2020 (1) TMI 8 - AT - Insolvency and Bankruptcy

Settlement of the matter between the creditor and debtor - CIRP started - Committee of Creditors has not been constituted - HELD THAT - Taking into consideration the fact that there is default of only ₹ 9,87,988.35/-, we assess the fee of the 'Interim Resolution Professional' at ₹ 1,00,000/- per month i.e. ₹ 1,50,000/-for one and a half month plus ₹ 37,936/- i.e. ₹ 1,87,936/-. However, ₹ 2,00,000/- should be adjusted against the advance already received by the 'Interim Resolution Professional'. In view of the fact that the parties have reached settlement before the constitution of the 'Committee of Creditors', the impugned order passed by the Adjudicating Authority (National Company Law Tribunal), Jaipur Bench, Jaipur is set aside - The 'Corporate Debtor' (company) is released from all the rigours of law and is allowed to function independently through its Board of Directors from immediate effect. The 'Interim Resolution Professional' will hand over the assets and records to the Board of Directors immediately. Appeal allowed.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process due to default by Operational Creditor against Corporate Debtor. Settlement reached between parties before constitution of Committee of Creditors.

Analysis:
The judgment pertains to a case where the Corporate Insolvency Resolution Process was initiated against a Corporate Debtor due to a default of a specific amount by an Operational Creditor. The impugned order for initiation was passed by the Adjudicating Authority. However, before the constitution of the Committee of Creditors, the parties reached a settlement. The Appellant expressed readiness to settle the matter, and it was confirmed that the amount in question had been paid by the Respondent, the Operational Creditor. The Interim Resolution Professional acknowledged the receipt of an initial amount and the expenses incurred.

Considering the settlement reached and the default amount, the Tribunal assessed the fee of the Interim Resolution Professional. The judgment specified the fee at a certain amount per month, adjusting the advance already received. As a result of the settlement before the formation of the Committee of Creditors, the impugned order initiating the Corporate Insolvency Resolution Process was set aside. The Corporate Debtor was released from legal obligations and permitted to resume independent functioning under its Board of Directors, with the Interim Resolution Professional required to transfer assets and records promptly.

The terms of the settlement were recorded, and the Appeal was allowed with the stated observations and directions. Notably, no costs were awarded in this matter. This comprehensive analysis outlines the key aspects and outcomes of the judgment, focusing on the initiation of insolvency proceedings, the subsequent settlement between the parties, and the consequential actions taken by the Tribunal in light of the settlement agreement.