2020 (1) TMI 807 - AT - Insolvency and Bankruptcy

Permission for withdrawal of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of debt and dispute - HELD THAT - The total amount stands paid in favour of Mr. Hukum Singh ('Financial Creditor'). The parties informed that the 'Committee of Creditors' has not been constituted. In exercise of powers conferred under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we set aside the impugned order dated 6th November, 2019 and allow Mr. Hukum Singh to withdraw the application under Section 7 which stands disposed of as withdrawn. Appeal allowed.

Summary

Issues: Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process, payment made to Financial Creditor, non-constitution of Committee of Creditors, role of Interim Resolution Professional, setting aside the impugned order, withdrawal of the application, release of Corporate Debtor from legal proceedings.

Analysis:
1. The case involved an application filed by Mr. Hukum Singh, a Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process against a Corporate Debtor, M/s. Adaab Hotels Ltd. The National Company Law Tribunal admitted the application, leading to the appeal by the Director of the Corporate Debtor.

2. The Appellant, through counsel, submitted that the Financial Creditor claimed a default amount of ?1,18,24,984. The Appellant then presented a Banker's Cheque for ?1,18,24,985 to the Financial Creditor, which was accepted. It was noted that the Committee of Creditors had not been constituted at that point.

3. The total amount owed to the Financial Creditor was paid, and it was acknowledged that the Committee of Creditors was not yet formed.

4. The Interim Resolution Professional, Mr. Atul Kumar, stated that he had worked for nine days and had been paid the cost of publication by the Financial Creditor. His fee was assessed at ?1,00,000, to be paid by the Appellant within a week. It was confirmed that the Committee of Creditors had not been established.

5. The National Company Law Appellate Tribunal, utilizing its powers under Rule 11 of its rules, set aside the order admitting the application and allowed the Financial Creditor to withdraw the application under Section 7. Consequently, the Corporate Debtor was released from legal obligations and permitted to operate independently through its Board of Directors. The Interim Resolution Professional was directed to transfer the records and assets of the Corporate Debtor to its management promptly.

6. The appeal was allowed, and the case was disposed of with the mentioned observations and directions. No costs were awarded in the circumstances of the case.