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2020 (1) TMI 105 - AT - Insolvency and BankruptcyMaintainability of application - Settlement agreement - default in the payment in terms of the settlement - operational creditor agrees to settle the claim subject to clearing of all post-dated cheques and receipt of settlement amount as per the repayment schedule - HELD THAT - Both parties state that they will be bound by this settlement. In exercise of inherent powers under Rule 11 of the NCLAT Rules, 2016, we allow the settlement and set aside the Impugned Order dated 18th September, 2019 passed by Adjudicating Authority (NCLT) Jaipur (Court No.1) - Company Petition filed by Mrs. Kanchan Ostwal against MEC Shot Blasting Equipment Private Limited is disposed of as withdrawn. The Appellant as well as shareholders, Directors of the Corporate Debtor will be bound by the terms of settlement. In case there is default in the payment in terms of the settlement, it will be open for the Operational Creditor to move this Appellate Tribunal for recall of this Order and to revive the CIRP process against the Corporate Debtor. The Operational Creditor may also file Application for initiation of the contempt proceedings against the defaulting Appellant, Directors/Director and shareholders. The Impugned Order admitting Section 9 Application and 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Professional are set aside - application preferred by the Respondent under Section 9 of the I B Code is disposed of as withdrawn.
Issues Involved:
1. Settlement Agreement between Operational Creditor and Corporate Debtor. 2. Constitution of Committee of Creditors. 3. Withdrawal of Corporate Insolvency Resolution Process (CIRP). 4. Payment of settlement amount and post-dated cheques. 5. Costs and fees of Interim Resolution Professional (IRP). Detailed Analysis: 1. Settlement Agreement between Operational Creditor and Corporate Debtor: The Appellant, a shareholder of MEC Shot Blasting Equipment Private Limited (Corporate Debtor), requested the recording of a settlement deed executed on 02.11.2019 between the Operational Creditor and the Corporate Debtor. Both parties confirmed the settlement and tendered the deed at Bar. The deed of settlement was taken on record and marked ‘X’ for identification. The settlement involved the acknowledgment of debt by the Corporate Debtor amounting to ?1,33,55,795.40, and an agreement to settle the claim for ?60,65,668/- in full and final settlement of the dues and liabilities. 2. Constitution of Committee of Creditors: The Tribunal had earlier directed not to constitute the Committee of Creditors if it had not yet been constituted. Both Company Secretaries confirmed that the Committee of Creditors had not been constituted, allowing for the settlement to proceed without complications from creditor committee involvement. 3. Withdrawal of Corporate Insolvency Resolution Process (CIRP): The Tribunal allowed the settlement and set aside the Impugned Order dated 18th September 2019, which initiated the CIRP against MEC Shot Blasting Equipment Private Limited. The Company Petition filed by the Operational Creditor was disposed of as withdrawn. The Appellant and shareholders, Directors of the Corporate Debtor, were bound by the terms of the settlement. In case of default in payment, the Operational Creditor could move the Appellate Tribunal to recall the order and revive the CIRP process. 4. Payment of Settlement Amount and Post-Dated Cheques: The Appellant handed over a draft of ?15 Lakhs and post-dated cheques as mentioned in the deed of settlement to the Company Secretary representing the Operational Creditor. The parties agreed to be bound by the settlement terms, which included an initial payment and subsequent installments as detailed in the repayment schedule. The Operational Creditor reserved the right to reinitiate CIRP if the Corporate Debtor defaulted on the repayment schedule. 5. Costs and Fees of Interim Resolution Professional (IRP): The Tribunal computed the IRP's fees at ?1,50,000/- and allowed the IRP to recover CIRP costs incurred. The Appellant undertook to contact the IRP and pay the fees and CIRP costs within three weeks, after deducting any amount already received under the Impugned Order. If the IRP faced difficulties regarding CIRP costs, they could move the Adjudicating Authority for directions. Conclusion: The Tribunal set aside the Impugned Order admitting the Section 9 Application and all subsequent orders, including the appointment of the IRP and the declaration of moratorium. The application under Section 9 of the I&B Code was disposed of as withdrawn, and the Respondent Company was released from all rigors of law, allowing it to function independently through its Board of Directors. The Company Appeal was disposed of accordingly.
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