2021 INSC 0530
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NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 
CIVIL APPEAL NO. 1792 OF 2021
K.N. RAJAKUMAR ...APPELLANT(S)
VERSUS
V. NAGARAJAN & ORS.       .... RESPONDENT(S)
WITH 
CIVIL APPEAL NO.2901 OF 2021
J U D G M E N T  
B.R. GAVAI, J. 
1. Both   these   appeals   are   being   decided   by   this
common judgment and order.
2. The appellant­D. Ramjee in  Civil Appeal No.2901
of   2021,   who   is   an   ex­employee   of   M/s   Aruna   Hotels   Ltd.
(hereinafter   referred   to   as   ‘the   Corporate   Debtor’)   has
approached   this   Court   being   aggrieved   by   the   resolution
passed   in   the   8 th
  Committee   of   Creditors   (hereinafter

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referred   to   as   ‘CoC’)   meeting   dated   25.5.2021;   the   order
passed   by   the   National   Company   Law   Tribunal,   Chennai
(hereinafter   referred   to   as   ‘NCLT’   or   ‘the   Adjudicating
Authority’) dated 4.6.2021 thereby permitting withdrawal of
Corporate   Insolvency   Resolution   Process   (hereinafter
referred to as ‘CIRP’) in respect of the Corporate Debtor; and
the order passed by the Adjudicating Authority/NCLT dated
6.7.2021   thereby   closing   the   proceedings   initiated   by   D.
Ramjee.
3. Civil   Appeal   No.   1792   of   2021   is   filed   by   K.N.
Rajakumar,   suspended   Director   of   the   Corporate   Debtor
(respondent No.1 in Civil Appeal No.2901 of 2021 filed by D.
Ramjee)   thereby   challenging   the   order   passed   by   the
National   Company   Law   Appellate   Tribunal,   Chennai   Bench
(hereinafter   referred   to   as   ‘NCLAT’)   dated   30.4.2021
dismissing   the   appeal   filed   by   K.N.   Rajakumar   challenging
the order dated 22.4.2021 passed by NCLT vide which NCLT
had   directed   the   Resolution   Professional   (hereinafter
referred to as ‘RP’) to convene a meeting of CoC consisting of
the   members   who   constituted   CoC   originally   in   the   year

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2017, soon after the order of admission of CIRP was passed
by NCLT.
4. The   facts   giving   rise   to   the   present   appeals   have
been   taken   from   Civil   Appeal   No.2901   of   2021,   and   are   as
under:
The Corporate Debtor was incorporated under the
provisions of the Companies Act, 1956 on 9.9.1960.   It had
started   various   businesses   like   sugar,   distillery,   flour   mill,
chemical   unit,   finance   company,   a   4­star   hotel   etc.   in
Chennai, but as on date owns only a hotel in Chennai.  The
hotel   business   of   the   Corporate   Debtor   was   shut   down   for
more than 7 years.
D.   Ramjee   joined   the   Corporate   Debtor   as   a
Junior   Assistant   on   11.5.1964.     Since   D.   Ramjee   was   not
receiving salary regularly, he sought to get relieved from the
services   with   effect   from   30.9.2006   and   sought   for
settlement of his salary dues.  However, it is his case that as
the   Corporate   Debtor   requested   him   to   continue   in   the
service, he continued to do so on a salary which was much
less   than   the   one   he   was   entitled   to.     On   31.5.2013,   D.
Ramjee officially retired after serving for 49 years.

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In   February,   2015,   the   Management   of   the
Corporate   Debtor   was   taken   over   by   one   Subasri   Realty
Limited,   thereby   acquiring   the   shareholding   of   the   earlier
promoters,   M.   Sivaram   and   his   family.     According   to   D.
Ramjee,   the   new   Management   disowned   itself   from   the
admissions   of   previous   management   pertaining   to
settlement of arrears of salary. 
On   27.2.2017,   Ramjee   issued   a   Demand   Notice
under   Section   271(1)(a)   of   the   Companies   Act,   2013   read
with   Section   8(1)   of   the   Insolvency   and   Bankruptcy   Code,
2016   (hereinafter   referred   to   as   ‘the   IBC’)   calling   upon   the
Corporate   Debtor   to   pay   dues   of   outstanding   salary
amounting   to   Rs.2,60,68,883/­   along   with   interest   at   the
rate of 12%.  
On failure of the Corporate Debtor to comply with
the notice, D. Ramjee filed an application under Section 9 of
the   IBC,   being   C.P.   No.478   of   2017   on   3.4.2017   before
NCLT.   Two   other   employees   of   the   Corporate   Debtor   had
also   filed   applications   under   Section   9   of   the   IBC.       Vide
order dated 13.6.2017, the Adjudicating Authority admitted

