Section 7 Application was registered as CP(IB)/127(CHE)/2025, before the Ld. NCLT on 07.05.2025, and it was admitted on 03.09.2025 thereby commencing CIRP of Corporate Debtor. Subsequent to commencement of CIRP, an application was filed by IRP of M/s. Vees Properties Limited, that being IA(IBC)/1557(CHE)/2025 in CP(IB)/127/2025, under Section 12A of the I & B Code read with Regulation 30A of IBBI (IRP for Corporate Persons) Regulation, 2016, and Rule 11 of NCLT Rules, 2016.

The relief sought by the IRP in the said Application IA(IBC)/1557(CHE)/2025 was to withdraw the CIRP. This application was allowed by Ld. NCLT vide order dated 04.11.2025.

It is this order, which is under challenge by the Appellant on the ground that, since, he had entered into a Joint Development Agreement with the Corporate Debtor dated 23.11.2007, and had 45% share in the profits, the impugned order of 04.11.2025 should not have been passed by the Ld. Tribunal without hearing him whose rights are affected and also because he had already submitted a claim of Rs.50 Crores as against the CD, which would be affected by withdrawal of CIRP.

The Company Appeal is accompanied with a Condone Delay Application being IA No. 230 / 2026.

The order impugned was rendered by the Ld. Tribunal on 04.11.2025. The application for a Certified copy of the order was preferred by the Appellant on 04.12.2025 and the same was made available to the Appellant on 08.12.2025. Consequentially, the Appeal was preferred before this Appellate Tribunal by filing the same on 17.12.2025.

The Registry has reported a delay of 8 days in filing of the Appeal. In the application preferred by the Appellant to condone the delay, the Appellant has submitted that he was never in receipt of the notices of the proceedings under Section 12A before the Ld. Tribunal, and therefore, was not aware of passing of the Impugned Order till 01.12.2025, when he had approached the IRP seeking an update in respect of his claim and he could take action to prepare and file his Appeal only after such date. Further he, since being based in Mumbai, faced constraints in preferring the Appeal at this Appellate Tribunal, Chennai, within the statutory period of 30 days on account of the above, he has submitted that the delay was neither deliberate nor wanton and hence, the same may be condoned.

Having considered the grounds taken in the Condone Delay Application, as well as the surrounding circumstances, and taking into account the fact that the delay would be falling well within the condonable period as prescribed under the Proviso to sub-section (2) of Section 61 of the I & B Code, 2016, we are of the view that the delay of 8 days is condonable and hence, the delay of 8 days that has chanced in preferring the Appeal would stand condoned.

Heard Ld. Counsel for the Appellant on merits.

The Impugned Order, which is under challenge has been passed on IA (IBC) / 1557 / CHE / 2025, which was preferred under Section 12A of I & B Code, to be read with Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Challenge to it in the instant Appeal is on the ground that, the invocation of the provision contained under Section 12A of the I & B Code, 2016, for withdrawing of the Company Petition, after the Corporate Debtor has already been directed to be admitted to the CIRP process, by the order of 03.09.2025, would be bad and Section 7 Application ought not have been permitted to be withdrawn owing to the fact that, upon invitation of claim as made by the RP by publications in the local newspapers, the Appellant had already submitted his claim in Form C to the tune of Rs.50 Crore based on the Joint Development Agreement before the cut-off date of 17.09.2025, and his claim has been classified under the category of the ``other Creditors’’ and listed at Serial No. 3 in the list of Creditors, given in the Schedule of Claim which has been filed before the Ld. Tribunal, and therefore, he should have been heard and his consent should have been taken prior to filing of the application under Section 12A of I & B Code, 2016.

He has further stated that, on 22.09.2025, the Respondent No. 2 / Financial Creditor had filed Form FA for withdrawal of the Company Petition being CP(IB)/127(CHE)/2025 on the basis of the Settlement Agreement dated 23.09.2025, that was executed between the Respondent No. 2, Respondent No.1 and the Suspended Directors / Equity Shareholders of Respondent No. 1. Further, Respondent No. 3 had filed the application IA (IBC) / 1557 (CHE) / 2025 for withdrawal of Section 7 Application under Section 12A of the `Code’ which was heard by the Ld. Adjudicating Authority and the same was allowed by the Impugned Order resulting into a withdrawal of the CIRP process thereby dismissing the Company Petition as withdrawn.

The Appellant’s case in the instant Company Appeal, has been that, since he enjoyed the status since the Appellant enjoyed the status of being the Creditor even though his claim was not admitted, the withdrawal of Section 7 Application under Section 12A at the behest of the Financial Creditor who had filed it, ought not to have been permitted because, he had raised various other issues pertaining to his claim in terms of the violation and breaches of the conditions of Joint Development Agreement, which were required to be considered and merits before the withdrawal was permitted.

