2021 (8) TMI 1315 - AT - Insolvency and Bankruptcy

Seeking stay to the Formation of CoC - HELD THAT - In the set of facts although the Learned Sr. Counsel for the Appellant is seeking stay to the Formation of CoC, there is no good reason found to stay the formation of CoC. The IBC is time-bound process and if tomorrow Appellant succeeds the suitable orders would follow. Issue Notice - List the Appeal For Admission (After Notice) Hearing on 07th October, 2021.

Summary

Issues: Appeal against Impugned Order admitting Application under Section 7 of IBC; Grievance of not being heard regarding Settlement offer; Effect of settlement attempt during pendency of Section 7 Application; Stay on Constitution of Committee of Creditors (CoC) requested.

Analysis:
1. The Appellant, through their Senior Counsel, raised concerns that the Impugned Order admitting the Application under Section 7 of IBC did not provide them with an opportunity to present a Settlement offer. The Appellant highlighted that a significant amount was already deposited, but due to pandemic-induced lockdown and the subsequent application of Section 10A of IBC, further action against the Corporate Debtor was unwarranted.

2. On the contrary, the Respondent, representing Central Bank of India, argued that prior settlement offers made by the Corporate Debtor were not honored, and the default triggering the Section 7 Application predated any subsequent settlement attempts. The Respondent contended that post-application settlement efforts could not absolve the Corporate Debtor of the initial default.

3. The Appellant's Senior Counsel sought to delve into the legal implications of settlement attempts made during the pendency of the Section 7 Application. The Appellant aimed to challenge the formation of the Committee of Creditors (CoC) based on these grounds, advocating for a stay on the CoC's constitution.

4. Despite the Appellant's plea for a stay on the formation of the CoC, the Tribunal did not find sufficient grounds to grant such relief. Emphasizing the time-bound nature of the IBC process, the Tribunal indicated that any success by the Appellant in the future would result in appropriate orders being issued.

5. Additionally, the IRP's Counsel highlighted that the CoC had already been constituted, with the first meeting scheduled shortly. This further solidified the Tribunal's decision not to interfere with the CoC's formation, given the procedural timeline and ongoing developments in the case.

6. Consequently, the Tribunal issued notices to the parties, requiring the Respondents to file Reply-Affidavits within two weeks and allowing for subsequent rejoinders. The parties were instructed to submit concise 'Written-Submissions' and relevant 'Copies of Judgments' within three weeks, setting the Appeal Hearing 'For Admission (After Notice)' on 07th October, 2021.