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D.   Ramjee’s   application   under   Section   9   of   the   IBC   and
initiated CIRP against the Corporate Debtor. One P. Sriram
was appointed as interim RP and moratorium was declared. 
Being   aggrieved   by   the   order   passed   by   NCLT
dated 13.6.2017, the Corporate Debtor filed an appeal being
Company   Appeal   (AT)   (Insolvency)   No.87   of   2017   before
NCLAT.   NCLAT vide order dated 2.8.2017 allowed the said
appeal filed by the Corporate Debtor and set aside the order
dated 13.6.2017 passed by NCLT. NCLAT had also recorded
the   assurance  given   by   the   Corporate   Debtor   that   they  will
be   paying   three   years’   arrears   of   salary   to   the   three
employees   including   Ramjee,   who   had   initiated   CIRP
proceedings against the Corporate Debtor.  
In   pursuance   to   the   assurance   given   to   NCLAT,
the   Corporate   Debtor   made   payment   vide   two   Demand
Drafts   dated   8.8.2017   for   a   sum   of   Rs.18,50,000/­   to   D.
Ramjee along with a letter dated 22.8.2017.  
In   the   meanwhile,   one   other   ex­employee   of   the
Corporate Debtor, N. Subramanian, who is respondent No.3
in   both   the   appeals,   also   issued   a   Demand   Notice   dated

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29.6.2017   under   Section   8   of   the   IBC   to   the   Corporate
Debtor.   On failure by the Corporate Debtor to comply with
the   Demand   Notice,   N.   Subramanian   also   filed   an
application   under   Section   9   of   the   IBC   being   CP/597/
(IB)/CB/2017   on   21.7.2017   before   NCLT.     NCLT   admitted
the   said   application   under   Section   9   of   the   IBC   filed   by   N.
Subramanian vide order dated 17.11.2017. 
Being   aggrieved   by   the   initiation   of   CIRP,   the
Corporate   Debtor   filed   an   appeal   being   Company   Appeal
(AT)(Insolvency)   No.290   of   2017   before   NCLAT   on
24.11.2017.     Vide   order   dated   16.7.2018,   NCLAT   allowed
the   appeal  of   the   Corporate  Debtor   and  set   aside   the  order
dated   17.11.2017   passed   by   NCLT   on   the   ground   of
‘existence   of   dispute’   about   arrears   of   salary   and   that   N.
Subramanian   had   not   explained   the   delay   from   the   year
1998 to 2016. 
Being   aggrieved   by   the   order   dated   16.7.2018
passed by NCLAT, N. Subramanian filed Civil Appeal No.187
of   2019   before   this   Court.     This   Court   vide   judgment   and
order   dated   3.3.2021   set   aside   the   order   dated   16.7.2018

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passed by   NCLAT  and  restored  the  order  dated  17.11.2017
passed   by   NCLT   admitting   the   application   under   Section   9
of the IBC.  
It   is   pertinent   to   note   that   D.   Ramjee   had   also
filed an application for permission to file an appeal being D.
No.34836 of 2018, which came to be rejected by this Court
by the same judgment and order dated 3.3.2021.
In the meantime, Subasri Realty Limited, a major
shareholder   of   the   Corporate   Debtor   filed   a   Miscellaneous
Application No. 480 of 2021 in Civil Appeal No.187 of 2019
before   this   Court   seeking   to   compromise   with   respondent
No.   3.     This   Court   vide   order   dated   19.3.2021   granted
liberty to the said applicant to approach CoC for settlement
under Section 12A of the IBC.  
Vide order dated 22.4.2021, NCLT directed RP to
convene   a   meeting   of   CoC   consisting   of   the   members,   who
constituted CoC originally in the year 2017.  
Being aggrieved thereby, the erstwhile Director of
the   Corporate   Debtor­K.N.   Rajakumar,   had   preferred   an
appeal  being  Company  Appeal   (AT)(CH)(Ins)  No.  48  of   2021

