Tribunal Upholds CoC's Unanimous Decision Against CIRP Withdrawal, Citing Need to Protect Collective Creditor Interests
The National Company Law Tribunal (NCLT), Ahmedabad Bench, has dismissed the application filed by Anil Kumar Satyanarayan Agarwal, the Interim Resolution Professional (IRP) of Vimla Fuels & Metals Ltd., seeking the withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code, 2016. The decision was delivered on January 5, 2026, by a bench comprising Sh. Shammi Khan, Member (Judicial), and Sh. Sanjeev Sharma, Member (Technical).
The application, filed under Section 12A read with Regulation 30A of the CIRP Regulations, was based on a settlement agreement reached between the operational creditor, Vidya Devi Chowdhury, and the suspended director of Vimla Fuels before the constitution of the Committee of Creditors (CoC). However, the Tribunal noted that the CoC was constituted on October 29, 2025, and had unanimously opposed the withdrawal of the CIRP with 100% voting against it.
In its detailed judgment, the Tribunal emphasized that the mere filing of a withdrawal application under Section 12A does not guarantee automatic withdrawal of the CIRP, especially post-CoC constitution. The NCLT highlighted the Supreme Court's stance in cases like Innoventive Industries Ltd. v. ICICI Bank, which underscores the collective nature of insolvency proceedings, making them proceedings in rem rather than bilateral arrangements.
The Tribunal further clarified that while the settlement proposal was submitted before the CoC's formation, the statutory requirement of a 90% voting share approval from the CoC was not met, as all CoC members voted against the withdrawal. This decision aligns with the principles laid down by the Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India, mandating collective resolution over individual settlements.
The NCLT also addressed the application filed by the suspended director seeking impleadment and challenging the CoC's constitution. The Tribunal dismissed this application, citing the lack of valid authority in the power of attorney presented and reaffirming the IRP's adherence to statutory duties.
In conclusion, the NCLT ordered the continuation of the CIRP for Vimla Fuels & Metals Ltd., directing the IRP to expedite the process in accordance with the law. The Tribunal's decision underscores the importance of collective creditor rights and the procedural integrity of the insolvency framework under the IBC.
Bottom Line:
Insolvency and Bankruptcy Code (IBC) - Section 12A application for withdrawal of Corporate Insolvency Resolution Process (CIRP) - Procedural compliance with Regulation 30A - Committee of Creditors (CoC) opposition and collective creditor rights - Adjudicating Authority's discretion in determining withdrawal application.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 12A, Regulation 30A of the CIRP Regulations, 2016, Rule 11 of NCLT Rules, 2016, Section 60(5)(c) of the IBC, 2016.
Anil Kumar Satyanarayan Agarwal, (NCLT)(Ahmedabad Bench) : Law Finder Doc Id # 2833907
