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2019 (2) TMI 1943 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - The order (s) passed by Ld. Adjudicating Authority appointing Interim Resolution Professional declaring moratorium freezing of account and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the Resolution Professional including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by the 1st Respondent under Section 9 of the I B Code is dismissed. The Corporate Debtor is diirected to pay the total sum of 14.5 Lakhs towards fee and cost incurred by Mr. Sandeep Chandna (Resolution Professional) within two weeks. So far as the Financial Creditors who wanted to intervene and other Operational Creditors who applied pursuant to the advertisement this order will not come in their way to take recourse in accordance with law. Appeal allowed - decided in favor of appellant.
Issues:
Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 without the appointment of Committee of Creditors. Settlement between parties before the constitution of Committee of Creditors. Legal implications of settlement on ongoing insolvency proceedings. Analysis: The appeal was filed against the order admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 without the appointment of the Committee of Creditors. The appellant expressed readiness to pay the debt to the Operational Creditor and highlighted the absence of advertisement publication despite the appointment of the Interim Resolution Professional. The Appellate Tribunal, referring to the decision in 'Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors.', emphasized the importance of consulting the Committee of Creditors before allowing individual corporate debtors to settle claims. The Tribunal issued notices to the respondents, restrained the Interim Resolution Professional from issuing advertisements or constituting the Committee of Creditors without permission, and allowed the appellant to make a settlement before the Adjudicating Authority. Mr. Dharmender Sharma, the Operational Creditor, informed the Tribunal about the settlement with the appellant and the receipt of the settled amount. The Resolution Professional detailed the duties performed and expenses incurred. An advocate representing Financial Creditors sought to intervene but was not entertained due to the settlement between the parties before the constitution of the Committee of Creditors. Citing the 'Swiss Ribbons Pvt. Ltd. & Anr.' decision and invoking inherent powers under Rule 11 of the NCLAT Rules, 2016, the Tribunal allowed the withdrawal of the application and set aside the impugned order, dismissing the C.P. (IB) No. 158/Chd/Hry/2018 as withdrawn. The Tribunal declared all orders passed by the Adjudicating Authority, including the appointment of the Interim Resolution Professional, moratorium, and actions taken by the Resolution Professional, as illegal and set them aside. The application under Section 9 of the I&B Code was dismissed, and the Adjudicating Authority was directed to close the proceeding. The Corporate Debtor was released from legal constraints and permitted to function independently. A directive was issued for the Corporate Debtor to pay the Resolution Professional's fee and costs within two weeks. However, the order did not hinder Financial Creditors or Operational Creditors from seeking legal recourse. In conclusion, the appeal was allowed with specific observations and directions, with no order as to costs given the circumstances of the case.
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