ABHISHEK SINGH versus HUHTAMAKI PPL LTD. & ANR.

Citation: [2023] 4 S.C.R. 596 · Decided: 28-03-2023 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 4 S.C.R.
   [2023] 4 S.C.R. 596
596
ABHISHEK SINGH
v.
HUHTAMAKI PPL LTD. & ANR.
(Civil Appeal No(s). 2241 of 2023)
MARCH 28, 2023
[B. R. GAVAI AND VIKRAM NATH, JJ.]
Insolvency and Bankruptcy Code, 2016: ss.9 and 12A –
Interpretation of s. 12A and Regn 30A – Withdrawal of application
of Corporate Insolvency Resolution Process-CIRP before the
constitution of Committee of Creditors-CoC – Validity of – Held:
s.12A permits withdrawal of applications admitted u/ss. 7, 9 and 10
– s. 12A does not debar entertaining applications for withdrawal
even before constitution of CoC – Application u/s. 12A cannot be
said to be kept pending for constitution of CoC, even where such
application was filed before the constitution of CoC – Furthermore,
Regn 30A clearly provided for withdrawal applications being
entertained before constitution of CoC – It does not in anyway
conflicts or is in violation of s.12A – There is no inconsistency in
the two provisions – It only furthers the cause introduced vide s.12A
– On facts, petition u/s.9 filed by Operational Creditor-OC before
NCLT for its outstanding amount against the Corporate Debtor-
CD – Petition admitted and CIRP initiated – Within two days of
admission order, OCs and CD entered into a settlement for payment
of the amount even before constitution of CoC – After receipt of the
settlement amount, OC filed application u/s.12A and Interim
Resolution Professional filed an application u/Regn 30A seeking
withdrawal of CIRP against the CD – However, the NCLT rejected
the withdrawal application – Said order cannot be sustained – NCLT
erred in taking a contrary view – At the time when the application
for withdrawal of the proceedings was filed the CoC was not
constituted as such there could not have been any other concerned
parties except the OC, CD and IRP – It was only because of the
delay caused by the NCLT in disposing of the applications u/s. 12A
and Regn 30A that large number of creditors filed their claims –
Inherent powers are to be invoked in order to meet the ends of
justice which the NCLT failed to invoke – Thus, application filed u/
Regn 30A allowed and application u/s. 9 filed by the OCs stands
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withdrawn – Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2018 –
Regn. 30 A.
Allowing the appeal, the Court
HELD: 1.1 Plea of alternative remedy is a self-imposed
restriction by the superior Courts and is never an absolute bar
unless barred by the statute. Further, in the present case, this
Court had entertained the SLP in 2021 itself and had granted an
order of status quo on 20.04.2021. Substantial time has passed
since then. As such this Court is not inclined to entertain the
said objection relating to availability of alternative remedy of filing
the appeal before the NCLT. IBC provides a statutory timeframe
for disposal of matters. Further, such matters being commercial
in nature keeping these matters pending for long, frustrates the
very object of IBC. [Para 25][609-E-G]
1.2 The intervenors have vehemently contended that after
01.03.2021, once the NCLT has admitted the petition and had
issued restraint order, section 14 of IBC had come into play; the
transactions made in the accounts of the CD would be unlawful
and illegal as such payment of the settlement amount from the
funds of the CD transferred to the account of the suspended
Director after 01.03.2021 ought to be rejected and no discretion
should be exercised permitting withdrawal of the proceedings.
Even the NCLT was not satisfied with the submission of the IRP
and has not approved the same. Secondly, even if there was any
transaction from the account of the CD, the same may at best be
held to be a wrongful transaction and in any other proceedings
where CIRP is initiated the amount so transferred could be
recovered under section 66 of IBC by the IRP or the RP subject
to establishing that the said transactions would be hit by the said
provision. [Para 26][609-G-H; 610-A-C]
1.3 Other creditors would have their own right to avail such
legal remedies as may be available to them under law with respect
to their claims. The rights of the creditors for their respective
claims do not get whittled down or adversely affected if the
settlement with the OC in the instant case is accepted and the
proceedings allowed to be withdrawn. [Para 27][610-D]
ABHISHEK SINGH v. HUHTAMAKI PPL LTD. & ANR.
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SUPREM

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