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2021 (1) TMI 1303 - AT - Insolvency and BankruptcyDenial of revival of petition by invoking Rule 11 of the NCLT Rules, 2016 - non-compliance with the settlement terms - HELD THAT - It appears that the Terms of Settlement providing a repayment schedule was incorporated in the order thereby making it an order/ decree of the Court and once this was the position, giving liberty to the Financial Creditor to come back can be interpreted on no hypothesis other than that the revival of CIRP would be sought for non-compliance with the Terms of Settlement. Therefore, even on merit, there are no substance in the instant appeal. Appeal dismissed.
Issues:
1. Restoration of Company Petition 2. Invocation of Rule 11 of NCLT Rules, 2016 3. Admissibility of appeal due to initiation of Corporate Insolvency Resolution Process (CIRP) 4. Interpretation of Terms of Settlement 5. Dismissal of appeal due to initiation of CIRP by another Creditor Restoration of Company Petition: The Adjudicating Authority disposed of a Company Petition based on a settlement between the parties, with an application later filed for restoration. The impugned order allowed the restoration, leading to an appeal by a former Director challenging the revival under Rule 11 of the NCLT Rules, 2016. The Terms of Settlement were crucial, as they were recorded in the order, making it an enforceable decree. The Financial Creditor was granted liberty to report any non-compliance with the settlement terms, indicating a potential revival of Corporate Insolvency Resolution Process (CIRP) in case of default. Invocation of Rule 11 of NCLT Rules, 2016: The appellant contended that revival through Rule 11 was not permissible, citing the initiation of CIRP by an Operational Creditor against the same Corporate Debtor. The Financial Creditor had the liberty to report any non-compliance with the settlement terms, potentially leading to the revival of CIRP. The terms of settlement, once incorporated into the court order, allowed for such interpretation, justifying the restoration of CIRP in case of non-compliance. Admissibility of appeal due to initiation of CIRP: The appeal was challenged on grounds of infructuousness due to the ongoing CIRP initiated by another Creditor against the Corporate Debtor. The development of CIRP by the Operational Creditor rendered the relief sought in the instant appeal irrelevant for consideration, leading to the dismissal of the appeal. Interpretation of Terms of Settlement: The Terms of Settlement, once recorded in the court order, became enforceable and allowed for the revival of CIRP in case of non-compliance. The Financial Creditor had the liberty to report any default, indicating the intention to take action in case of non-compliance, even if not explicitly stated in the order. Dismissal of appeal due to initiation of CIRP by another Creditor: The initiation of CIRP by an Operational Creditor against the Corporate Debtor rendered the relief sought in the appeal irrelevant, leading to the dismissal of the appeal. The ongoing CIRP proceedings by another Creditor made the appeal inconsequential for further consideration.
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