He further submitted that, since there was no reason provided by the IRP for non-admission of his legitimate claim, he still remains a Creditor to the CD, withdrawal of the CIRP by the Financial Creditor should not have been considered, without issuing notices to the other Creditors including himself whose claims were received and were yet to be considered and that the action of the IRP in filing the 12A Application is allegedly in violation of the procedure contemplated under the Glas Trust Company LLC V. BYJU Raveendran & Ors. as decided in Civil Appeal No. 9986 / 2024.

Thus, exclusively on this principal ground, the Appellant has contended that the impugned order happens to be in violation of principles of natural justice and non-compliance of the mandatory provisions, and that, the impugned order be quashed and the proceedings of the CIRP, as against the Corporate Debtor be revived.

If the logic, which has been assigned by the Ld. Tribunal, in the impugned order, is taken into consideration, it records that the application for withdrawal in Form FA was filed by the Financial Creditor seeking to withdraw the application under Section 7 of the I & B Code, 2016, which was filed by it earlier and which got admitted on 03.09.2025.

When the application came up for consideration, the Ld. Tribunal took note of the fact that a Settlement Agreement dated 23.09.2025, has been entered into between M/s. Reliance Value Services Pvt. Ltd. called as the First Party (or) the Financial Creditor M/s. Vees Properties Limited (erstwhile KGS Developers Limited), called the Second Party (or) the Corporate Debtor, and 6 Equity Shareholders collectively holding 100% equity shares of M/s. Vees Properties Limited (Corporate Debtor).

As per the terms of the Settlement Agreement dated 23.09.2025, the settlement amount of Rs.48,48,19,180/- was agreed to be paid by the Corporate Debtor out of which Rs.3 Crore to be paid on execution of the Agreement and the balance by way of post dated cheques as detailed in the impugned order and consequent to the said terms, the Financial Creditor had agreed for the withdrawal of the CIRP process, as it stood initiated at their behest under Section 7 of the I & B Code, 2016. However, the rights of the Financial Creditors were kept reserved, in the sense that, if any of the conditions was not complied with by the Corporate Debtor or there is any material breach of the terms of the settlement, it will be open for the Financial Creditor to revive and pursue the insolvency proceedings, for the balance unpaid amount.

In the proceedings that were held on 28.10.2025, Ld. Tribunal sought clarifications from the IRP and other related parties regarding the modalities of payment, the issue of the post dated cheques by the CD, inclusion of CD in the settlement and the status of Suspended Directors in the said Agreement and upon being satisfied that the Application filed under Section 12 fulfils the provisions of the Code, allowed the withdrawal of the CIRP proceedings which stood initiated in pursuance to the institution of the CP (IB) / 127 (CHE) / 2025.

The Ld. Tribunal has relied on the ratio of Glas Trust Company LLC V. BYJU Raveendran & Ors. in Civil Appeal No. 9986 / 2024, while recording its findings in the context of Section 12A. The relevant portions are extracted hereunder:

``11. The present case falls in the above mentioned situation i.e. after an application under Sections 7, 9 or 10 is admitted, but before the CoC has been constituted. The relevant portion of the above judgement is reproduced as under:

Although Section 12A continues to be silent on this aspect, after the decision in Swiss Ribbons (supra), Regulation 30A was amended to provide for this eventuality. An application for withdrawal in such cases may be made by the applicant through the IRP. The IRP will then place the application before the NCLT, which may pass an order either approving or rejecting the application. As noted above, once the application has been admitted, the proceedings are no longer the sole preserve of the applicant creditor and the corporate debtor. They are now in rem and at this stage, the NCLT must hear the concerned parties and consider all relevant factors before approving or rejecting the application for withdrawal. The NCLT being a quasi-judicial body, must not act as a mere post office, which stamps and approves every sufficient settlement agreement, without application of judicial mind.

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In the present case based on legal provisions in the Code, Regulations and jurisprudence available, after hearing the parties and going through the representations the following facts and law emerge:

CoC has not been formed, before filing of withdrawal application. ii) Even if CoC is to be formed, the petitioner will be the sole CoC member.

iii) As per law, NCLT can consider withdrawal of CIRP Application, before formation of CoC, after hearing all the concerned parties. iv) No objections have been received from the other parties for withdrawal.

In the FA submitted by the financial creditor, it is stated that CIRP cost and IRP fees have been paid in accordance with the regulations.’’

