2020 (3) TMI 1215 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - It is evident that the appellant intended to settle the matter with the respondent. Finally, on September 19, 2019 when we noticed that the matter has not been settled, it is the appellant who was ready to deposit the total amount of ₹ 2.13 crores as claimed by the respondent- M/s. Val-Met Engineering P. Ltd. , we allowed to give such offer to 'M/s. Val-Met Engineering P. Ltd.' (financial creditor) and may deposit with them . However, we directed the respondent to keep the same in a separate interest bearing account . It was also made clear that if the amount is deposited within 10 days, then this Appellate Tribunal will decide whether to allow the M/s. Val-Met Engineering P. Ltd. to withdraw the application under section 7 of the I and B Code - the respondent having agreed to withdraw the application filed under section 7, we are not inclined to accept such plea taken by the appellant. The application under section 7 filed by M/s. Val-Met Engineering P. Ltd. stands withdrawn.

Issues:
1. Application under section 7 of the Insolvency and Bankruptcy Code, 2016 for corporate insolvency resolution process.
2. Dispute regarding the classification of the respondent as a financial creditor or operational creditor.
3. Negotiations for an amicable settlement between the parties.
4. Offer by the appellant to deposit the total claim amount for settlement.
5. Deposit of the claim amount with the respondent and withdrawal of the application under section 7.
6. Argument on the limitation of the claim.
7. Exercise of power under rule 11 of the National Company Law Appellate Tribunal Rules, 2016 to set aside the impugned order.
8. Assessment of fees and costs payable to the interim resolution professional/resolution professional.

Analysis:

1. The case involved an application under section 7 of the Insolvency and Bankruptcy Code, 2016 for the initiation of the corporate insolvency resolution process against a specific company. The Adjudicating Authority admitted the application, leading to subsequent legal proceedings.

2. A dispute arose regarding the classification of the respondent as a financial creditor or an operational creditor. The appellant argued that the respondent should be considered an operational creditor due to previous actions, leading to a stay on the constitution of the committee of creditors.

3. The parties engaged in negotiations for an amicable settlement, leading to adjournments of the appeal to allow for the submission of terms of settlement by the respondent.

4. Despite attempts at settlement, the appellant offered to deposit the total claim amount for settlement. The tribunal directed the appellant to deposit the amount with the respondent within a specified timeframe.

5. Following the deposit of the claim amount with the respondent, and the respondent's agreement to withdraw the application under section 7, the tribunal decided not to accept the appellant's plea and allowed the withdrawal of the application.

6. An argument regarding the limitation of the claim was raised by the appellant, but the tribunal refrained from deciding on this issue due to the settlement agreement and payment of the claim amount.

7. Citing the decision in Swiss Ribbons P. Ltd. v. Union of India, the tribunal exercised power under rule 11 of the National Company Law Appellate Tribunal Rules, 2016 to set aside the impugned order and allow the withdrawal of the application under section 7.

8. The tribunal assessed the fees and costs payable to the interim resolution professional/resolution professional, directing the respondent to make the necessary payments within a specified timeframe and to hand over assets and records of the corporate debtor promptly.

This comprehensive analysis covers the various issues addressed in the judgment, detailing the legal proceedings and outcomes of the case before the National Company Law Appellate Tribunal.

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