AI Structured Summary
Not yet generated for this judgment
Judgment
NARESH SALECHA, MEMBER (TECHNICAL)
The two Appeals have been preferred by the same Appellant i.e., Mr. Narendra Jindal. In Company Appeal (AT) (Insolvency) No. 594 of 2022 M/s Sharda Ma Enterprises Private Limited (in short ‘Corporate Debtor’) is Respondent No. 1 and Mr. Vaneet Bhatia is the Respondent No. 2 herein, who is the Interim Resolution Professional (in short ‘IRP’) of the Corporate Debtor, Norvic Shipping North America Inc. is the Respondent No. 3 who is Operational Creditor to the Corporate Debtor and Committee of Creditors (in short ‘CoC) of the Corporate Debtor is the Respondent No. 4. In this appeal, the Appellant has challenged the Impugned Order dated 08.04.2022 admitting the application filed by the Respondent No. 3 under Section 9 of the Insolvency & Bankruptcy Code, 2016 (in short ‘Code’) and putting the Corporate Debtor into Corporate Insolvency Resolution Process (in short ‘CIRP’).
The Second Appeal i.e., Company Appeal (AT) (Insolvency) No. 506 of 2022 has been filed by the same Appellant i.e., Mr. Narendra Jindal and HDFC Bank Limited the Financial Creditor is the Respondent No. 1, the Assistant General Manager SAMB-(II) is the Respondent No. 2, ICICI Bank is the Respondent No. 3 and Mr. Vaneet Bhatia the Resolution Professional is the Respondent No. 4, aggrieved by the Impugned Order which did not allow the application under Section 12A of the Code.
Both these Appeals have been preferred under Section 61 of the Code.
Both these Appeals are stated to be connected and both were conjointly argued by the parties and heard by us accordingly.
Heard the Counsel for the Parties and perused the records made available including the cited judgements.
Company Appeal (AT) (Insolvency) No. 594 of 2022
The Corporate Debtor is in business of trading in coal and for developing coal facilities. One consortium of banks comprises of State Bank of India of Bikaner and Jaipur (later merged into SBI), SBI of Patiala and HDFC Bank Limited granted credit facilities to the Corporate Debtor.
It is the case of the Appellant that during 2014, the Government of India diverted entire coal to the thermal power plants to meet the power crises and no coal was allocated to the coal trader like the Corporate Debtor. The Appellant explained that earlier the Corporate Debtor used to precure the coal through e-auction from Coal India Limited and due to non-availability of coal, the Corporate Debtor initiated for import of coal from Indonesia.
The Appellant submitted that during the relevant period, there has been continuous fall in international prices of coal and the Corporate Debtor suffered severe loses with each import and during this financially difficult period, the Corporate Debtor entered into a Charter Party Agreement dated 25.02.2016 with the Operational Creditor for shipment of coal ex- vessel ‘MV. Beks Nazik’. The Appellant admitted that the Operational Creditor invoices No. DFR-16-037-2 for USD 1,57,234.17 could not be paid by the Corporate Debtor due to de-monetization and implementation of GST regime. The Appellant also stated that in the meanwhile his account was also categorized as NPA in March, 2017 by the Lenders.
The Appellant stated that subsequent to failure on the part of the Corporate Debtor to make payment to the Operational Creditor, a Settlement Agreement was entered between the Corporate Debtor and the Operational Creditor to pay the entire outstanding amount of USD 1,57,234.17 in 13 instalments and the Corporate Debtor made the payment of first two instalment totalling USD 25,000/- but defaulted in making the payment of 3rd instalments which was due on 31.03.2019.
The Operational Creditor issued demand notice under Section 8 of the Code on 16.10.2019 and filed an application before the National Company Law Tribunal, New Delhi, Court- III (in short ‘Adjudicating Authority’) on 03.12.2019 No. CP (IB) No. 3370/ ND/ 2019 .
It is the case of the Appellant that he entered into the fresh settlement with the Operational Creditor after filing the application under Section 9 of the Code by the Operational Creditor and the Corporate Debtor was willing to settle the outstanding due of USD 1,57,234.17 at 75% of payable amount within a period of 12 months in monthly instalments and therefore the Adjudicating Authority should have taken the same on record and should have given an opportunity to the Corporate Debtor to revive therefore, the Impugned Order is perverse and need to be set aside.
