Regulation 30A Permits CIRP Withdrawal Without Creditor Notice Prior To CoC Constitution: NCLAT New Delhi

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 25 May held that an application for withdrawal of insolvency proceedings under Regulation 30A of the CIRP Regulations, 2016, filed before constitution of the Committee of Creditors (CoC), does not require issuance of notice to other creditors and remains valid if authorities comply with the prescribed procedure.

Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey dismissed two appeals filed by Chandra Prakash Lohia and Basanti Devi Lohia and upheld the Kolkata Bench of the National Company Law Tribunal's order permitting withdrawal of insolvency proceedings against West Bengal Agro Textile Corporation Ltd. The Bench held:

“The procedure under Regulation 30A of the CIRP Regulations, 2016, for filing an application by IRP before the constitution of the CoC does not envisage issuance of any notice by the adjudicating authority to any creditor. Present is the case where even Form-A also was not published by the IRP since he received the Form-FA from the operational creditor on the next day of passing of the order of admission.”

The dispute arose from a Section 9 application filed by operational creditor Jitendra Jain, who alleged a default of Rs 1.19 crore by the government-owned corporate debtor. The National Company Law Tribunal (NCLT) admitted the petition on 22 August 2025 and appointed an Interim Resolution Professional (IRP).

Before admission, the corporate debtor and the operational creditor executed a settlement agreement dated 18 August 2025 for Rs 1.5 crore. After admission, the operational creditor filed Form-FA on 23 August 2025 seeking withdrawal of the proceedings.

The IRP sought supporting documents, which the parties furnished on 25 August 2025, including the settlement agreement and proof of payment. The IRP then filed an application under Section 12A of the Insolvency and Bankruptcy Code, 2016. The NCLT allowed the application on 27 August 2025 and terminated the CIRP.

The appellants, who separately filed Section 9 applications against the corporate debtor, challenged the withdrawal order. They argued that once admitted, insolvency proceedings assume an in rem character and require the adjudicating authority to hear all stakeholders before permitting withdrawal.

The corporate debtor countered that the parties had reached a genuine settlement before constitution of the CoC. It submitted that no public announcement had been made and the IRP had not issued Form A, so Regulation 30A applied squarely. It further pointed out that no objections were raised before the NCLT and that the appellants' own Section 9 petitions were later dismissed in March 2026, with the NCLAT affirming those dismissals in May 2026.

The NCLAT examined Regulation 30A and held that it allows withdrawal of CIRP applications before constitution of the CoC, provided the IRP files the application within the stipulated time after receiving Form-FA. It found that the IRP complied with the regulation and acted promptly on receipt of settlement documents.

The Bench distinguished the precedents cited by the appellants. It noted that in Himanshu Singh, another financial creditor had already filed objections, while no creditor raised objections in the present case before the NCLT. It further held that Chikali Nagaraju involved exercise of inherent powers under Rule 11, which did not apply to a statutory withdrawal under Regulation 30A.

Accordingly, the NCLAT found no infirmity in the NCLT's order and dismissed the appeals.