Case: – Mayuras Industrial Services v/s S R Shriraam Shekher & Anr; Company Appeal (AT) (CH) (Ins) No. 07/2023
The recent judgment of National Company Law Appellate Tribunal (NCLAT) Chennai has brought clarity to the issue of withdrawal of Section 7 Application under the Insolvency and Bankruptcy Code (IBC). The judgment emphasized that it is not open to the National Company Law Tribunal (NCLT) to reject a withdrawal application under Section 12A of the IBC, where there is an approval of 90% voting shares of the Committee of Creditors (CoC).
The case involved a dispute between the Appellant and Respondent over the withdrawal of the Corporate Insolvency Resolution Process (CIRP) initiated against the corporate debtor. The CoC had approved the withdrawal of the CIRP with 90% voting shares, but the Appellant had objected to the same. The Respondent had filed an application under Section 19(2) of the IBC for non-cooperation of the suspended Board of Directors of the Corporate Debtor, which led to the second CoC meeting where the withdrawal application was approved.
The Hon’ble Court observed that the NCLT has limited powers to interfere with the commercial wisdom of the CoC, once it has approved the settlement plan submitted by the Corporate Debtor. The Court also highlighted that an Adjudicating Authority/Tribunal may allow the withdrawal of a Section 7 Application, even after its admission, with the approval of 90% voting shares of the CoC.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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