In this connection, we also note from the reply submitted on behalf of the Corporate Debtor by IRP wherein the Respondent No. 2 i.e., IRP gave the background of the case and submitted that subsequent to the CIRP, the Respondent No. 2 published Form A on 10.04.2022 inviting claims against the Corporate Debtor and Respondent No. 2 vide e-mail dated 11.04.2022 also intimated HDFC Bank, SBI and ICICI Bank regarding initiation of the CIRP along with a request to them to file their claims before 22.04.2022 being the last date for receipt of claims. The Respondent No. 2 confirmed that he received three claims from of bankers and two claims from two Operational Creditors, namely, Department of Commercial Tax, Katni MP and Department of Income Tax, New Delhi.
The Respondent No. 2 stated that in terms of Section 21(1) of the Code, he constituted the CoC on 30.04.2022 and three Financial Creditors were taken as member of the CoC with 19.94% voting right to HDFC, 56.83 voting rights to SBI and 23.23% voting rights to ICICI Bank.
The IRP/ Respondent No. 2 submitted that on 18.05.2022, the Suspended Board of Directors of the Corporate Debtor claimed to have entered into a settlement agreement with the Operational Creditor agreeing to pay USD 1,00,000/- and therefore, he received Form-FA dated 18.05.2022 under Regulation 30A of CIRP Regulation, 2016 signed by the Operational Creditor with a request to terminate the CIRP. The Respondent No. 2 convened the meeting of CoC on 23.06.2022 for seeking approval of CoC for withdrawal of CIRP in terms of Section 12A r/w Regulation 30 A for CIRP Regulation 2016. However, the HDFC Bank being Member of CoC with 19.94% voting share voting, opposed the said resolution. The said resolution was required to be approved by the CoC with 90% of the voting share and therefore, resolution for withdrawal of CIRP could not be passed.
It is the case of the Respondent No. 2 that in view of non approval of withdrawal application by CoC, the Respondent No. 2 did not submit the application for withdrawal of CIRP proceeding as mandated by Regulation 30A of CIRP Regulation before the Adjudicating Authority.
We also note that the Appellant filed I.A. No 3238 of 2022 in Company Appeal (AT) (Insolvency) No. 594 of 2022 before the Adjudicating Authority seeking the directions to IRP not to proceed with the transaction audit in terms of Section, 43, 45, 50 & 66 of the Code. The said application was opposed by the Answering Respondent/ HDFC being devoid of any merit made with mala-fide intention. The Answering Respondent/ HDFC reiterated that in the 5th Meeting of CoC held on 22.09.2022, the HDFC Bank confirmed that they have taken final decision for not granting an approval for withdrawal of CIRP proceedings and further submitted that in view of failure of the settlement, the Resolution Professional is duty bound to continue its duties to conclude the CIRP in time bound manner and further requested to get removed stay by this Appellate Tribunal on Form G, thereby, allowing the Respondent No. 1 to carry out his duties pertaining to CIRP in accordance with the Code and help the Financial Creditors to recover their money and revive the Corporate Debtor.
Company Appeal (AT) (Insolvency) No. 506 of 2022
In this appeal, the Appellant gave details of various joint lenders Meeting especially the 4th Joint Lenders Meeting held on 22.02.2022 in which the Corporate Debtor submitted comprehensive proposal vide letter dated 22.02.2022 for Rs. 22 Crores against the outstanding amount of Rs. 69 Crores and requested the consortium lenders to allow the Corporate Debtor accordingly.
It is the case of the Appellant that during hearing the pending Appeal, despite discussions about the settlement with the Creditors, the Adjudicating Authority passed order for initiating of CIRP on 08.04.2022 and the IRP took over on 11.04.2022.
The Appellant submitted that after the fresh settlement agreement with the Operational Creditor, the matter was pending before the Adjudicating Authority and during this period, the SBI being the lead bank of consortium vide their letter dated 06.06.2022 approved the revised settlement proposal and revised payment schedule of the Corporate Debtor to pay Rs. 22 Crores.
The Appellant also submitted that as Promoters/ the Suspended Directors of the Corporate Debtor made part payment toward compromised settlement to bankers. However, despite their best efforts, the HDFC, during 5th Meeting of CoC held on 28.09.2022 denied approval of Form FA for withdrawal application of CIRP and recorded the following :-
“Sh. Anirudh Ji. HDFC Bank confirmed that their decision making authority has denied approval on “Form FA” (Withdrawal Application) and this being the final decision from their higher authorities.”
