2019 (7) TMI 1132 - AT - Insolvency and Bankruptcy

Admissibility of application - Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors not constituted - HELD THAT - We set-aside the impugned order dated 16th May, 2019 and allow Respondent No.1 to withdraw the application under Section 9, which stands disposed of as withdrawn. The Adjudicating Authority will close the proceedings.

Summary

Issues:
- Appeal against the order admitting application under Section 9 of the Insolvency and Bankruptcy Code, 2016
- Settlement reached between the parties before the constitution of the 'Committee of Creditors'
- Assessment of fee and cost of the 'Interim Resolution Professional'
- Setting aside the impugned order and allowing withdrawal of the application under Section 9

Analysis:
1. The appeal was filed against the order passed by the Adjudicating Authority admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant, Director/ Shareholder of a company, challenged this order.

2. A settlement was reached between the parties before the constitution of the 'Committee of Creditors'. The Counsel for the Appellant submitted the Settlement Agreement and a draft amount in terms of the settlement. The matter was adjourned to allow the Respondent to file an affidavit and inform the 'Interim Resolution Professional'.

3. An affidavit was filed by the Operational Creditor admitting the settlement before the constitution of the 'Committee of Creditors'. The 'Interim Resolution Professional' had already incurred costs, and the Appellant handed over a draft to the Respondent for onward transmission.

4. Considering the circumstances, the Tribunal allowed the settlement and assessed the fee and cost of the 'Interim Resolution Professional'. The Appellant was directed to hand over a cheque to the 'Interim Resolution Professional' on the same day.

5. The impugned order admitting the application under Section 9 was set aside, and the Respondent was allowed to withdraw the application, which was disposed of as withdrawn. All orders and actions taken pursuant to the impugned order were declared illegal and set aside.

6. Consequently, the 'Corporate Debtor' was released from the rigour of the law and allowed to function independently through its Board of Directors. The appeal was allowed with no order as to costs in the circumstances of the case. The Adjudicating Authority was directed to close the proceedings.