2019 (11) TMI 541 - AT - Insolvency and Bankruptcy

Admissibility of application - initiation of CIRP - Corporate Debtor failed to make repayment of outstanding amount - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - In exercise of inherent power conferred upon this Appellate Tribunal under Rule 11 of the NCLAT Rules 2016, we accept the Terms of Settlement and set aside the impugned order dated 10th July, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in Company Petition No. (IB)-1069 (PB)/2018. The order (s) passed by Ld. Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the Resolution Professional are set aside - application disposed off as withdrawn.

Summary

Issues involved:
Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor, dispute regarding the status of the Respondent as a Financial Creditor, negotiation for settlement, constitution of Committee of Creditors, Settlement Deed dated 19th July, 2019, acceptance of terms of settlement, setting aside the impugned order, payment of fee and costs by the Interim Resolution Professional, withdrawal of application under Section 7 of the I&B Code, release of the Company from legal constraints.

Analysis:
The appeal before the National Company Law Appellate Tribunal involved a dispute arising from an order passed by the Adjudicating Authority admitting an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor. The Appellants contended that the Respondent, identified as a Financial Creditor, failed to pay the demanded amount upon receiving the notice. However, negotiations for settlement were ongoing, and the Committee of Creditors had not been constituted at that time.

A Settlement Deed dated 19th July, 2019, was presented by the parties, outlining the terms agreed upon. The Settlement Agreement detailed the involvement of the parties, the withdrawal of a complaint before the National Company Law Tribunal, and the financial arrangements made for the settlement. The Settlement Deed was signed voluntarily by the parties, and witnesses were present to attest to the agreement.

Upon review of the Settlement Deed and the circumstances, the Appellate Tribunal invoked its inherent power under Rule 11 of the NCLAT Rules 2016 to accept the Terms of Settlement. Consequently, the impugned order dated 10th July, 2019, was set aside, and the application under Section 7 of the I&B Code was disposed of as withdrawn. The Company was released from the legal constraints, allowing it to operate independently through its Board of Directors.

Additionally, it was noted that the fee and costs incurred by the Interim Resolution Professional had been settled. As a result, the orders appointing the Interim Resolution Professional, declaring a moratorium, and all other related actions were set aside. The appeal was allowed with the mentioned observations and directions, with no costs imposed on any party involved.