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2020 (11) TMI 122 - AT - Insolvency and BankruptcyLiquidation order - during the period of CIRP , no Resolution Plan was received - Section 60 (5) of IBC - HELD THAT - When it is an admitted fact that during the Time limit provided under Section 12 of IBC, no Resolution Plan was received, the necessary consequence of liquidation order could not be avoided. For this, the Application was moved. Subsequently, the Appellant started claiming that there is a settlement and paid some amount. However, even that is now reported to have failed. The Appellant has not placed on record material as to who were the other claimants other than the 100% Financial Creditor namely Respondent/ARCIL during CIRP. During CIRP , once CoC has been formed, Procedure under Section 12 A of IBC would be required to be followed. This does not appear to have been followed before the liquidation order was passed. Appeal dismissed.
Issues:
1. Appeal against the impugned order dated 11th February, 2020 passed in M.A. No. 463 of 2019 in CP/603/IB/2017 by Adjudicating Authority, Chennai Bench. 2. Claim of settlement between the Appellant and Respondent/ARCIL. 3. Failure to pay further amounts after the initial payment in the claimed settlement. 4. Appointment of Liquidator by the Adjudicating Authority despite the claimed settlement. Analysis: 1. The Appellant filed an appeal against the order passed by the Adjudicating Authority in a case where no Resolution Plan was received during the Corporate Insolvency Resolution Process (CIRP). The Appellant, being the promoter of the Corporate Debtor, claimed a settlement with the Respondent/ARCIL, which was communicated to the Adjudicating Authority. However, the Adjudicating Authority proceeded with the liquidation order due to the absence of a Resolution Plan during the stipulated time under the Insolvency and Bankruptcy Code, 2016 (IBC). The Adjudicating Authority's decision was based on the lack of evidence provided by the Appellant regarding other claimants during the CIRP, besides the Respondent/ARCIL. The Appellant failed to follow the procedure under Section 12 A of the IBC before the liquidation order was passed, leading to the dismissal of the Appeal. 2. The Appellant claimed to have reached a settlement with the Respondent/ARCIL, making partial payments and submitting an Application under Section 60 (5) of the IBC to inform the Adjudicating Authority about the settlement. However, the Respondent's Counsel argued that the Appellant failed to fulfill the settlement terms by not paying the further amounts, leading to the collapse of the claimed settlement. The Respondent withdrew support for the Appellant's settlement claim, which was crucial in the case. 3. Despite the Appellant's assertions of making payments and reaching a settlement with the Respondent/ARCIL, the failure to pay the complete settlement amount after the initial payment raised doubts about the sincerity and feasibility of the claimed settlement. The Respondent's Counsel highlighted this failure as evidence that the settlement had indeed failed, contradicting the Appellant's claims. 4. The Adjudicating Authority appointed a Liquidator despite the Appellant's claims of a settlement with the Respondent/ARCIL. The Authority's decision was based on the lack of concrete evidence and procedural lapses on the Appellant's part, such as not providing details of other claimants during the CIRP and not following the prescribed procedure under the IBC. The dismissal of the Appeal was justified based on these grounds, affirming the liquidation order. In conclusion, the judgment highlights the importance of following due process and providing substantial evidence in insolvency cases, especially regarding settlements and creditor claims, to ensure fair and lawful proceedings under the Insolvency and Bankruptcy laws.
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