2019 (9) TMI 962 - AT - Insolvency and Bankruptcy

Admissibility of application - Initiation of CIRP - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The order (s) passed by Ld. Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the Resolution Professional are set aside. The application preferred by the Respondent under Section 9 of the I B Code is disposed of as withdrawn. Appeal allowed.

Summary

Issues:
1. Appeal against the order admitting the application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Settlement between parties before the constitution of Committee of Creditors.
3. Setting aside the impugned order and allowing the respondent to withdraw the application.
4. Directions regarding the Terms of Settlement and payment of fees to the Interim Resolution Professional.
5. Disposal of the application under Section 9 of the I&B Code and release of the Respondent Company from legal obligations.

Analysis:
1. The appeal was filed by the shareholders of a Corporate Debtor against the order passed by the Adjudicating Authority admitting the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by an Operational Creditor. The matter was taken up on 12th April, 2019, where it was revealed that the parties had settled the dispute before the constitution of the Committee of Creditors.

2. The settlement between the parties was accepted by the Appellate Tribunal based on the decision of the Hon’ble Supreme Court and the inherent powers under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016. The impugned order dated 28th March, 2019 was set aside, allowing the respondent to withdraw the application under Section 9 of the I&B Code. The Terms of Settlement were directed to be complied with in letter and spirit.

3. Consequently, all orders passed by the Adjudicating Authority appointing the Interim Resolution Professional, declaring moratorium, and any other actions taken were set aside. The application under Section 9 of the I&B Code was disposed of as withdrawn, and the Adjudicating Authority was instructed to close the proceedings. The Respondent Company was released from legal obligations and permitted to function independently through its Board of Directors immediately.

4. The Appellate Tribunal also directed the Corporate Debtor to pay the fees of the Interim Resolution Professional within three weeks. The order allowed for the closure of proceedings, release of the Respondent Company from legal constraints, and the independent functioning of the company through its Board of Directors.

5. The appeal was allowed with the stated observations and directions, with no costs imposed on either party. The judgment provided a comprehensive resolution to the dispute, emphasizing the settlement between the parties and the subsequent withdrawal of the application under the I&B Code, resulting in the release of the Respondent Company from insolvency proceedings and legal obligations.