1. Withdrawal of insolvency proceedings — Agreement between corporate debtor and creditors — Bar under Regulation 30A after invitation for expression of interest. (Para 1 )
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2018 Supreme(SC) 1928
SUPREME COURT OF INDIA
Rohinton Fali Nariman, Navin Sinha, JJ.
Brilliant Alloys Private Limited - Appellant
Versus
Mr. S. Rajagopal & Ors. - Respondents
Petition(s) for Special Leave to Appeal (C) No(s). 31557/2018(Arising out of impugned final judgment and order dated 01-11-2018 in MA No. 536/2018 passed by the National Company Law Tribunal, Divisional Bench, Chennai)
Decided On : 14-12-2018
Important Points
The stipulation in Regulation 30A is directory and can be construed depending on the facts of each case.
Subject
Corporate Law - Insolvency and Bankruptcy
Headnote
Regulation 30A - Withdrawal of Resolution Application - The court allowed the withdrawal of the settlement despite Regulation 30A stating that withdrawal cannot be permitted after the invitation for expression of interest. The court interpreted Regulation 30A in conjunction with Section 12A and concluded that the stipulation in Regulation 30A is directory and can be construed depending on the facts of each case.
Fact of the Case:
The withdrawal of the settlement was not allowed due to Regulation 30A, despite the agreement of the Corporate Debtor and the Financial Creditor. The court annulled the proceedings and allowed the Settlement.
Finding of the Court:
The court found that the stipulation in Regulation 30A is directory and can be construed depending on the facts of each case, allowing the Settlement to be entered into and annulling the proceedings.
Issues: Withdrawal of settlement, Interpretation of Regulation 30A and Section 12A
Ratio Decidendi: The stipulation in Regulation 30A is directory and can be construed depending on the facts of each case.
Final Decision: The court allowed the Settlement and annulled the proceedings.
Legal Category Hierarchy
Advocates Appeared:
Ms. Nandini Sen Mukherjee, AOR, for the Appellant; Mr. G. Ananda Selvam, Adv. Mr. K. Mayilsamy, Adv. Mauriya Nihangam, Adv. Ms. Lakshmi Ramamurthy, AOR Mr. Sanjay Kapur, AOR Ms. Megha Karnwal, Adv. Mr. Bharat G., Adv. Ms. Reena Pandey, AOR Mr. Anurag Pandey, Adv., for the Respondent
Ms. Nandini Sen Mukherjee, AOR, for the Appellant; Mr. G. Ananda Selvam, Adv. Mr. K. Mayilsamy, Adv. Mauriya Nihangam, Adv. Ms. Lakshmi Ramamurthy, AOR Mr. Sanjay Kapur, AOR Ms. Megha Karnwal, Adv. Mr. Bharat G., Adv. Ms. Reena Pandey, AOR Mr. Anurag Pandey, Adv., for the Respondent
Table of Contents
2. Whether the prohibition on withdrawal under Regulation 30A after invitation for expression of interest overrides the agreement between parties and Section 12A. (Para 1 )
3. Regulation 30A must be read alongside Section 12A, which contains no stipulation prohibiting withdrawal after the invitation for expression of interest. (Para 2 )
4. The stipulation in Regulation 30A prohibiting withdrawal after invitation for expression of interest is directory and depends on the facts of each case. (Para 3 )
5. Settlement allowed — Insolvency proceedings annulled — Special Leave Petition disposed of. (Para 4 , 5 )
6. How should Regulation 30A be interpreted regarding the withdrawal of insolvency proceedings?
Regulation 30A must be read in conjunction with Section 12A, which does not contain the stipulation prohibiting withdrawal after the invitation for expression of interest. (Para 2 )
7. Is the prohibition on withdrawal after the invitation for expression of interest under Regulation 30A mandatory?
No, the stipulation in Regulation 30A is construed as directory, depending on the specific facts of each case. (Para 3 )
8. Can insolvency proceedings be annulled if the corporate debtor and creditors agree to a settlement despite Regulation 30A?
Yes, because the restriction in Regulation 30A is directory, the court may allow a settlement entered into by the corporate debtor and creditors and annul the proceedings. (Para 1 , 3 , 4 )
ORDER
1. The only reason why the withdrawal was not allowed, though agreed to by the Corporate Debtor as well as the Financial Creditor -State Bank of India and the Operational Creditor-Respondent No. 3, is because Regulation 30A states that withdrawal cannot be permitted after issue of invitation for expression of interest.
2. According to us, this Regulation has to be read along with the main provision Section 12A which contains no such stipulation.
3. Accordingly, this stipulation can only be construed as directory depending on the facts of each case.
4. Accordingly, we allow the Settlement that has been entered into and annul the proceedings.
5. The Special Leave Petition is disposed of accordingly.