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before   NCLAT.   The   said   appeal   came   to   be   dismissed   by
NCLAT vide order dated 30.4.2021, which in turn has been
challenged   in   Civil   Appeal   No.   1792   of   2021   and   Civil
Appeal No.2901 of 2021.
CoC vide its resolution dated 25.5.2021 passed in
its   8 th
  meeting,   unanimously   resolved   to   withdraw   CIRP
initiated in respect of the Corporate Debtor.
Vide   order   dated   4.6.2021,   NCLT   allowed   the
application  filed  by   K.N.  Rajakumar   for  withdrawal  of   CIRP
in respect of the Corporate Debtor and directed RP to hand
over the management of the Corporate Debtor to the Board
of   Directors.   The   application   filed   by   D.   Ramjee   seeking   to
set   aside   the   resolution   dated   25.5.2021   passed   in   the   8 th
CoC   meeting   thereby   approving   the   withdrawal   of   CIRP
initiated   against   the   Corporate   Debtor   was   dismissed   by
NCLT   vide   order   dated   6.7.2021,   having   been   rendered
infructuous.  
Hence   Civil   Appeal   No.2901   of   2021,   filed   by   D.
Ramjee before this Court being aggrieved as aforesaid. 

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5. In   Civil   Appeal   No.   2901   of   2021,   this   Court   on
23.7.2021 passed the following order:
“Permission   to   file   appeal   is
granted.
Issue notice.
In   the   meantime,   there   shall   be
stay   of   operation   and   implementation   of
the   impugned   judgment   and   stay   of
further   proceedings   taken   out   in
pursuance of the impugned order.”
6. In   Civil   Appeal   No.1792   of   2021   filed   by   K.N.
Rajakumar, this Court vide the same order dated 23.7.2021
directed the said appeal to be listed along with Civil Appeal
No.2901 of 2021 filed by D. Ramjee.  
7. Subsequently,   K.N.   Rajakumar   filed   an
application   being   I.A.   No.87750   of   2021   in   Civil   Appeal
No.2901   of   2021   seeking   vacation   of   the   stay   granted   by
this   Court   vide   order   dated   23.7.2021.     When   the   said   I.A.
was   listed,   we   directed   the   appeals   to   be   heard   on   merits.
Accordingly,   on   1.9.2021   the   appeals   were   heard   at
considerable length.  
8. We   have   heard   Shri   Ritin   Rai,   learned   Senior
Counsel   appearing   on   behalf   of   D.   Ramjee,   Shri   K.V.

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Viswanathan,   learned   Senior   Counsel   appearing   on   behalf
of   K.N.   Rajakumar   and   Shri   Mohan   Chevanan,   learned
counsel appearing for HDFC Bank.  
9. It   is   contended   on   behalf   of   D.   Ramjee   that   the
provisions  of  the   IBC  require  the  claims  of  all  the  creditors
of   the   Corporate   Debtor   to   be   updated   by   RP   from   time   to
time. 
Relying   on   Regulation   16   of   the   Insolvency   and
Bankruptcy   Board   of   India   (Insolvency   Resolution   Process
for   Corporate   Persons)   Regulations   2016   (hereinafter
referred  to as  ‘2016 Regulations’),  it is submitted on  behalf
of D. Ramjee that since the matter was settled between the
financial   creditors   and   the   Corporate   Debtor,   CoC   was
required to be constituted only of the operational creditors.  
Further relying on Section 25(2)(e) of the IBC, it is
submitted that in recognition of the principle that a creditor
must continue to have a valid claim to be a member of CoC,
it   is   mandated   that   RP   should   maintain   an   updated   list   of
claims.  It is further submitted that Section 24(6) of the IBC
provides   that   the   voting   share   shall   be   based   on   the
financial debts owed.  

