Reliance Value Services Pvt Ltd vs Vees Properties Ltd

(a)

To pass an order allowing the IA 1557 of 2025 along with accompanying Form FA filed by the Financial Creditor under Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for withdrawal of the Company Petition bearing CP(IB)/127(CHE)/2025 filed u/s. 7 of IBC, 2016 in lieu of the settlement arrived at between the Financial Creditor and Suspended Director along with the Equity Shareholders of the Corporate Debtor;

(b)

To pass an order relieving Vees Properties Limited (formerly known as KGS Developers Limited) having CIN: U31909TN1974PLC006798 from the rigours of Corporate Insolvency Resolution Process (CIRP) proceedings and _ its pursuant processes, which was initiated vide Admission Order dated September 03, 2025 in CP(IB)/127(CHE)/2025.

(c)

To pass an order thereby terminating the CIRP of the Corporate Debtor and discharging the IRP i.e. M/s. DiMax Restructuring Private Limited, having IBBI Regn. No.: IBBI/IPE-0172/1IPA-3/2024-2025/50087 from the duty of Interim Resolution Professional of the Corporate Debtor;

(d)

To pass any such other or further order(s), as may be deemed fit and in the interest of justice and equity.

BRIEF FACTS

i) Details of the total claims received are as under:

ii) Details of secured financial creditors:

iii) Details of Operational creditors (Govt)

iv) Details of other creditors:

a)

Agreement was entered into between:

i)

Reliance Value Services Private Limited called First Party or Financial creditor.

ii) Vees Properties Limited (erstwhile KGS Developers Ltd) called Second Party or Corporate Debtor.

iii) The six equity shareholders collectively holding 100% equity shares of the Vees Properties Limited.

b)

Settlement amount agreed is Rs. 48,48,19.180/- . It will be paid in following terms:

i)

Rs.3 crore payable on or before execution of the agreement.

ii) Balance amount of Rs.45,48,19,180 will be paid by Corporate Debtor by way of Post-dated cheques as under:

SL NO	Date	Bank	Cheque No	Amount Rs.
1	15.12.25	BOB Chn 28	000071	10,00,00,000
2	15.12.25	BOB Chn 28	000072	10,00,00,000
3	15.12.25	BOB Chn 28	000073	10,00,00,000
4	15.12.25	BOB Chn 28	000074	10,00,00,000
5	15.12.25	BOB Chn 28	000075	5,48,19,180
Total	45,48,19,180

iii) the promoters of Corporate Debtor agree and undertake to pledge in favour of financial creditor or its assignee ,100% of equity shares of the corporate debtor free from all encumbrances, as further security. (NOC obtained from legal heirs of Late. Shri. P.V. Sanmugam annexed along with the settlement agreement).

c)

If the corporate debtor fails to honour its commitments or there is a material breach in the agreement, financial creditor shall be at liberty to revive and pursue the insolvency proceedings. The entire financial debt shall stand revived to its original position for the balance unpaid amount and the corporate debtor shall be liable to pay such amount together with interest at the rate of 18% per annum from the date of default until realization.

7. Updates / Clarifications:

1. Clarifications on payment of Rs.3. crore

A) In compliance with the clause in settlement agreement , Mr. S. Venkatasubramanian, the suspended Director of the Corporate Debtor, issued a cheque bearing No. 011827 dated 23.09.2025 drawn on Union Bank of India for a sum of Rs.3.0 Crores in favour of the Financial Creditor.

2. Clarification on Inclusion of the Corporate Debtor as Party in the Settlement Agreement

It is stated that the Corporate Debtor has been shown as the Second Party in the Settlement Agreement only for the limited legal purpose of binding the company in the event of future default, thereby safeguarding the rights of the Financial Creditor to seek revival of CIRP or re-initiation under Section 7 of the IBC, if necessary. No person has signed the Agreement in the capacity of Director or Promoter on behalf of the Corporate Debtor. All signatories have executed the Agreement in their individual capacity, standing as personal guarantors / contributors for payment of the settlement amount on behalf of the Corporate Debtor. The inclusion of the Corporate Debtor's name is therefore merely declaratory and protective and does not amount to the exercise of management or control over the affairs of the Corporate Debtor, which continue to remain vested with the Resolution Professional, as on date, in accordance with Section 17(1)(b) of the IBC, 2016. (The copy of the email communication dated 30.10.2025 received from the Financial Creditor to the Applicant / IRP is enclosed as Annexure-2).

