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2021 (3) TMI 771 - AT - Insolvency and BankruptcyValidity of CIRP proceedings - Committee of Creditors came to be constituted by the IRP hastily - Operational Creditor was settled and in terms of the Settlement Agreement - HELD THAT - It is established that immediately after passing of the impugned order, the claim of Operational Creditor was settled and in terms of the Settlement Agreement, which envisaged payment of ₹ 13,47,989/- towards full and final settlement of the claim of Operational Creditor, withdrawal application was to be filed before the Adjudicating Authority as a sequel to settlement. It is flabbergasting to find that the Committee of Creditors came to be constituted by the IRP on 16th March, 2021 so hastily though only a single claim was said to have been received by the IRP. Without commenting upon the fairness of the procedure adopted in constituting the Committee of Creditors so hastily, in view of the fact that the Operational Creditor, being the sole claimant is satisfied with the settlement of his claim in terms of the Settlement Agreement executed barely within four days of the passing of the impugned order in ex parte demonstrating that it had the capacity and will to settle the Operational Creditor s claim, we find this to be a fit case for accepting the settlement arrived at between the parties. The Corporate Debtor is released from the rigour of CIRP - Appeal disposed off.
Issues Involved:
Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 in ex-parte, settlement agreement between parties, constitution of Committee of Creditors, fairness of the procedure in constituting the Committee of Creditors, acceptance of settlement, quantification of costs, release of Corporate Debtor from CIRP. Admission of Application under Section 9: The Adjudicating Authority admitted the Operational Creditor's application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) in an ex-parte manner. The Corporate Debtor learned about the initiation of Corporate Insolvency Resolution Process (CIRP) only after receiving an email from the Interim Resolution Professional (IRP). The Corporate Debtor subsequently settled the claim with the Operational Creditor and executed a Settlement Agreement for withdrawal of the application under Section 9. The IRP was informed to initiate the process for withdrawal, but no action was taken. Settlement Agreement: The Operational Creditor confirmed that the claim had been settled by the Corporate Debtor as per the Settlement Agreement, which involved a payment of a specific amount. The Stamp Paper issued on the date of the Settlement Agreement was presented as evidence. The IRP, representing the Committee of Creditors, acknowledged the settlement and claimed fees and costs incurred during the resolution process. Constitution of Committee of Creditors: The Committee of Creditors was constituted hastily by the IRP, despite there being only one claim received. The IRP justified this by stating that the quick constitution was due to the single claim received. However, the timing of the constitution raised concerns about the fairness of the process, as certain procedures under the I&B Code were seemingly rushed. Acceptance of Settlement and Quantification of Costs: Considering the settlement between the parties and the satisfaction of the Operational Creditor's claim, the Tribunal deemed it appropriate to accept the settlement. The total costs, including the IRP's fee and CIRP costs, were quantified. The parties agreed to the payment of these costs, with the Operational Creditor undertaking to provide the required amount to the IRP within a specified timeframe. Consequently, the Corporate Debtor was released from the CIRP. Conclusion: The Tribunal set aside the impugned order of admission under Section 9 of the I&B Code, accepted the settlement, and disposed of the appeal accordingly. The order was to be communicated to the Adjudicating Authority for case closure, marking the resolution of the issues raised in the appeal.
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