2019 (7) TMI 1638 - Tri - Insolvency and Bankruptcy

Approval of OTS proposal - HELD THAT - The bank has already initiated that its parallel proceeding under SARFEASI Act while filing the present proceeding under the Insolvency Bankruptcy Code. It also seems the process of auction is going on and bank can realize the debts from the sale proceed Of such auction. Hence, we are not able to understand the purpose of filing such parallel proceeding in this Court which amount to forum shopping and attract the panel provision of Section 65 of the Insolvency Bankruptcy Code, because this Court is not meant for recovery forum, and if such petition is filed, wherein the Petitioner is having intention of other then resolution of the Company, then penalty may be imposed under Section 65 of the Insolvency Bankruptcy Code. List the matter on 09.08.2019.

Summary

Issues:
1. Delay in final hearing due to settlement proposed by the corporate debtor.
2. Discrepancy regarding the approval of the One Time Settlement (OTS) proposal.
3. Corporate debtor's offer for settlement and the ongoing SARFEASI proceedings.
4. Parallel proceedings under SARFEASI Act and the Insolvency & Bankruptcy Code.
5. Forum shopping and penalty provisions under Section 65 of the Insolvency & Bankruptcy Code.

Analysis:
1. The delay in the final hearing was attributed to the settlement proposed by the corporate debtor, which had been previously rejected. The Adjudicating Authority was urged to proceed with the hearing on its merits and disposal, as per the submission of the Learned Counsel representing the financial creditor/petitioner.

2. A discrepancy arose concerning the approval of an OTS proposal, with the Director of the corporate debtor company highlighting a recent email from the bank requesting approval for the OTS proposal. The Petitioner's counsel contended that no OTS had been approved from the bank's side, as it had been rejected earlier, emphasizing the need for the court to proceed with the arguments.

3. The corporate debtor, in response to queries about an improved settlement proposal, mentioned ongoing SARFEASI proceedings initiated by the bank for auctioning the company's assets. The corporate debtor offered a settlement amount exceeding the assets' liquidation value, indicating efforts to enhance the settlement offer further to approximately ?8 to 9 Crores.

4. The Tribunal noted the parallel proceedings under the SARFEASI Act alongside the Insolvency & Bankruptcy Code filing. Expressing confusion over the purpose of such parallel actions, the Tribunal highlighted the potential forum shopping implications and the penalty provisions under Section 65 of the Insolvency & Bankruptcy Code. The Tribunal provided an opportunity for the bank to justify its auction proceedings before considering issuing a formal notice under the Code.

5. Emphasizing that the Court is not a recovery forum, the Tribunal warned against filing petitions with intentions other than the resolution of the company, as it may attract penalties under Section 65 of the Insolvency & Bankruptcy Code. The Tribunal directed the bank's Chief Manager to be present for the next hearing, scheduled for 09.08.2019.