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Judgment
Per: Bhaskara Pantula Mohan, Member (Judicial)
ORDER
This Miscellaneous Application No. 3059/2019 has been filed by the Samarth Lifters Private Limited under Section 12A of the Insolvency and Bankruptcy Code, 2016 seeking permission to withdraw the Petition under Section 12A of the IBC, 2016 in view of the memorandum of settlement dated 06.09.2019.
By the order of this Hon'ble Tribunal dated 30.08.2019 CIRP was initiated against the DBM Geotechnics and Constructions Private Limited (Hereinafter referred to as the "Corporate Debtor") which was passed in view of the Petition filed by Samarth Lifters Private Limited (hereinafter called "Petitioner") under section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor.
Due to an inadvertent omission on the part of this Tribunal, even though the Petition filed under section 9 was admitted, moratorium was not initiated against the Corporate Debtor and no Interim Resolution Professional was appointed. In view of the same, since no IRP was appointed, CoC could not be formed.
Following Intervention Applications / Miscellaneous Applications have been filed by various creditors before the Tribunal, pleading a serious objection against the 12A Application for withdrawal filed by the Petitioner: MA No. 3781/2019; MA No. 3782/2019; MA No. 3126/2019; MA 3834/2019; MA No. 4045/2019; MA No. 4019/2019; MA No. 3795/2019
It is argued by the Interveners that the Application filed under Section 12A seeking withdrawal should not be allowed because the order passed by this Tribunal admitting the Petition against the Corporate Debtor is in rem and not an order in personam. It is urged that the Petitioner should only be allowed to withdraw this Application once the Corporate Debtor may have settled with all the other Creditors.
The Counsel representing the Corporate Debtor argues that the contentions of the Intervenors cannot be accepted. Reliance has been placed on Swiss Ribbons Pvt Ltd Vs Union of India (2019 SCC Online SC 73):
"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 the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case."
It is argued that Insolvency against the Corporate Debtor has not yet been initiated. It is submitted that in this case since no IRP has been appointed as on date, therefore, the insolvency commencement date has not yet arrived.
Herein, it is important to note that due to an inadvertent omission by this Tribunal, the Corporate Debtor and the Petitioner cannot use it to their advantage. Therefore, we place reliance on Hon'ble Supreme Court in the case of Alchemist Asset Reconstruction Company Ltd. Vs Hotel Gaudavan Pvt. Ltd. & Ors. wherein it was held as follows:
"The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect under Section 14 (1) (a) expressly interdicts institution or continuation of pending suits or proceedings against Corporate Debtors."
Therefore, it is a settled law that as soon as the Petition against the Corporate Debtor is admitted, the moratorium is automatically initiated.
The Corporate Insolvency Resolution Process against the Corporate Debtor was initiated as on 30.08.2019 and the moratorium had also started, rendering all the other petitions filed by rest of Creditors as infructuous. Hence, in this case based on the facts & circumstances if the Application under section 12A of the Code for withdrawal is allowed, it would cause heavy prejudice to the rest of the Creditors. Therefore, based on disapprove discussion Miscellaneous Application No. 3059 of 2019 is disposed off as dismissed.