The Appellant submitted that during pending of the Appeal bearing Company Appeal (AT) (Insolvency) No. 594 of 2022, this Appellate Tribunal vide its order dated 05.10.2022 directed the Adjudicating Authority to hear I.A. No. 4704 of 2022 and accordingly the proceeding took place before the Adjudicating Authority and several hearings were held. The parties presented their submissions before the Adjudicating Authority.
It is the case of the Appellant that he brought before the Adjudicating Authority the aspect of the compromised settlement which has been taken place with the Operational Creditor and the Financial Creditor and therefore one of the Financial Creditor i.e., the HDFC could not have been allowed to object to such settlement and therefore the decision of the HDFC bank offering to the application filed under Section 12A of the Code, cannot be treated as commercial wisdom in accordance with the law.
The Appellant tried to differentiate the case under Section 12 A of the Code vis-à-vis Section 30(4) of the Code and stated that the sustainability and viability of the Resolution Plan is covered under Section 30(4) of the Code which involve the element of commercial wisdom of the CoC but in case of withdrawal of CIRP under Section 12A of the Code, what is required to be examined by the CoC is what would be beneficial in the larger interest of the Creditors of the Corporate Debtor.
The Appellant assailed the Adjudicating Authority who dismissed IA No. 4704 of 2022 merely on the ground of commercial wisdom of the CoC without looking into spirit of the Code, which is meant for revival of the Corporate Debtor and not for recovery mechanism for the bankers.
The Appellant highlighted that SBI and ICICI Bank together holding approximately 80% of the voting shares were in support of withdrawal of application in Form FA, whereas the HDFC holding 19.94% was not supporting and such solitary act of HDFC can only be treated as arbitrary, capricious and unreasonable act on part of HDFC.
Concluding his arguments, the Appellant submitted that the Impugned Order dated 15.03.2023 should be set aside and his Appeal should be allowed.
Per Contra, the Respondent No. 1 i.e., HDFC Bank denied all averments made by the Appellant.
The Respondent No. 1 stated that in the 7th CoC meeting on 06.06.2023, CoC discussed appeal filed by the Appellant and it was pointed out that the Appellant was hampering the CIRP process and further suggested that said appeal should be withdrawn by the Appellant. The Respondent No. 1 submitted that the representative of SBI requested Resolution Professional to bring to the notice of this Appellate Tribunal that SBI has confirmed the withdrawal of OTS agreement agreed between SBI and the Appellant herein.
The Respondent No. 1 stated that in view of said withdrawal of alleged settlement with SBI, the Appeal has become infructuous.
The Respondent No. 1 refuted the averment of the Appellant that the stand taken by the HDFC is arbitrary and in counter argument the Respondent No. 1 stated that total amount of claim as per Form C was Rs. 29,04,57,295/- on the debt of commencement of CIRP and the amount offered by the Appellant was merely Rs. 4.97 Crores which is not even 18% of total outstanding payable by the Corporate Debtor and in view of such huge haircut of more than 82%, the Respondent No. 1 did not find any commercial wisdom to accept the application of the Appellant to withdraw the CIRP proceedings.
The Respondent No. 1 strongly pleaded that as lender and as an independent Financial Creditor, despite being part of consortium of lenders, HDFC never agreed to the proposal made by the Respondent No. 1. The Respondent No. 1 further submitted that no other Financial Creditor could have offered binding offer on behalf of the Respondent No. 1. Thus, the alleged settlement proposal mentioned by the Appellant is neither binding on the Respondent No. 1 nor on the Members of the CoC.
The Respondent No. 1 also refuted that the averment of the Appellant regarding alleged agreement and settlement with the Financial Creditor w.r.t. properties being incorrect as it was regarding charge of the property owned by the promoters and not owned by the Corporate Debtor.
The Respondent No. 1 cited judgment of the Hon’ble Supreme Court of India in the matter of Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., [(2021) 10 SCC 4] and also cited judgment of this Appellate Tribunal in the matter of 'Shaji Purushothaman v. Union Bank of India, [(2019 SCC OnLine NCLAT 1151)], in support of his case.
In addition, the Respondent No. 1 cited judgment of Hon’ble Supreme Court of India Vallal RCK v. Siva Industries and Holdings Ltd., [(2022 SCC OnLine SC 717)], wherein it was held that NCLT/ NCLAT cannot adjudicate the differences arising of CoC.
The Respondent No. 1 referred to Section 21(6) of the Code and stated that as part of consortium arrangement, each Financial Creditor is required to authorise its agent to act on its own behalf to the extent of its voting share. Therefore, no other Financial Creditor could bind other Financial as claimed by the Appellant.
