ASHOK G. RAJANI versus BEACON TRUSTEESHIP LTD. & ORS

ASHOK G. RAJANI versus BEACON TRUSTEESHIP LTD. & ORS

Section 12A permits withdrawal of an application under Section 7 that has been admitted where the withdrawal is sought by the applicant prior to constitution of the Committee of Creditors; the NCLT, exercising inherent powers under Rule 11, should consider and may allow such withdrawal (or settlement) and the pending Section 12A settlement application must be taken up and decided by the NCLT; the interim NCLAT order did not warrant interference by this Court.

Parties
Appellant: Ashok G. Rajani; Respondent No.1: Beacon Trusteeship Limited; Corporate Debtor / Respondent No.4: Seya Industries Limited
Jurisdiction
India
Judgment Date
22 September 2022
Procedural Posture
Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Interim Order of NCLAT Dated 18.08.2021; Settlement Application Under Section 12 a Pending Before NCLT
Outcome
Appeal dismissed
Legal Topics
Section 12 a IBC Withdrawal, Section 7 IBC Admission, Committee of Creditors Constitution, NCLT Inherent Powers (rule 11), Settlement Procedure Under IBC, Corporate Insolvency Resolution Process (cirp)
Insolvency and Bankruptcy Arbitration Company Law Procedural Law Section 12 a IBC Withdrawal Section 7 IBC Admission Committee of Creditors Constitution NCLT Inherent Powers (rule 11) +2 more

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Parties

Ashok G. Rajani

Appellant

Beacon Trusteeship Limited

Respondent No.1

Seya Industries Limited

Corporate Debtor / Respondent No.4

Procedural Posture

Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Interim Order of NCLAT Dated 18.08.2021; Settlement Application Under Section 12 a Pending Before NCLT

Legal Issues

  1. 1 Whether an applicant may withdraw an application admitted under Section 7 of the IBC prior to constitution of the Committee of Creditors
  2. 2 Whether the NCLAT interim order permitting the IRP to proceed and to issue publication should be interfered with while a Section 12A settlement application is pending
  3. 3 Whether settlements between parties can be permitted or stifled before constitution of the CoC

Ratio Decidendi

Section 12A permits withdrawal of an application under Section 7 that has been admitted where the withdrawal is sought by the applicant prior to constitution of the Committee of Creditors; the NCLT, exercising inherent powers under Rule 11, should consider and may allow such withdrawal (or settlement) and the pending Section 12A settlement application must be taken up and decided by the NCLT; the interim NCLAT order did not warrant interference by this Court.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed
  • Direction to the National Company Law Tribunal to take up and decide the settlement application filed under Section 12A of the IBC in light of the observations of this Court