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2021 (7) TMI 410 - AT - Insolvency and BankruptcyInitiation of CIRP - Corporate Debtor sought to reopen the application - Appellant had paid the due amount in full and final settlement with the Respondent/Operational Creditor - the Adjudicating Authority had not granted permission to the Appellant and further mentioned that the prerogative to file a reopen application vests only with the Respondent/Operational Creditor and not with the Corporate Debtor . HELD THAT - The Appellant had paid the due amount in full and final settlement with the Respondent/Operational Creditor and an acknowledgement letter dated 04.06.2021 was issued by the Respondent/Operational Creditor to the Appellant/Corporate Debtor, this Tribunal, in furtherance of substantial cause of justice directs the filing of an application for withdrawal of main application in IBA/155/2020 on the file of National Company Law Tribunal, Division Bench I, Chennai, as per 12A of the I B Code, Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (vide Form FA) and in accordance with the Law, by the Applicant/Operational Creditor before the Adjudicating Authority (through the Interim Resolution Professional) within 10 days from today, and in event of filing of said application, the Adjudicating Authority shall dispose of the said application in accordance with the I B Code and IBBI Regulations as expeditiously as possible. Application disposed off.
Issues:
1. Interpretation of Section 8(2)(a) of IBC, 2016 regarding dispute notification requirements. 2. Examination of Memorandum of Understanding for debt crystallization. 3. Determination of default in payment and debt falling due. 4. Analysis of pecuniary jurisdiction in relation to the threshold limit. 5. Consideration of settlement efforts during the proceedings. 6. Applicability of Rules 11 and 32 of National Company Law Tribunal Rules, 2016. 7. Permission to reopen proceedings and payment acknowledgment. 8. Decision on withdrawal of the main application and formation of Committee of Creditors. Issue 1: The Adjudicating Authority observed that under Section 8(2)(a) of IBC, 2016, the Corporate Debtor must notify the Operational Creditor of any dispute before receiving the Demand Notice. In this case, the Corporate Debtor failed to raise any dispute before the Demand Notice was issued, leading to the conclusion that the debt of ?80 lakhs was payable as per the Memorandum of Understanding dated 22.08.2019. Issue 2: The Adjudicating Authority found that the debt had fallen due on 05.11.2019, and the Operational Creditor had proven the existence of an Operational Debt. The Corporate Debtor's default in repayment necessitated the initiation of the Corporate Insolvency Resolution Process. Issue 3: Regarding pecuniary jurisdiction, the Tribunal confirmed its authority to entertain the application filed before the threshold limit was raised to ?1 crore, as the application was submitted before the amendment. Issue 4: The Appellant attempted to reconcile disputes with the Respondent during the proceedings, seeking a settlement. However, due to lockdown conditions, face-to-face meetings were challenging, and no resolution was achieved within the given time frame. Issue 5: The Appellant made efforts to settle the dues by proposing payments in instalments, seeking to reopen the proceedings under Rules 11 and 32 of the National Company Law Tribunal Rules, 2016. Issue 6: The Appellant's request to reopen the proceedings was denied by the Adjudicating Authority, stating that only the Operational Creditor had the prerogative to file a reopen application. Issue 7: The Appellant made payments totaling ?77 lakhs to the Respondent, who acknowledged the full and final settlement of all dues. This led the Tribunal to direct the filing of an application for withdrawal of the main application within 10 days. Issue 8: Considering the payment acknowledgment and full settlement, the Tribunal ordered the withdrawal of the main application and stayed the formation of the Committee of Creditors until the withdrawal application was disposed of by the Adjudicating Authority. The Comp. App was disposed of with no costs incurred, and related applications were closed.
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