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Relying  on  various  provisions  of  the  IBC   and  the
2016   Regulations,   it   is   submitted   that   the   composition   of
CoC must change on the basis of the updated claims of the
creditors  and whenever   the claims of  the  creditors undergo
any   change,   the   composition   of   CoC   must   change
accordingly.     It   is   therefore   submitted   that   since   the
Corporate Debtor does not have any financial creditors, CoC
ought   to   have   been   constituted   of   operational   creditors,
wherein D. Ramjee would have a substantial voting right.  
It   is   further   submitted   on   behalf   of   D.   Ramjee
that   the   contention   of   K.N.   Rajakumar   that   since   the
Corporate   Debtor   has   taken   finance   from   HDFC   Bank
(respondent   No.2   in   Civil   Appeal   No.1792   of   2021   and
respondent   No.4   in   Civil   Appeal   No.2901   of   2021),   CoC
should   consist   only   of   HDFC   Bank,   is   without   merit,
inasmuch   as   the   finance   taken   from   HDFC   Bank   was   only
an  ‘interim  finance’ and  as such, HDFC  Bank could not be
termed as a financial creditor.  It is submitted that the view
taken by both NCLT and NCLAT that CoC should constitute

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only of financial creditors as on the date of initiation of CIRP
proceedings is untenable.  
10. Per   contra,   it   is   submitted   on   behalf   of   K.N.
Rajakumar   that   the   new   Management   of   the   Corporate
Debtor has successfully revived the business by settling the
claims   of   members   of   CoC,   amounting   to
Rs.46,31,16,650/­.  
It is submitted that order dated 13.6.2017 passed
by   NCLT   admitting   Section   9   application   of   D.   Ramjee
initiating CIRP proceedings was challenged by the Corporate
Debtor   before   NCLAT.     NCLAT   vide   order   dated   2.8.2017
had   allowed   the   appeal   and   set   aside   the   said   order   dated
13.6.2017.  It is submitted that D. Ramjee did not challenge
the   same   and   as   such,   said   order   dated   2.8.2017   had
attained finality.    
It   is   further   submitted   that   D.   Ramjee   had
received  an   amount  of   Rs.18,50,000/­  as   arrears   of  salary.
Vide   order   dated   3.3.2021,   this   Court   had   rejected   the
application   filed   by   D.   Ramjee   for   permission   to   file   an
appeal.       It   is   submitted   that   having   not   challenged   the

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order dated 2.8.2017 passed by NCLAT allowing the appeal
and setting  aside the initiation of CIRP proceedings against
the Corporate Debtor at the behest of D. Ramjee, he did not
have any locus in the proceedings initiated by the Corporate
Debtor for withdrawal of CIRP proceedings.
It   is   submitted   that   the   new   Management   of   the
Corporate Debtor has taken a loan from HDFC Bank, which
fact has also been acknowledged by NCLT in its order dated
4.6.2021   while   permitting   withdrawal   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

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in this regard could be made to the judgments of this Court
in   the  cases  of   Vidya   Charan   Shukla   v.   Purshottam   Lal
Kaushik 1
  and   K.I.   Shephard   and   others   v.   Union   of
India and others 2
.
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
1  (1981) 2 SCC 84
2  (1987) 4 SCC 431

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the   requisite   voting   majority.     NCLT   after   considering   the
resolution   passed   by   CoC   in   its   8 th
  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 3
  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
3  2021 SCC OnLine SC 313

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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   on­going
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   sub­section   (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.  

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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. Ramjee’s 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. 

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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.  
20. In   the   result,   we   find   no   reason   to   interfere   with
the same.   Civil Appeal No.2901 of 2021 filed by D. Ramjee
is therefore dismissed.  
21. Insofar   as   Civil   Appeal   No.1792   of   2021   filed   by
K.N.   Rajakumar   is   concerned,   in   view   of   the   subsequent
development  i.e. withdrawal  of CIRP proceedings vide order
dated 4.6.2021, the counsel for the appellant has circulated

19
a letter dated 23.7.2021, thereby seeking withdrawal of the
appeal   leaving   the   questions   of   law   open.     The   said   appeal
therefore stands disposed of as withdrawn.  
22. The   appeals   are   disposed   of   in   the   above   terms.
All pending applications in both the appeals shall also stand
disposed of.   
…….…....................., J.
                             [L. NAGESWARA RAO]
…….…....................., J.
                                                 [B.R. GAVAI]
…….…....................., J.
                                            [B.V. NAGARATHNA]
NEW DELHI;
SEPTEMBER 15, 2021