2019 (11) TMI 617 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Appellants submitted that the Appellants are willing to settle the matter and in view of statement that the Committee of Creditors have not been constituted - HELD THAT - Taking into consideration that the parties have reached settlement on 13th May, 2019, prior to the constitution of Committee of Creditors , in exercise of powers conferred under Rule 11 of the NCLAT Rules, 2016, we allow the prayer and set aside the impugned order dated 21st February, 2019. Application under Section 7 filed by the Respondents is disposed of as withdrawn. The parties will be bound by the terms of settlement. The application preferred by the Respondent under Section 7 of the I B Code is disposed of as withdrawn.

Summary

Issues:
Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by Financial Creditors - Respondents against a company. Settlement reached between parties before the constitution of 'Committee of Creditors'.

Analysis:
The judgment by the National Company Law Appellate Tribunal, New Delhi pertains to an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Financial Creditors against a company. The Appellants expressed willingness to settle the matter, leading to the passing of interim orders by the Appellate Tribunal to prevent the constitution of the 'Committee of Creditors'. Subsequently, the parties informed the Tribunal that a settlement had been reached, resulting in the withdrawal of a Writ Petition filed before the Hon'ble Supreme Court.

The Appellants submitted a Memorandum of Settlement dated 13th May, 2019, stating that part of the amount had been received and the rest deposited with the National Company Law Tribunal, Chennai Bench. The Respondents requested the Tribunal to hand over the Draft as per the settlement terms. Taking into account the settlement reached by the parties before the constitution of the 'Committee of Creditors', the Appellate Tribunal, under Rule 11 of the NCLAT Rules, 2016, allowed the prayer and set aside the impugned order dated 21st February, 2019. The application under Section 7 was disposed of as withdrawn, binding the parties to the settlement terms.

Consequently, all orders passed by the Adjudicating Authority appointing the 'Interim Resolution Professional', declaring moratorium, and actions taken by the 'Resolution Professional' were set aside. The Respondents Company was released from the legal constraints, enabling it to function independently through its Board of Directors immediately. The Adjudicating Authority, National Company Law Tribunal, Chennai Bench, was directed to hand over the Draft deposited by the Appellants to the Counsel for the Respondents for transfer to the 'Financial Creditors'.

Regarding the fee and cost of the 'Interim Resolution Professional'/'Resolution Professional', the 'Corporate Debtor' was instructed to pay within three weeks. Failure to comply would empower the 'Interim Resolution Professional'/'Resolution Professional' to notify the Appellate Tribunal. The appeal was allowed with the mentioned observations and directions, without any costs incurred.