The Respondent No. 1 also refuted averment of Appellant regarding interplay between Section 30(4) and Section 12A of the Code and emphasised that the commercial wisdom of the CoC is with regard to all matters and not limited to one or other aspect.
The Respondent No. 1 stated that that in light of the aforementioned provision, the settlement proposed by the Appellant herein has failed to procure a ninety per cent vote in accordance with Section 12A of the Code. The Respondent No. 1 also stated that the Form FA submitted by the Appellant before CoC was based on the Settlement Agreement dated 18.05.2022 executed between Norvic Shipping North America INC, the Operational Creditor and Sharda Ma Enterprises the (Corporate Debtor) and Respondent No. l and other Financial Creditors are not parties to the said Settlement Agreement.
Concluding his arguments, the Respondent No. 1 requested to dismiss the appeal with costs.
The Respondent No. 2 i.e., SBI also opposed the appeal treating it as misconceived and an attempt to mislead this Appellate Tribunal by making false statement.
The Respondent No. 2 submitted that the Appellant at various places in the instant appeal, has falsely mentioned that the Respondent No. 2 who is the Lead Bank of the Lenders consortium and a member of the CoC of the Corporate Debtor has issued an acceptance letter dated 06.06.2022. The Respondent No. 2 clarified that Consortium Lenders led by SBI approved the Compromise settlement offered by the Ex-Promoters of the Corporate Debtor. The Respondent No. 2 submitted that the said letter was issued by SBI only on its own behalf and no authorisation was granted by ICICI Bank or HDFC Bank to SBI to issue the said compromise acceptance letter on behalf of ICICI Bank or HDFC Bank.
The Respondent No. 2 reiterated that at no stage the Respondent No. 2 gave any assurance to the Corporate Debtor on behalf of other bankers as in any case he was not authorised to do so.
The Respondent No. 2 also refuted the wrong statement by the Appellant that is the lead bank is always the final authority in case of difference of opinion amongst the members of consortium and submitted that there is no such statutory provisions the Respondent No. 2 cited the judgments “Swiss Ribbons Pvt. Ltd. Vs. Union of India & Ors. AIR (2019) 4 SCC 17”, the relevant portion of the aforementioned judgment is reproduced herein below:
"53.The main thrust against the provision of Section 12A is the fact that ninety per cent of the committee of creditors has to allow withdrawal. This high threshold has been explained in the ILC Report as all financial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus settlement involving all creditors ought, ideally, to be entered into. This explains why ninety per cent, which is substantially all the financial creditors, have to grant their approval to an individual withdrawal or settlement. In any case, the figure of ninety per cent, in the absence of anything further to show that it is arbitrary, must pertain to the domain of legislative policy, which has been explained by the Report (supra). Also, it is clear, that under Section 60 of the Code, the committee of creditors do not have the last word on the subject. If the committee of creditors arbitrarily rejects a just settlement and/or withdrawal claim, the NCLT, and thereafter, the NCLAT can always set aside such decision under Section 60 of the Code. For all these reasons, we are of the view that Section 12A also passes constitutional muster." (Emphasis Supplied)
The Respondent No. 2 submitted that final OTS letter dated 06.06.2022 stood expired as the Appellant vide its OTS letter dated 22.02.2022 made the statement that entire compromise settlement account in respect of the loan account will be paid latest by 31.03.2023 but the Appellant filed to comply with the terms of OTS proposal dated 22.02.2022 and therefore, the alleged settlement by SBI with the Appellant is no more valid and legal.
Concluding his arguments, the Respondent No. 2 supported fully the Impugned Order passed by the Adjudicating Authority and opposed any relief to be granted to the Appellant.
The Respondent No. 4 i.e, the Resolution Professional has also briefed this Appellate Tribunal by filling the Status Report.
In Company Appeal (AT) (Insolvency) No. 594 of 2022 the main issue is whether the Adjudicating Authority committed any error in accepting the CIRP application of the Operational Creditor. We have noted during our discussion in the earlier paragraphs and found that there was clear debt of more than Rs. 1 Crore payable to the Operational Creditor which remain unpaid and the the Operational Creditor filed the application under Section 9 of the Code. The Adjudicating Authority accepted the same and initiated the CIRP.
