2020 (2) TMI 1526 - AT - Insolvency and Bankruptcy

Withdrawal of application admitted u/s 9 of the Insolvency and Bankruptcy Code 2016 - appellant settled the matter with the Operational Creditor prior to the constitution of the Committee of Creditors - Rule 11 of the NCLAT Rules 2016 - HELD THAT - From the pleadings made by the Intervener - Rishu Goyal Proprietor of Shaurya Impex we find that after the impugned order dated 7th November 2019 a public announcement was made on 11th November 2019. According to the Intervener he filed claim before the Interim Resolution Professional on 19th November 2019. However the Interim Resolution Professional asked for additional documents on 2nd December 2019. Subsequently by email dated 13th December 2019 Interim Resolution Professional informed that the claim is not legally tenable on oral agreement. Therefore we are not inclined to deliberate on the issue with regard to the claim of the Intervener. Admittedly this Appellate Tribunal by order dated 26th November 2019 noticed the prayer made by one of the Shareholder/ Promoter that it intends to settle and allowed the Promoter to settle the matter with the Operational Creditor . The settlement was reached by next day as evident from Stamp Paper dated 27th November 2019. The Committee of Creditors was constituted thereafter on 28th November 2019 about which the Adjudicating Authority was informed on 3rd December 2019 - Therefore it is found that the Promoters settled the matter with the Operational Creditor prior to constitution of the Committee of Creditors on 27th November 2019 in view of the liberty given by the Appellate Tribunal. Application disposed off as withdrawn.

Summary

Issues:
1. Settlement reached between the Appellant and Operational Creditor prior to the constitution of the Committee of Creditors.
2. Challenge to the impugned order by another Operational Creditor.
3. Intervention Application filed by a third party claiming outstanding dues.

Issue 1: Settlement reached between the Appellant and Operational Creditor prior to the constitution of the Committee of Creditors:
The Appellant, M/s R.B. Enterprises, filed an application under Section 9 of the Insolvency and Bankruptcy Code against the Corporate Debtor, M/s Black Diamond Pulses Private Limited. The Appellant claimed to have settled the matter with the Operational Creditor before the constitution of the Committee of Creditors. The Operational Creditor accepted the settlement, which was reached on 27th November, 2019. The Settlement Deed was executed on a Non-Judicial Stamp Paper. The National Company Law Appellate Tribunal set aside the impugned order dated 7th November, 2019, and disposed of the application under Section 9 of the I&B Code as withdrawn. Consequently, the Corporate Debtor was released from the Corporate Insolvency Resolution Process, and the Interim Resolution Professional was directed to hand over assets and records to the Promoters. The Tribunal assessed the fee of the Interim Resolution Professional and directed the Corporate Debtor to pay the costs incurred within three weeks.

Issue 2: Challenge to the impugned order by another Operational Creditor:
Another Operational Creditor, Mr. Rahul Goel, had challenged the same impugned order in a separate appeal but withdrew it with liberty to negotiate and settle the dispute with the Operational Creditor. The Appellate Tribunal allowed the withdrawal of the appeal and granted liberty to the Appellant to approach the Operational Creditor for an amicable settlement. This withdrawal was made before the constitution of the Committee of Creditors, similar to the settlement reached by the Appellant with the Operational Creditor.

Issue 3: Intervention Application filed by a third party claiming outstanding dues:
An Intervention Application was filed by Mr. Rishu Goyal, Proprietor of Shaurya Impex, opposing the prayer due to a pending suit before the District Judge regarding outstanding dues. The Intervention Application highlighted that the Interim Resolution Professional did not accept the claim as legally tenable. The Appellate Tribunal declined to deliberate on the Intervener's claim, emphasizing that the settlement between the Promoters and the Operational Creditor was reached before the constitution of the Committee of Creditors, following the liberty granted by the Tribunal.

In conclusion, the National Company Law Appellate Tribunal allowed the appeal, setting aside the impugned order and releasing the Corporate Debtor from the insolvency resolution process due to the settlements reached between the Appellant and the Operational Creditor before the formation of the Committee of Creditors. The Tribunal emphasized the importance of amicable settlements and the exercise of inherent powers under Rule 11 of the NCLAT Rules, 2016, in line with relevant legal precedents.