2019 (9) TMI 24 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors have not been constituted - HELD THAT - The Corporate Debtor is a small scale industry and the parties have reached settlement; the Committee of Creditors have not been constituted and till date no claim has been received except the Operational Creditor (Respondent before us), who also has not filed a claim, in view of the settlement; we set aside the impugned order dated 10th April, 2019 and allow the respondent Operational Creditor to withdraw the application under Section 9 of the I B Code. Fee and resolution cost of the Interim Resolution Professional - HELD THAT - The Corporate Debtor will pay a sum or ₹ 1,20,000/- in his favour within three weeks. The application preferred by the Respondent under Section 9 of the I B Code is disposed of as withdrawn.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 rejected by Adjudicating Authority; Appeal allowed by Appellate Tribunal; Settlement reached between parties; Committee of Creditors not constituted; Claims not received; Interim Resolution Professional's fee and expenses; Order to withdraw application under Section 9; Payment to Interim Resolution Professional; Set aside previous orders and actions; Company released from legal restrictions.

Analysis:
The case involved an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by 'Alloysmin Industries' as the Operational Creditor against 'Raman Casting (P) Ltd.' as the Corporate Debtor. The Adjudicating Authority initially rejected the application, leading to an appeal before the National Company Law Appellate Tribunal. The Appellate Tribunal, in the case of 'Company Appeal (AT) (Insolvency) No. 684 of 2018,' allowed the appeal on 21st January, 2019, setting aside the earlier order and remitting the case back to the Adjudicating Authority for admission under Section 9 without delving into other issues. The parties were instructed to settle the matter, resulting in the Adjudicating Authority admitting the case on 10th April, 2019, after which the matter was challenged in this appeal.

The settlement agreement was reached between the parties on 29th April, 2019, with the amount being paid as per the terms of the settlement. However, the Committee of Creditors had not been constituted, and no claims had been received by that time. The Interim Resolution Professional confirmed the settlement and highlighted the absence of the Committee of Creditors, along with his fee and expenses incurred. Considering the settlement, absence of claims, and the nature of the Corporate Debtor as a small-scale industry, the Appellate Tribunal set aside the order dated 10th April, 2019, allowing the Operational Creditor to withdraw the application under Section 9 of the I&B Code, thereby closing the proceedings.

Regarding the fee and resolution cost of the Interim Resolution Professional, the Corporate Debtor was directed to pay a sum of ?1,20,000/- within three weeks. The Appellate Tribunal further set aside all previous orders appointing the Interim Resolution Professional, declaring a moratorium, and other actions taken, ultimately disposing of the application under Section 9 as withdrawn. Consequently, the Company was released from legal constraints and permitted to operate independently through its Board of Directors immediately. The appeal was allowed with the mentioned observations and directions, with no costs imposed.