2020 (10) TMI 392 - Tri - Insolvency and Bankruptcy

Continuation of proceedings in the Commercial Suits - HELD THAT - The enforcement of the settlement entered into between the litigating parties in the two commercial suits would require legal proceedings to be instituted, which would squarely fall within the meaning other legal proceeding mentioned in the proviso to sub-section (5) of section 33 - Considering the value of the settlement arrived at, we are convinced that the terms of the settlement entered into in the two Commercial Suits bearing No.842/2017 and No.310/2018 before the Hon ble Bombay High Court will inure to the benefit of the Corporate Debtor, thus increasing its liquidation value. This Adjudicating Authority hereby accords its approval to the Liquidator to take appropriate legal steps to enforce the settlement in the two Commercial Suits bearing No.842/2017 and No.310/2018 before the Hon ble Bombay High Court, for the benefit of the Corporate Debtor - Application disposed off.

Summary

Issues:
1. Application for continuation of Commercial Suits under IBC.
2. Enforcement of settlement terms in pending commercial suits during liquidation proceedings.

Analysis:
1. The Interlocutory Application was filed under section 35(1)(k) of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Liquidator seeking permission to continue Commercial Suits before the Bombay High Court on behalf of the Corporate Debtor. The suits involved disputes related to the transport of Metro Rails and termination of contracts. The Liquidator sought approval to enforce settlement terms reached in the suits for the benefit of the Corporate Debtor.

2. The Tribunal considered the statutory provisions of sections 33(5) and 35(1)(k) of the IBC. It was noted that after the liquidation order is passed, no suit or legal proceeding can be initiated against the corporate debtor, except with the approval of the Adjudicating Authority. The Liquidator's request to enforce the settlement terms in the pending commercial suits was deemed essential as it would enhance the liquidation value of the Corporate Debtor.

3. The Tribunal examined the settlement terms in the commercial suits and concluded that legal proceedings were necessary to enforce the settlement, falling under the category of "other legal proceedings" as per the IBC. Considering the potential benefits of the settlement for the Corporate Debtor, the Tribunal approved the Liquidator to take necessary legal steps to ensure the enforcement of the settlement terms in the two Commercial Suits before the Bombay High Court. The Liquidator was directed to proceed with the enforcement for the benefit of the Corporate Debtor.

4. In conclusion, the Tribunal disposed of the Interlocutory Application with directions to allow the Liquidator to enforce the settlement terms in the pending Commercial Suits, thereby enabling the realization of benefits for the Corporate Debtor during the liquidation proceedings.