The National Company Appellate Law Tribunal ("NCLAT") held an order dated May 5, 2021 in the cases of Ramasamy Palaniappan v. Radhakrishnan Dharmarajan and Others [Company Appeal (AT) (CH) (Ins.) No. 19 of 2021] and Chandrasekaran v. Radhakrishnan Dharmarajan and Others [Company Appeal (AT) (CH) (Ins.).
In the instant case titled Ramasamy Palaniappan v. Radhakrishnan Dharmarajan and Others, the issue raised for clarification before the NCLAT was:
Whether the RP's failure to take into account the interests of all stakeholders constituted a flagrant violation of Regulation 40 C?
With regard to this issue, the NCLAT pointed out that whereas Regulation 30-A(1)(a) of the CIRP Regulations deals with the procedure to be followed before the organisation of CoC, Section 12-A of the IBC pertains to a situation that is post-CoC constitution. The NCLAT stated that, as of July 25, 2019, Regulation 30-A of the CIRP Regulations had been changed. Furthermore, the amended Regulation 30-A of the CIRP Regulations, when read in conjunction with Section 12-A of the IBC, provided that the pre-constitution stage of the CoC would be covered by Regulation 30-A(1)(a) of the CIRP Regulations.
The NCLAT went on to rule that, in the interest of justice and with the interests of the parties involved in mind, it would exercise its inherent powers and permit the withdrawal of the CIRP application against the Corporate Debtor. The NCLAT noted that the current case did not fall under Regulation 30-A(1)(a). The NCLAT upheld the appeal, overturned the contested order, and thus overturned the appointment of the IRP, the corporate debtor moratorium, etc. The NCLAT additionally ordered that the Corporate Debtor be released from all legal restrictions and given immediate permission to operate independently through its board of directors. The intervenor petitions submitted while the appeal was pending were denied. The NCLAT further ruled that the intervenors had the right to pursue any legal remedies provided by the IBC by submitting a separate application for CIRP admission at any time, and that the NCLT would hear the case on the merits without regard to this judgement, if any, and proceed according to the law.
The Court categorically stated that,
“The law laid down by Hon'ble Supreme Court in the above-mentioned case squarely applies to the facts of the present case. In the instant case, even though we find that Regulation 30 C could have been applied for exclusion of 179 days on account of the unprecedented situation created by the Covid 19 pandemic and some of the Financial Creditors opined for fresh publication of form G for the invitation of EOI. But the COC had unanimously decided only for seeking exclusion of 179 days, i.e. from 5 May 2020 to 31 October 2020, for completion of CIRP. But the CoC, under its commercial wisdom, did not prefer for publication of Form-G afresh to invite Expression of Interest. Therefore such a decision of the CoC is not justiciable."