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TMI Blog2020 (7) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... uld probably be the reason for the Respondents not to seek exit from the 'Corporate Insolvency Resolution Process' before passing of the impugned order as the Settlement inter se them, though not proved to have manifested in the form of a Settlement Agreement, was not all encompassing. This factual position would not warrant exercise of inherent powers under Rule 11 to allow exit of the 'Corporate Debtor' from 'Corporate Insolvency Resolution Process' as the legitimate interests of all other stakeholders, including the Intervenors whose claims have been admitted and the 'Committee of Creditors' is in seisen of the same would be seriously jeopardised. This is apart from the fact that in the event of settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motion 'Corporate Insolvency Resolution Process' against Respondent No. 1- 'M/s. Crown Realtech Private Limited'- ('Corporate Debtor'). 2. Through the medium of instant appeal filed under section 61 of the 'I B Code', Shri Gopal Krishan Bathla, Ex-Director of the 'Corporate Debtor' seeks to assail the impugned order of admission on various grounds set out in the memo of the Appeal. However, at the hearing of this appeal, the arguments have been restricted to only one ground adumbrated herein below. 3. For better understanding of the controversy raised in this Appeal, it is apt to refer to the factual matrix of the case. It emerges from the record that the 'Corporate Debtor' is a Real Es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assailed in this Appeal. 4. The only ground pressed at the hearing for setting aside the impugned order is that the Respondent No. 2 had arrived at a Settlement with the 'Corporate Debtor' on 3rd December, 2019 and since the same preceded the date of admission of the application under section 7 vide impugned order dated 6th December, 2019 and constitution of the 'Committee of Creditors' on 3rd January, 2020, in terms of the law laid down by the Hon'ble Apex Court in Swiss Ribbons Private Limited and Anr. v. Union of India and Ors.- [2019] 4 SCC 17 and followed by this Appellate Tribunal's Judgement in number of cases, this Appellate Tribunal should exercise its inherent powers to take on record the Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a committee of creditors is constituted (as per the timelines that are specified, a committee of creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 425 of 2020. It emerges that during the hearing of CP(IB) No. 1565 (PB)/2018 i.e., the application filed by Respondent No. 2 against the 'Corporate Debtor' under section 7 of the 'I B Code' and until the pronouncement of the impugned order, neither of the parties approached the Adjudicating Authority to lay intimation about Settlement of the claim of the Respondent No. 2 and seek exit from 'Corporate Insolvency Resolution Process' by allowing Settlement inter se the parties. There is not even a whisper in the memo of the Appeal that Respondent No. 2 had arrived at a Settlement with the 'Corporate Debtor', manifesting in reducing of the Settlement to an instrument i.e., the Settlement Deed. There is not an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to be set aside by this Appellate Tribunal in terms of the order dated 7th March, 2019 in Company Appeal (AT) (Insolvency) No. 797 of 2018. As already stated, none of the parties reported any development in regard to Settlement of claim of Respondent No. 2 before the Adjudicating Authority prior to passing of the impugned order or even thereafter until constitution of the 'Committee of Creditors' on 3rdJanuary, 2020. It further appears from I.A. No. 425 of 2020 filed by the Intervenors that as many as seven matters including the application of the Respondent No. 2 were pending when the impugned order was passed by the Adjudicating Authority. As the 'Corporate Debtor', despite commitments, failed to settle with all seven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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