In this connection, we have gone through the reply of the Respondent No. 3 i.e., the Operational Creditor filed before us stating that “an incorrect version of settlement agreement dated 18.05.2022 has been placed on record of this Hon’ble Tribunal by the Appellant”. The Respondent No. 3 also stated that USD 25,000/- was indeed paid by the Corporate Debtor on 10.05.2022 through Zenibyte Creative Pte. Limited who paid on behalf of the Corporate Debtor, but the second instalment of USD 25,000/- was made with the delay of 9 days which would entitle the Respondent No. 3 to the entire amount along with the interest immediately and no further instalments have been paid by the Corporate Debtor to the Operational Creditor.
We note that the issue regarding withdrawing application by the Appellant was discussed in 7th CoC Meeting held on 06.06.2023 and the relevant extract of the minutes reads as under :-
"All the CoC members enquired from Suspended Director, Mr Narendra Jindal with regard to reason for filing an appeal against the Hon’ble NCLT dismissal order and requested him to withdraw the appeal application before the Hon’ble NCLAT at the earliest. Since his appeal is hampering the CIRP process and further stay on publication of "Farm G" is unnecessary delaying the CIRP process, wherein time is the essence. Suspended Director, Mr Narendra Jindal assured the CoC members that he will withdraw his Appeal application before the NDOH i.e. 24th July, 2023. Further, Sh. Amit Goyal Ji, (DGM) State Bank of India requested the RP to bring to the notice of Hon’ble NCLAT in the NDOH with regard to withdrawal of existing OTS agreement earlier entered with the SBI Bank and as on date there is No OTS agreement in existence with the SBI Bank either. RP assured him that same will be communicated to the Hon’ble NCLAT in the next NDOH." (Emphasis Supplied)
We have also noted that the Appellant himself accepted the fact regarding debt and tried to defend his case by stating that he owned two properties which could have been used to settle the outstanding dues of the Operational Creditor.
In this connection, we find that the appellant failed time and again, in making the payments to the Operational Creditor and due to his failure to meet the prior commitments, the first settlement was entered with the Operational Creditor dated 25.01.2019 whereby, he agreed to make the payment of USD 1,57,234.17 in 13 instalment. However, the Corporate Debtor could make the payment of only two instalments. Thus, the OTS entered between the Corporate Debtor and the Operational Creditor failed.
We observe that subsequent to admission of CIRP on 08.04.2022, the Suspended Management of the Corporate Debtor through the Appellant entered into second settlement with the Operational Creditor dated 18.05.2022 and according to which the Corporate Debtor agreed to make the payment @ 75% of the outstanding dues in 12 instalments. However, he could make payment of first instalment through someone else and second instalment was paid 9 days late and subsequently no instalment was paid. We note that in the meantime, the RP has invited the claims and has received the claims from three banks, namely, SBI, ICICI and HDFC and claims from two Operational Creditors.
We note that this Appellate Tribunal in the appeal filed by the Appellant in the meantime, gave interim relief to the Appellant stating that as Resolution Professional should not proceed further.
We would like to refer to cited judgment on commercial wisdom aspect, namely, Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., [(2021) 10 SCC 4]. The relevant extract has been reproduced hereinafter:
“174.It is also pointed out, that in pursuance of the order dated 5-8-2020 [Kotak Investment Advisors Ltd. v. Krishna Chamadia, 2020 SCC OnLine NCLAT 590] passed by Nclat, CoC has approved the resolution plan of KJAL on 13-8-2020. However, since we have already held, that the decision of Nclat dated 5-8-2020 [Kotak Investment Advisors Ltd. v. Krishna Chamadia, 2020 SCC OnLine NCLAT 590] does not stand the scrutiny of law, it must follow, that the subsequent approval of the resolution plan of KJAL by CoC becomes non est in law. For, it was only to abide by the directions of Nclat. We are of the view that nothing would turn on it. The decision of CoC dated 13-2-2019/14-2-2019 is a decision, which has been taken in exercise of its "commercial wisdom". As such, we hold, that the decision taken by CoC dated 13-2- 2019/14-2-2019, which is taken in accordance with its "commercial wisdom" and which is duly approved by NCLT, will prevail. Further, Nclat was not justified in interfering with the stated decision taken by CoC.” (Emphasis Supplied)
We note the decision of the Hon’ble Supreme Court of India on 12A of the Code rendered in Shaji Purushothaman (Supra) on commercial wisdom of the CoC. The relevant extract of the said judgment has been reproduced hereinafter:
"9.If an application under Section 12-A is filed by the appellant, the "Committee of Creditors" may decide as to whether the proposal given by the appellant for settlement in terms of Section 12-A is better than the "resolution plan" as approved by it and may pass appropriate order. However, as such decision is required to be taken by the "Committee of Creditors", we are not expressing any opinion on the same. (Emphasis Supplied)
We also refer to ratio of Vallal RCK (Supra) which restricted scope of about judicial interference on 12A matter under the Code. The relevant extract of the said judgment has been reproduced hereinafter:
“23.As already stated hereinabove, the provisions under Section 12-A IBC have been made more stringent as compared to Section 30(4) IBC17. Whereas under Section 30(4) IBC, the voting share of CoC for approving the resolution plan is 66%, the requirement under Section 12-A IBC for withdrawal of CIRP is 90%.
