2018 (8) TMI 1035 - AT - Insolvency and Bankruptcy

Corporate Insolvency process - Corporate Debtor - Held that - . Taking into consideration the nature of the case and as a prima facie case has been made that the impugned order was passed out without hearing the Corporate Debtor and the parties intended to settle the dispute, we allow the learned Senior Counsel for the Appellant to file petition for substitution, as ordered above, and allow the parties to settle the claims. Post the matter for orders on 29th June, 2018.

Summary

Issues:
1. Violation of principles of Natural Justice in passing an order under Section 9 of the Insolvency and Bankruptcy Code, 2016 without hearing the Corporate Debtor.
2. Settlement of dispute between the parties.

Analysis:

1. The main issue raised by the Appellant in this case is the alleged violation of the principles of Natural Justice in the order passed under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant contended that the order admitting the application was passed by the Adjudicating Authority without hearing the Corporate Debtor, who expressed an intention to settle the dispute. The Appellant's Senior Counsel argued that this order contravened the principles of Natural Justice and referred to a previous decision of the Appellate Tribunal in "Innoventive Industries Ltd. Vs. ICICI Bank" to support their claim. It was further highlighted that drafts worth approximately &8377; 28.69 lakhs had already been prepared and handed over to the Respondent's Counsel, with an agreement for a third draft to be provided before the next date.

2. On the other hand, the Respondent's Counsel stated that if a total amount of &8377; 33 lakhs was paid to the Respondent, they would have no objection to closing the Resolution Process. Considering the nature of the case and the prima facie case made that the impugned order was passed without hearing the Corporate Debtor and with intentions to settle the dispute, the Appellate Tribunal allowed the Senior Counsel for the Appellant to file a petition for substitution to implead one of the Directors/shareholders as an appellant in place of the Corporate Debtor. The Tribunal also permitted the parties to settle the claims and scheduled the matter for further orders on 29th June 2018.

3. Additionally, the Appellate Tribunal issued an order that until further notice, the Adjudicating Authority or the Interim Resolution Professional should refrain from issuing any advertisements if not already done. This directive aimed to maintain the status quo pending the resolution of the issues raised in the appeal. The Tribunal's decision to allow the parties to settle the dispute and its intervention to ensure procedural fairness by permitting the filing of a petition for substitution underscored the importance of upholding principles of Natural Justice and facilitating amicable resolutions in insolvency proceedings.