In the present case, in order to expand it’s chemical manufacturing plant, the Corporate Debtor raised capital from Respondent no. 1 M/s Beacon Trusteeship Ltd. The second tranche of the capital was not forthcoming and therefore, the Corporate Debtor took recourse to arbitration proceedings.

The Arbitrator passed an interim award in favour of the Respondents and directed the Corporate Debtor to make a payment of around Rs. 72 crores. The Corporate Debtor preferred an objection petition under Section 34 of the Arbitration and Conciliation Act, 1996.

The Corporate Debtor and the Respondents filed a joint application before the NCLT to defer the Order as the parties were in the process of arriving at a settlement and sought some time. The NCLT, Mumbai Bench rejected this request. Being aggrieved by this Order, the partied preferred an appeal to the NCLAT.  The NCLAT stated the formation of the Committee of Creditors, but declined to exercise it’s powers under Rule 11 of the NCLT Rules, 2016 to take the settlement on record and dispose off the matter.

The Supreme Court looked into the matter and stated that before the Committee of Creditors is formed, there can be no bar to withdrawal by the applicant.