2019 (7) TMI 1250 - AT - Insolvency and Bankruptcy

Admissibility of application - Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Settlement Agreement - main plea taken is that prior to the admission of the application under 9 of the I B Code, the parties had reached the settlement on 10th December, 2018 - HELD THAT - We have heard the learned counsel for the parties and perused the so called Settlement Agreement dated 10th December, 2018, which is on plain paper and does not have date at the foot nor has the date of verification below the signatures. In absence of such dates below the signatures and being on plain paper and the fact that it was not brought to the notice of the Adjudicating Authority by either of the parties and the Operational Creditor filed claim subsequently dated 25th December, 2018, we are not inclined to exercise our inherent power under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 and not inclined to allow the Operational Creditor to withdraw the application under Section 9 of the I B Code. Appeal dismissed.

Summary

Issues:
1. Appeal against order admitting application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of Settlement Agreement reached between parties.
3. Submission of claim by Operational Creditor post alleged settlement.
4. Constitution of Committee of Creditors and total claimed amount.

Analysis:
1. The appeal was filed by a shareholder against the order admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by an Operational Creditor. The appellant claimed that a settlement was reached between the parties before the admission of the application.

2. The Resolution Professional argued that the Settlement Agreement was an afterthought and fraudulently reached. They contended that the Operational Creditor filed a claim post the alleged settlement, indicating that the settlement was not honored. The Settlement Agreement, dated 10th December, 2018, was found to be on plain paper without proper dates below the signatures, and it was not brought to the notice of the Adjudicating Authority.

3. The Operational Creditor's counsel acknowledged the settlement on 10th December, 2018, but stated that the amount was not paid as agreed. They further argued that the agreement was not honored, leading to the Operational Creditor filing a claim with the Resolution Professional.

4. The Tribunal, after hearing both parties and examining the Settlement Agreement, noted its deficiencies and the subsequent filing of a claim by the Operational Creditor. Due to the absence of proper dates on the Agreement, and considering the circumstances, the Tribunal declined to allow the Operational Creditor to withdraw the application under Section 9 of the I&B Code. Consequently, the appeal was dismissed with no costs awarded.