Based on the analysis as above and recording that as the CoC is yet to be constituted and therefore, NCLT can consider withdrawal of Section 7 Application, after hearing all concerned parties, that no objections have been received and CIRP Cost and IRP Fees have been paid in accordance with the Regulations, Ld. Tribunal proceeded to pass the impugned order, allowing withdrawal of Section 7 Application by the Financial Creditor (FC).

Section 12A of IBC, 2016, to be read with Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016, lays down the procedure for withdrawal of the application filed under Section 7 of the Code. This has been further elaborated by Hon’ble Apex Court in Glas Trust v. Byju (supra). It states that withdrawal of the said application can be sought at four different stages;

Firstly, before the Application under Section 7 of the Code is admitted; in such cases, Applicant may approach Ld. NCLT directly which then may pass an order, restricting its inquiry to the Applicant Creditor and the Corporate Debtor only.

Secondly, after the application under Section 7 is admitted, but, before the CoC has been constituted; in this case, the withdrawal application has has to be filed through IRP and Ld. NCLT has to pass orders, only after hearing concerned Parties and considering all relevant factors.

Thirdly, after the application under Section 7 is admitted and the CoC has been constituted and invitation of Expression of Interest has not been issued; in such case, RP will file application before Ld. NCLT only after it is approved by CoC with at least 90% majority.

Lastly, after an application under Section 7 of the Code has been admitted, the CoC has been formed and invitation of EoI has been issued.

In such a case, the procedure as detailed in (c) will be followed with the added condition that the Applicant must state reasons for withdrawal at this belated stage.

The Hon’ble Apex Court in Glas Trust Company LLC v. BYJU Raveendran & Ors. has also dwelt upon, as to how the inherent powers could be exercised by the Ld. Tribunal, under Rule 11 of the NCLT Rules, 2016, for the purposes of allowing or dis-allowing the application under Section 12A. The relevant Para 82 of the said Judgment is extracted hereunder:

``82. It is clear that once the Code gets triggered by admission of a creditor’s petition under Sections 7 to 9, the proceedings that is before the adjudicating authority, being a collective proceeding, is a proceeding in rem. Being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a Committee of Creditors is constituted (as per the timelines that are specified, a Committee of Creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case.’’

It is seen that, after considering the Judgment said entirety of the controversy and while invoking its inherent powers under Rule 11 of NCLT Rules, 2016, as prescribed by the Judgment of Glas Trust Company LLC (supra), which is to be read in consonance to the other authorities rendered by the Hon’ble Apex Court, the Ld. Tribunal had proceeded to allow the withdrawal of CIRP process.

In the proceedings of the Company Petition, in which CIRP was commenced against the Corporate Debtor, the Appellant was only an entity, who had filed his claim and his claim was not yet admitted, when application for withdrawal of Section 7 Application was filed. At this stage, mere filing of his claim will not crystallize his rights to take part in the proceedings in which Section 12 Application was taken up, as his claim was yet to be adjudicated when the proceedings of the Company Petition was taken on merits. Further, since the Ld. Tribunal in itself has satisfied itself that Rule 11 of NCLT Rules can be invoked for ordering withdrawal of the CIRP process to be read with Section 12A of the I & B Code, 2016, the impugned order cannot be said to have been passed by Ld. Tribunal by exercising an authority which is not vested with it. Thus, the impugned order permitting withdrawal of the CIRP process, is correct as per law, more particularly when the Application was moved by the Financial Creditor who has 100% share in CoC which is much more than what is prescribed under Section 12A of the I & B Code, 2016, to be read with Regulation 30A of IBBI Regulations.

Looking to the reasons assigned by the Ld. Tribunal and also the principles of law as elaborately by Hon’ble Apex Court in matters of Glas Trust v. Byju (supra) allowing of the application (IA(IBC)/1557(CHE)/2025) does not call for any interference at this stage. Hence, the Company Appeal stands dismissed.

Having said so, the dismissal of this Company Appeal as against the withdrawal of the CIRP process in the shape of IA(IBC)/1557(CHE)/2025 in CP (IB) / 127 (CHE) / 2025 as initiated against the Corporate Debtor M/s. Vees Properties Limited (Formerly known as KGS Developers Limited), would be without prejudice to any of the rights of the Appellant to invoke his enforcement of debts payable to it, in accordance with the provisions of law available to him.

Subject to the aforesaid exception, the Company Appeal (AT) (CH) (INS) No. 82 / 2026 lacks merit and the same is accordingly dismissed. The connected pending Interlocutory Applications, if any, would stand closed.

[Justice Sharad Kumar Sharma] Member (Judicial) [Jatindranath Swain] Member (Technical)