3. Clarification on issue of post-dated cheques.

i)

It is stated that, pursuant to the execution of the Settlement Agreement, the suspended Directors of the Corporate Debtor initially issued post-dated cheques in the name of the Corporate Debtor under the impression that, by the time those cheques are presented for payment, the Corporate Debtor would be released from the CIRP pursuant to the withdrawal application under Section 12A.

ii) Upon being apprised that the bank accounts of the Corporate Debtor cannot be operated without the authorization of the Interim Resolution Professional, as mandated under Section 17(1)(d) of the Code, the suspended Directors withdrew and cancelled those cheques. (The copy of the email communication dated 30.10.2025 received from the Corporate Debtor to the Applicant /IRP is enclosed herewith as Annéxure-3). Thereafter, to ensure compliance with the provisions of the Code and to demonstrate their bona fide intention to honour the settlement, the suspended Directors have personally issued post-dated cheques in their individual capacity in favour of the Financial Creditor, details of which are as under:

ANALYSIS

¹[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.]

(1)

An application for withdrawal under section 12A may be made to the Adjudicating Authority –

(a)

before the constitution of the committee, by the applicant through the interim resolution professional;

(b)

after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be:

Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applicant shall state the reasons justifying withdrawal after issue of such invitation.

(2)

The application under sub-regulation (1) shall be made in Form FA of the Schedule I accompanied by a bank guarantee-

(a)

towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33, till the date of filing of the application under clause (a) of sub-regulation (1); or

(b)

towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub-regulation (1).

(3)

Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt.

(4)

Where an application for withdrawal is under clause (b) of sub-regulation (1), the committee shall consider the application, within seven days of its receipt.

(5)

Where the application referred to in sub-regulation (4) is approved by the committee with ninety percent voting share, the resolution professional shall submit such application along with the approval of the committee, to the Adjudicating Authority on behalf of the applicant, within three days of such approval.

(6)

The Adjudicating Authority may, by order, approve the application submitted under sub-regulation (3) or (5).

(7)

Where the application is approved under sub-regulation (6), the applicant shall deposit an amount, towards the actual expenses incurred for the purposes referred to in clause (a) or clause (b) of sub-regulation (2) till the date of approval by the Adjudicating Authority, as determined by the interim resolution professional or resolution professional, as the case may be, within three days of such approval, in the bank account of the corporate debtor, failing which the bank guarantee received under sub-regulation (2) shall be invoked, without prejudice to any other action permissible against the applicant under the Code.

63.

In essence, after a series of deliberations by the legislature, the executive and nudges by this Court, the framework created by Rule 8 of the NCLT Rules and Section 12A of the IBC read with Rule 30A of the CIRP Regulations lays down an exhaustive procedure for the withdrawal of an application filed by creditors under Sections 7, 9, or 10 of the IBC. Withdrawal may be sought at four stages, all of which have a procedure prescribed under the existing framework. These may be summarized as follows:

i). Before the application under Sections 7, 9 or 10 is admitted by the NCLT.

ii) After an application under Sections 7, 9, or 10 is admitted, but before the CoC has been constituted.

iii) After an application under Section 7, 9 or 10 is admitted, the CoC has been constituted and the invitation for expression of interest has not been issued.

iv) After an application under Section 7, 9 or 10 is admitted, the CoC has been formed and the invitation for expression of interest has been issued.

“82.

It is clear that once the Code gets triggered by admission of a creditor's petition under Sections 7 to 9, the proceeding 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.

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 settlement agreement, without application of judicial mind.

11.

Inherent Powers.- Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal.

Invocation of an `Inherent Power':

32.

To be noted, that an `Inherent Power', is to be pressed into service by a `Tribunal' / `an Appellate Tribunal' based on the well settled proposition of `Law' that an `Act of Tribunal' / `Court of Law', shall cause any `prejudice', hardship, inconvenience to an `Homo-sapien' in the considered opinion of this `Tribunal'. In aid of delivering justice to the Stakeholders, an `Inherent Power' can be exercised by a `Tribunal'. An inherent powers' breadth is co-extensive with the necessity.

CONCLUSION