NCLT Chennai Allows Withdrawal of Insolvency Proceedings Against Vees Properties Ltd

Reliance Value Services Pvt. Ltd. and Vees Properties Ltd. Reach Settlement Before Formation of Creditors' Committee

In a significant development, the National Company Law Tribunal (NCLT) Chennai has permitted the withdrawal of the Corporate Insolvency Resolution Process (CIRP) initiated against Vees Properties Ltd. The decision comes after a settlement was reached between the financial creditor, Reliance Value Services Pvt. Ltd., and the corporate debtor, Vees Properties Ltd., before the formation of a Committee of Creditors (CoC).

The tribunal, comprising Shri. Sanjiv Jain, Member (Judicial), and Shri. Venkataraman Subramaniam, Member (Technical), exercised its inherent powers under Rule 11 of the NCLT Rules, 2016, to allow the withdrawal of the CIRP application. This decision aligns with Section 12A of the Insolvency and Bankruptcy Code, 2016, which permits withdrawal of CIRP applications before the CoC is constituted.

The application for withdrawal was filed by Reliance Value Services Pvt. Ltd., the sole financial creditor, who had submitted claims amounting to Rs. 34.49 crore. The tribunal noted that no objections were received from any stakeholders, and the CIRP costs were duly settled.

The settlement agreement, dated September 23, 2025, outlines that Vees Properties Ltd. will pay a total settlement amount of Rs. 48,48,19,180. An initial amount of Rs. 3 crore was paid before the execution of the agreement, with the remaining balance to be paid through post-dated cheques.

The tribunal emphasized that it had thoroughly examined the details of the settlement and ensured that no prejudice would be caused to any stakeholders as a result of the withdrawal. It was also noted that the corporate debtor's promoters agreed to pledge 100% of the company's equity shares as additional security.

This ruling reaffirms the NCLT's commitment to facilitating amicable settlements in insolvency matters, particularly when such resolutions are reached at an early stage, thereby preventing prolonged litigation and business disruptions.

Bottom Line:

Insolvency and Bankruptcy Code, 2016 - Withdrawal of Corporate Insolvency Resolution Process (CIRP) application before formation of Committee of Creditors (CoC) permissible under Section 12A read with Regulation 30A - Tribunal has inherent powers under Rule 11 of NCLT Rules, 2016 to ensure justice in such cases.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 12A, Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Rule 11 of NCLT Rules, 2016

Reliance Value Services Pvt. Ltd. v. Vees Properties Ltd., (NCLT)(Division Bench (Chennai) : Law Finder Doc Id # 2812487