# In the matter of K.N. Rajakumar Vs. V. Nagarajan & Ors. Civil Appeal No. 1792 of 2021

> SC judgment dated 2021-09-15. Citation: TCN-2021-SC-00016. The case involves two civil appeals concerning the Corporate Insolvency Resolution Process (CIRP)…

- **Court:** SC
- **Order date:** 15 Sept 2021
- **Citation:** TCN-2021-SC-00016
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/kn-rajakumar-vs-v-nagarajan-ors-civil-appeal-no-1792-of-2021-2b1481c7

## Summary

### Background

The case involves two civil appeals concerning the Corporate Insolvency Resolution Process (CIRP) of Aruna Hotels Ltd. Civil Appeal No. 2901/2021 was filed by D. Ramjee, an ex-employee of the Corporate Debtor, challenging the resolution passed by the Committee of Creditors (CoC) to withdraw CIRP and the subsequent orders by NCLT. Civil Appeal No. 1792/2021 was filed by K.N. Rajakumar, a suspended Director of the Corporate Debtor, challenging the NCLAT's dismissal of his appeal against NCLT's order to convene a CoC meeting. The Corporate Debtor was incorporated in 1960 and faced financial difficulties, leading to CIRP initiation based on D. Ramjee's application under Section 9 of the IBC due to unpaid salary dues. NCLAT initially set aside the CIRP order based on the

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## Facts

The Corporate Debtor, Aruna Hotels Ltd., incorporated in 1960, faced financial difficulties. D. Ramjee, an ex-employee, joined in 1964 and retired in 2013 after 49 years of service. He sought settlement of salary dues. In 2015, Subasri Realty Limited took over the management. On 2017-02-27, Ramjee issued a demand notice for outstanding salary of Rs.2,60,68,883/-. On 2017-04-03, Ramjee filed an application under Section 9 of the IBC. Two other employees also filed applications under Section 9. On 2017-06-13, NCLT admitted Ramjee's application and initiated CIRP. P. Sriram was appointed as interim RP. The Corporate Debtor appealed to NCLAT, which allowed the appeal on 2017-08-02, setting aside the CIRP order. The Corporate Debtor assured NCLAT to pay three years'

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## Issues and analysis

### Issue 1: Whether the CoC's decision to withdraw the …

**Ratio:** Section 12A of the IBC allows the Adjudicating Authority to permit the withdrawal of an

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**Reasoning:** The Court noted that the resolution of the CoC approving the withdrawal of CIRP

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**Interpretation:** Section 12A provides a mechanism for withdrawing CIRP proceedings if a

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**Application:** In this case, the CoC's resolution to withdraw CIRP was supported by the

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## Parties

- **Judges:** L. Nageswa…; B.R. G…; +1 more
- **Appellants:** K.N. RAJA…
- **Respondents:** Aruna Hotel…; V. Naga…
- **Other parties:** Affir…

## Timeline

- **1960-09-09 — Incorporation of…**: Aruna Hotels Ltd. was incorporated under the…
- **1964-05-11 — D. Ramjee…**: D. Ramjee joined the Corporate…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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