Case: K.N. RAJAKUMAR Vs. V. NAGARAJAN &amp; ORS

of CIRP proceedings under Section 12A of the IBC. It is the contention of K.N. Rajakumar that as a matter of fact, NCLT and NCLAT ought to have held that CoC should consist only of HDFC Bank, which is now the sole financial creditor. 11. Though, various submissions have been advanced on behalf of the rival parties, we do not find it necessary to go into the said issues. It is a settled principle of law that the Court should not go into the academic issues and seek to interpret the provisions of law when it is not necessary for deciding the issues in the appeal(s). Reference in this regard could be made to the judgments of this Court in the cases of Vidya Charan Shukla v. Purshottam Lal Kaushik (1981) 2 SCC 84 and K.I. Shephard and others v. Union of India and others (1987) 4 SCC 431 . 12. At this juncture, it would be relevant to refer to Section 12A of the IBC, which reads thus: 12A. Withdrawal of application admitted under section 7, 9 or 10.— The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors, in such manner as may be specified. 13. It could thus be seen that the Adjudicating Authority is entitled to withdraw the application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting share of the CoC. 14. It is not in dispute that the resolution of CoC approving withdrawal of CIRP proceedings was supported by the requisite voting majority. NCLT after considering the resolution passed by CoC in its 8th meeting held on 25.5.2021 has allowed the application filed by K.N. Rajakumar vide order dated 4.6.2021. 15. This Court in the case of Ghanashyam Mishra and Sons Private Limited through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited Through The Director and Others 2021 SCC OnLine SC 313 after considering the earlier pronouncements of law by this Court with regard to aims and objects of IBC has observed thus: 86. As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an on-going concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in sub-section (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable. 16. It could thus be seen that one of the principal objects of the IBC is providing for revival of the Corporate Debtor and to make it a going concern. Every attempt has to be first made to revive the concern and make it a going concern, liquidation being the last resort. 17. From the order of NCLT dated 4.6.2021, it could be seen that the Corporate Debtor has already settled the issue with the erstwhile financial creditors, who have resolved to withdraw the CIRP proceedings and by virtue of withdrawal of CIRP proceedings, the Corporate Debtor now is a going concern. 18. Insofar as the appeal filed by D. Ramjee is concerned, we have already observed that the order of NCLAT dated 2.8.2017 allowing the appeal filed by the Corporate Debtor and setting aside the order dated 13.6.2017 passed by NCLT in D. Ramjees application under Section 9 of the IBC has admittedly not been challenged by D. Ramjee. In pursuance of the assurance given before NCLAT, an amount of Rs.18,50,000/- was also paid to D. Ramjee towards arrears of salary by the Corporate Debtor. The application for permission to file an appeal filed by D. Ramjee before this Court has been rejected by this Court vide judgment and order dated 3.3.2021. 19. In that view of the matter, we find that insofar as D. Ramjee is concerned, the issue has attained finality as on 2.8.2017 when the appeal filed by the Corporate Debtor came to be allowed by NCLAT. We find that NCLT vide order dated 6.7.2021, passed in the application (I.A.No.540/CHE/2021) filed by D.Ramjee, has rightly held that from the date of the order dated 4.6.2021, after the withdrawal of CIRP proceedings, the powers and management of the Corporate Debtor were handed over to the Directors of the Corporate Debtor and from that date RP and CoC in relation to the Corporate Debtor had become functus officio. NCLT has rightly disposed of the application filed by D.Ramjee having rendered infructuous.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]11. Though, various submissions have been advanced on behalf of the rival parties, we do not find it necessary to go into the said issues. It is a settled principle of law that the Court should not go into the academic issues and seek to interpret the provisions of law when it is not necessary for deciding the issues in the appeal(s). Reference in this regard could be made to the judgments of this Court in the cases of Vidya Charan Shukla v. Purshottam Lal Kaushik (1981) 2 SCC 84  and K.I. Shephard and others v. Union of India and others (1987) 4 SCC 431 .13. It could thus be seen that the Adjudicating Authority is entitled to withdraw the application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting share of the CoC.14. It is not in dispute that the resolution of CoC approving withdrawal of CIRP proceedings was supported by the requisite voting majority. NCLT after considering the resolution passed by CoC in its 8th meeting held on 25.5.2021 has allowed the application filed by K.N. Rajakumar vide order dated 4.6.2021.15. This Court in the case of Ghanashyam Mishra and Sons Private Limited through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited Through The Director and Others 2021 SCC OnLine SC 313 after considering the earlier pronouncements of law by this Court with regard to aims and objects of IBC has observed thus:86. As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an on-going concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in sub-section (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable.16. It could thus be seen that one of the principal objects of the IBC is providing for revival of the Corporate Debtor and to make it a going concern. Every attempt has to be first made to revive the concern and make it a going concern, liquidation being the last resort.17. From the order of NCLT dated 4.6.2021, it could be seen that the Corporate Debtor has already settled the issue with the erstwhile financial creditors, who have resolved to withdraw the CIRP proceedings and by virtue of withdrawal of CIRP proceedings, the Corporate Debtor now is a going concern.18. Insofar as the appeal filed by D. Ramjee is concerned, we have already observed that the order of NCLAT dated 2.8.2017 allowing the appeal filed by the Corporate Debtor and setting aside the order dated 13.6.2017 passed by NCLT in D. Ramjees application under Section 9 of the IBC has admittedly not been challenged by D. Ramjee. In pursuance of the assurance given before NCLAT, an amount of Rs.18,50,000/- was also paid to D. Ramjee towards arrears of salary by the Corporate Debtor. The application for permission to file an appeal filed by D. Ramjee before this Court has been rejected by this Court vide judgment and order dated 3.3.2021.19. In that view of the matter, we find that insofar as D. Ramjee is concerned, the issue has attained finality as on 2.8.2017 when the appeal filed by the Corporate Debtor came to be allowed by NCLAT. We find that NCLT vide order dated 6.7.2021, passed in the application (I.A.No.540/CHE/2021) filed by D.Ramjee, has rightly held that from the date of the order dated 4.6.2021, after the withdrawal of CIRP proceedings, the powers and management of the Corporate Debtor were handed over to the Directors of the Corporate Debtor and from that date RP and CoC in relation to the Corporate Debtor had become functus officio. NCLT has rightly disposed of the application filed by D.Ramjee having rendered infructuous.