9911796707
TMI Blog2022 (5) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... D) which was admitted vide orders dated 04.03.2022 and Corporate Insolvency Resolution Process (CIRP) commenced with effect from the said date. On 05.03.2022, the Interim Resolution Professional (IRP) appointed by this Tribunal vide order dated 04.03.2022, sent an email to the Applicant intimating the commencement of CIRP and requesting to handover the control and custody of the assets of Respondent No. 2. b. Subsequently, a shareholder of Respondent No. 2 i.e., the Applicant herein contacted Respondent No. 1/Operational Creditor and after deliberations at the office of the Counsel for Respondent No. 1, the Applicant and Respondent No. 1 arrived at a verbal agreement on 11.03.2022, whereby the Applicant agreed to pay on behalf of Respondent No. 2/Corporate Debtor and Respondent No. 1 agreed to accept the entire amount of Rs. 9,72,14,511/-, which was claimed as due and payable by Respondent No. 2 in Section 9 Application filed by Respondent No. 1 and upon receipt of the said amount, file appropriate application for withdrawal of the Company Petition, under Section 12A of the IBC, through the IRP. It was further agreed that settlement agreement and Form-FA etc., would also be signe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India. The Applicant cannot at this stage file the instant application on the premise of alleged compromise, while in fact there is no settlement between the parties at all. Respondent No. 1 and Respondent No. 2 do not have right to file any application for withdrawal of the Company Petition at this stage without a duly executed settlement deed in place. Respondent No. 2 is trying to evade the legally bound liability arising out of the SOW with a convenient mischief. As per Section 12A, the Applicant lost his right to file any application, as soon as IRP is appointed. The total due amount is Rs. 17 Crores which is still payable after adjusting 9.72 Crores paid by the Applicant. The Applicant miserably failed to file any document showing the alleged settlement. No settlement took place between the parties. The amounts remitted are towards part of its dues which are received by Respondent No. 1 without prejudice to his rights. After receiving the amount of Rs. 9 Crores and odd from the Applicant, Respondent No. 1 received an email from the Ex-CFO of Respondent No. 2, claiming that said amounts have been transferred towards full and final settlement of dues. Immediately, Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n encountered by Respondent No. 2, wherein allegedly settlement talks went on between the parties and a settlement was arrived at with regard to the amount that has to be paid by Respondent No. 2 and the said amount was paid, at which time Respondent No. 1 resiled from the oral settlement and is refusing to file an Application under Section 12A for withdrawing the Application filed under Section 9 of IBC. No doubt there are emails exchanged between the parties as regards the settlement amount. A letter dated 11.03.2022 by the Chief Financial Officer of Respondent No. 2 shows that a sum of Rs. 9,45,49,426/- was being paid in full & final and complete settlement of dues. There is a mail from Respondent No. 1 on 12.03.2022 stating, that they are shocked to receive only a part payment and questioning whether it is intentional or out of ignorance. It was also informed that the dues of Respondent No. 1 have to be settled as on CIRP commencement date i.e., 04.03.2022. A request to settle the dues as on the said date was made. A mail dated 11.03.2022 sent to one Mr. Kondapalli Yashaswi by the IRP, mentioning that Form-FA was being forwarded for finalization and filing by the EOD upon recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Petition and would relate to the date of filing of the claim petition i.e., 29.02.2020. As such, the settlement agreement, clarifying the same was admittedly forwarded to Respondent No. 1. On 29.03.2022, the Counsel for Respondent No. 1 sought time to verify the memo filed by the Senior Counsel as per the undertaking given on 28.03.2022. On 30.03.2022, the Counsel for Respondent No. 1 submitted that they have to come to a settlement agreement and that they want to discuss on the said agreement and file the Application for withdrawal of the Petition. But later since, Respondents counsel did not accept the fact of the settlement, the matter was heard. c) On the premise that Respondent No. 1, through their counsel, admitted that there was a settlement and Respondent No. 1 resiled from the said admission, the Counsel for the Applicant contends that it would amount to an abuse of process of law. The Counsel also contends that there is an inducement by Respondent No. 1 to pay the amount and that the same would amount to cheating. As regards the contents of the abuse of the process of law it would usually be done by the party, who claims certain reliefs by invoking the law. The cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2016 which provides for inherent powers. It reads as under: "Rule 11 Inherent Powers:- Nothing in these rides shall, be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal". e) In my considered opinion, inherent powers can be exercised to meet the ends of justice in an application which is maintainable under the provisions of the Code and to prevent an abuse of process of the Tribunal involved in deciding such application. A settlement presupposes a consensus between the parties entering into a settlement. If from the inception of the settlement, one of the parties proceeds with an element of cheating in its mind, it cannot be termed as a settlement. Section 12A permits withdrawal of the application only if there is an agreed settlement between the parties. Since the Application under Section 9 of IBC is filed by Respondent No. 1 and since withdrawal of an Application can be done only by a person who filed it, it implies that the Applicant referred to in Section 12A would only be the Operational Creditor or the Financial Creditor as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be seen that the locus to file an application under Section 12A would be only for the Financial Creditor. The question which fell for consideration before the NCLAT in Anuj Tejpal vs. Rakesh Yadav &. Another, was also whether the NCLAT can exercise powers under Rule 11 and entertain application seeking withdrawal prior to constitution of CoC and whether procedure under Regulation 30-A(i)(a) is applicable to the said application and whether the intervention applications filed by the proposed interveners during the pendency of the appeal be allowed, having regard to the settlement arrived at between the Appellant and Operational Creditor prior to the constitution of CoC. In the said context, it was made clear that at any stage where the CoC is not yet constituted, a party can approach National Company Law Tribunal directly and the Tribunal may exercise its inherent powers under Rule 11 of NCLT Rules, and allow or disallow the application for withdrawal of settlement. When some Financial Creditors wanted to intervene, opposing the settlement, it was held by the NCLAT that since the parities have settled the matter prior to the constitution of CoC, the said applications cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such a situation, it would have been felt appropriate by Respondent No. 1 not to go ahead with receiving the amount specified under the draft settlement deed and to make it clear to the Applicant that they do not intend to act on the said settlement deed for the said reason. It is true that after having induced Respondent No. 2 to pay the entire claim amount, it would not be in the interest of fairness to put forth the plea of interest. But at the same time this Tribunal cannot direct Respondent No. 1 to act on the draft settlement deed which is not yet signed by the parties by considering the correspondence between the parties and Respondent No. 1 cannot be asked to forgo the above mentioned interest or to file a suit or proceeding for recovery of the same. But however, taking into consideration the events presented before this Tribunal and by relying on what the NCLAT has done in the case of Bhaskar Biswas Vs. M/s. Devi Trading and Holding Pvt. Ltd., & Another in Company Appeal (AT) (Ins) No. 823 of 2019, I am inclined to allow the Applicant to approach the Operational Creditor as sought for by them, for having further talks on the matter and with regard to the interest for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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