J U D G M E N T

The present Appeal CA AT (Ins.) No. 222 of 205, has been preferred by Mr. Deepak Modi, Suspended Director of Shalfeyo Industries Private Limited (“Corporate Debtor”), against the impugned order dated 18.12.2024 passed by the National Company Law Tribunal, Jaipur Bench (‘Adjudicating Authority’) in IA (IBC) No. 549/JPR/2024 in CP (IB) No. 79/9/JPR/2020, whereby the application filed by the Appellant under Section 12A of the Insolvency and Bankruptcy Code, 2016 (“hereinafter referred to as ‘Code’) read with Regulation 30A of the CIRP Regulations seeking withdrawal of the CIRP of the Corporate Debtor was dismissed. The CIRP was initiated at the instance of Prime Impex (Operational Creditor)/Respondent No.3 on 16.08.2022, and Mr. Umang Jain appointed as the Resolution Professional. Axis Bank Limited, the financial creditor is the Respondent No.2 in these proceedings.

FACTS OF THE CASE

2. The brief facts of the case relevant for the instant appeal are given below:

i.) Prime Impex, the Operational Creditor, initiated the insolvency proceedings under Section 9 of the Code against Shalfeyo Industries Private Limited. The Corporate Insolvency Resolution Process (‘CIRP’) proceedings were admitted by the Adjudicating Authority on 16.08.2022, pursuant to which Mr. Umang Jain was appointed as the Interim Resolution Professional who was subsequently confirmed as Resolution Professional (RP).

ii.) Pursuant to the public announcement, Axis Bank Limited submitted its claim as the sole Financial Creditor, and the (Committee of Creditors) was accordingly constituted with Axis Bank as its sole member. In the 1st CoC meeting held on 15.09.2022, Axis Bank stated that the Corporate Debtor had no meaningful assets and that continuation of the CIRP would serve no useful purpose, and accordingly requested that steps be taken for closure of the CIRP.

iii.) Consequent to the initiation of CIRP proceedings, the Appellant’s personal property, which had been furnished as collateral to Axis Bank, was sold and the Appellant deposited the balance outstanding of the Axis Bank thereby meeting the entire claim of Financial Creditor.

iv.) As the claim of the Financial Creditor/ Axis Bank was fully satisfied the Bank withdrew its claim, following which the RP reconstituted the CoC, replacing Axis Bank with Prime Impex, the Operational Creditor/ Respondent No. 3. The said reconstitution was challenged by the Appellant, and the Adjudicating Authority subsequently directed restoration of the CoC to its original composition, namely with Axis Bank as the Financial Creditor.

v.) During the CIRP, the CoC also decided for liquidation of the Corporate Debtor. The resolution for liquidation was passed on 05.11.2022, when the CoC comprised of the Operational Creditor as the sole CoC member, despite two Expressions of Interest having been received.

vi.) Subsequently, the Financial Creditor continued to remain the relevant creditor for the purpose of the CoC, and during the 6th CoC meeting held on 18.09.2023, Axis Bank noted that the entire insolvency proceedings had originated from a claim of approximately Rs. 12 Lakhs and had continued for about one and a half years. Axis Bank accordingly took an initiative to facilitate settlement between Deepak Modi and Prime Impex. The Appellant initially offered payment of Rs. 8 Lakhs along with return of materials valued at Rs. 4 Lakhs and subsequently offered to settle the entire claim of approximately Rs. 12 Lakhs, but the offer was not accepted as the Operational Creditor sought additional compensation and litigation costs.

vii.) In respect of the Operational Creditor, the Appellant agreed to pay the entire claimed amount of Rs. 11.90 Lakhs and placed a demand draft bearing No. 722222 dated 03.12.2024 towards the said amount. The Appellant also provided the draft of Form FA to the Operational Creditor and undertook to pay such fees and expenses of the Resolution Professional as might ultimately be determined by the