Tribunal Orders Cost Payment to Prime Minister's National Relief Fund for Belated Withdrawal
In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Special Bench, has allowed the withdrawal of an insolvency petition filed by Aviator ML 29641, Limited against Spicejet Limited. This decision follows a settlement agreement reached between the parties. The tribunal, presided over by Shri Mahendra Khandelwal, Member (Judicial), and Ms. Anu Jagmohan Singh, Member (Technical), emphasized that the withdrawal is permissible under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, but with certain conditions.
The tribunal heard submissions from senior advocates representing both parties. Mr. Ramji Srinivasan, appearing for the applicant, and Mr. Krishnendu Datta, representing the respondent, jointly stated that a settlement had been reached, prompting the request for withdrawal of the insolvency petition. The application sought permission to withdraw the petition with the liberty to revive it should there be a default in the settlement terms.
Notably, the tribunal highlighted that the withdrawal request came at a late stage, as the order on the main petition had already been reserved. Consequently, the tribunal imposed a cost of Rs. 15,00,000 to be shared equally by both parties, payable to the Prime Minister's National Relief Fund within seven days. The withdrawal order will only take effect upon proof of payment.
The tribunal's decision underscores the importance of timely resolution in insolvency proceedings while balancing the interests of both parties involved. The judgment also allows for the potential revival of the petition if the settlement terms are not honored, ensuring a safeguard for the applicant.
This ruling is significant as it sets a precedent for similar cases where settlement agreements are reached at advanced stages of insolvency proceedings. It also highlights the tribunal's approach in handling such matters, aiming to ensure fairness and adherence to procedural rules.
Bottom Line :
Withdrawal of insolvency application at a belated stage is permissible under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, provided the withdrawal request is subject to payment of costs as directed by the Tribunal.
Statutory provision(s): Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, Rule 11 of the NCLT Rules, 2016