24.When 90% and more of the creditors, in their wisdom after due deliberations, find that it will be in the interest of all the stakeholders to permit settlement and withdraw CIRP, in our view, the adjudicating authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. The interference would be warranted only when the adjudicating authority or the appellate authority finds the decision of the CoC to be capricious, arbitrary, irrational and dehors the provisions of the statute or the Rules.” (Emphasis Supplied)
Here we have noted that HDFC has taken decision as the likely recovery from the Corporate Debtor was found to be less than 18% which fall in the commercial wisdom domain and there is no arbitrary or irrational decision on the part of the Financial Creditor/ CoC.
We note that the Adjudicating Authority in their order dated 08.04.2022 discussed all facts and noted that the Corporate Debtor has failed to comply the terms of settlement with the Operational Creditor dated 25.01.2019 and did not make the payment as required. The Adjudicating Authority came to conclusion that there has been debt and default and therefore, ordered for initiation of CIRP against the Corporate Debtor by appointing Mr. Vaneet Bhatia as the IRP.
In view of above discussions, we do not find any error in the Impugned Order dated 08.04.2022 passed by the Adjudicating Authority and therefore, Company Appeal (AT) (Insolvency) No. 594 of 2022 stand dismissed.
As regard, the Second Appeal challenging the dismissal of I.A. No. 4074 of 2022 filed by the Appellant as on application for withdrawal of CIRP, we note that the HDFC, having the voting share of 19.94% was not in favour of the same and gave its clear vote against the same.
We also note from the averments of the HDFC that against total claim of Rs. 29.05 Crores, the Appellant offered only Rs. 4.97 Crores which is less than 18 % of the outstanding dues payable. Therefore, the HDFC as Financial Creditor did not support the 12A application filed by the Appellant, considering commercial wisdom and we do not find any error here.
We have also noted from the averments made by the SBI, where the SBI categorically stated that it never gave the assurance on behalf of the other bankers and the OTS proposal of the SBI dated 06.06.2022 also stood expired in view of non-compliance of terms and condition committed by the Appellant vide its OTS proposal dated 22.02.2022. Thus, we hold that no banker is willing to support the application of the Appellant for withdrawal from CIRP.
We find that in view of provisions laid down under Section 12A of the Code, it is crystal clear that, once CoC is constituted, there is a mandatory requirement of 90% of the voting shares of the CoC in favour of the resolution for withdrawal of the CIRP of the Corporate Debtor and if the voting of the CoC is below 90% then the application of withdrawal cannot be allowed and hence it need to be dismissed. In the present case the Respondent No. 1 with 19.94% voting did not support 12A Application filed by the Corporate Debtor, hence the Adjudicating Authority rightly gave its verdict.
We note that both the SBI as well as HDFC have opposed the present appeals and requested this Appellate Tribunal to dismiss the same in order to find resolution of the Corporate Debtor and in order to recover their money.
In this connection, we note Section 12A, which is reproduced as under :-
[12A. Withdrawal of application admitted under section 7, 9 or 10. –
The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be specified.]”
(Emphasis Supplied)
The Section 12A of the Code is very clear that any withdrawal of CIRP by the Appellant need to have minimum voting support of 90% of the CoC and in the present case never met this threshold. Thus, the Adjudicating Authority could not direct for settlement to the HDFC in contravention of the Code.
We also take into consideration the various judgments where it has been held by the Hon’ble Supreme Court of India that commercial wisdom is non judiciable and there is extremely limited scope for judicial intervention.
In view of above discussion, we do not find any merit in the appeal bearing Company Appeal (AT) (Insolvency) No. 506 of 2023 and same stand dismissed.
In fine, both appeals fail, devoid of any merit and stand dismissed. No Cost. Interlocutory Application, if any, stand Closed.