01Facts
ASK Trusteeship Services Pvt. Ltd. filed a Section 7 application under the Insolvency and Bankruptcy Code (IBC) against ATS Heights Private Limited (Corporate Debtor), which was admitted by the Adjudicating Authority on 22.04.2024
¶ 1The Appellant challenged this admission, and on 09.05.2024, the NCLAT stayed further steps in the Corporate Insolvency Resolution Process (CIRP), except for construction activities under the supervision of a court-appointed monitor
¶ 1During the pendency of the appeal, the parties entered into a Settlement Agreement on 24.01.2026
¶ 3Consequently, the Interim Resolution Professional (IRP) received Form FA (withdrawal application) on 23.02.2026 and filed I.A. No. 1670 of 2026 seeking either permission to approach the Adjudicating Authority for withdrawal or for the NCLAT to exercise its inherent powers to set aside the CIRP
¶ 2-302Issues
i.Whether the CIRP against the Corporate Debtor can be withdrawn and the appeal disposed of in light of a settlement agreement reached between the parties during the appellate proceedings
¶ 3ii.Whether the NCLAT should exercise its inherent powers to allow withdrawal or direct the parties to the Adjudicating Authority under Section 12A of the IBC
¶ 3-403Law Applied
The court applied Section 12A of the Insolvency and Bankruptcy Code, 2016, which permits the withdrawal of an application admitted under Section 7, 9, or 10, read with Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
¶ 3The court further relied on the precedent set by the Hon’ble Supreme Court in *GLAS Trust Company LLC v. BYJU Raveendran & Ors. (Civil Appeal No. 9986 of 2024)*, which provides the legal framework and limitations for the withdrawal of insolvency proceedings post-admission
¶ 304Reasoning
The Tribunal observed that since a formal Settlement Agreement had been executed and the IRP was already in receipt of Form FA from the Financial Creditors, the statutory mechanism for withdrawal was triggered
¶ 3Rather than exercising its inherent appellate powers to terminate the CIRP directly, the NCLAT determined that the procedurally appropriate route is for the IRP to file the withdrawal application before the Adjudicating Authority (NCLT) as per Section 12A
¶ 3The Tribunal emphasized that the Adjudicating Authority must evaluate this application through the lens of the Supreme Court’s ruling in *GLAS Trust Company LLC*, ensuring the settlement adheres to the law laid down regarding the rights of other creditors and the integrity of the process
¶ 3To preserve the status quo during this transition, the Tribunal halted further IRP actions until the Section 12A application is decided
¶ 305Holding
The NCLAT disposed of the Appeal and I.A. No. 1670 of 2026 by directing the IRP to file the Section 12A withdrawal application before the Adjudicating Authority within one week
¶ 3-4The Adjudicating Authority is directed to decide the application in accordance with the law laid down in *GLAS Trust Company LLC*
¶ 3The IRP is restrained from taking further steps in the CIRP until the Section 12A application is decided
¶ 3Regarding ancillary reliefs, such as the quantification of monitor fees, the IRP was granted liberty to file appropriate applications before the Adjudicating Authority
¶ 4Original Court PDF
JM Financial Asset Reconstruction Company Ltd. v. ASK Trusteeship Services Pvt. Ltd. & Ors. Comp. App. (AT) (Ins.) No. 912 of 2024 with I.A. No. 1670 of 2026.
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