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TMI Blog2022 (7) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... hi, on 25.05.2022, had allowed I.A. No. 2391 of 2022 filed by the Appellant/Petitioner/Financial Creditor (under Section 12A of the I B Code read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016, for withdrawal of the Corporate Insolvency Resolution Process) initiated against the Respondent/Corporate Debtor, based on the Settlement entered into between the Parties, prior to the formation of the Committee of Creditors. In reality, as per the Terms of Settlement read in terms of the Deed of Adherence, the Respondent in unambiguous and unequivocal terms had consented and agreed for Revival/Restoration of Corporate Insolvency and Resolution Process against the Respondent/Corporate Debtor in the event of any default, being committed thereto. This Tribunal pertinently points out that in the Terms of Settlement dated 21.04.2022, in Clause 12, it was mentioned that because of the Settlement, the Appellant/Petitioner wished to conditionally withdraw the Section 7 Petition filed against the Corporate Debtor, subject to the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the `Corporate Insolvency Resolution Process' proceedings against the Corporate Debtor. Appellant's Submissions: 3. Challenging the `impugned order' dated 25.05.2022 in I.A. No. 2391 / 2022 in C.P. IB No. 1101/PB/2020, passed by the `Adjudicating Authority' (NCLT), Principal Bench, New Delhi, the Learned Counsel for the Appellant contends that the `Adjudicating Authority' had permitted the `Appellant' to withdraw the `Application' filed by the `Applicant/Appellant/Petitioner' under Section 7 of the I & B Code, 2016, for initiation of `Corporate Insolvency and Resolution Process' against the `Respondent/Corporate Debtor' (M/s. Anand Divine Developers Private Limited) in lieu of the terms of the `Settlement' dated 21.04.2022 that was entered into between the `Appellant' and the `Corporate Debtor' group (as defined under the `Terms of Settlement' and which includes Mr. Getamber Anand, the promoter and super majority shareholder of Respondent and ATS Infrastructure Limited, a shareholder of the Respondent, holding an aggregate of 98% of the shareholding of the Respondent. 4. According to the Learned Counsel for the `Appellant' while permitting the `withdrawal of the Application' a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under Section 7 filed by the Financial Creditor. 4. Considering the aforesaid, we allow the I.A. No. 1346 of 2022, take the Settlement on record and permit the Appellant to withdraw the Company Appeal (AT) (Ins.) No. 400 of 2022 to enable the parties to approach the Adjudicating Authority by filing an Application for withdrawal of Section 7 Application. With regard to expenses etc., it shall be open for the parties to request the Adjudicating Authority to pass appropriate order." and resultantly permitted the `Appeal' to be withdrawn, etc. Respondent's Contentions: 9. The Learned Counsel for the Respondent submits that the `impugned order' dated 25.05.2022 in I.A. No. 2391 of 2022 in C.P. IB No. 1101/PB/2020 requires no modification as sought for, by the `Appellant' in the instant Comp. App (AT) (INS) No. 703 of 2022, to make the `Terms of Settlement' dated 21.04.2022 as part and parcel of the `impugned order'. 10. The Learned Counsel for the Respondent comes out with a plea that the `Appellant' is not to be granted the `relief' of `Revival/Restoration' of main C.P. IB No. 1101/PB/2020 by virtue of `Terms of Settlement' dated 21.04.2022. Also, no liberty is to be given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h its Promoters and Shareholders owing to the Respondent at the concerned time having been admitted into `CIRP') had unconditionally agreed in the `Terms of Settlement' that the `Appellant' would be at `liberty' to `Restore/Revive' the Section 7 Application in the `event of default' committed by the Respondent in abiding the `Settlement Terms'. In fact, both the `Parties' were in complete agreement and that the `Adjudicating Authority' had ignored this aspect and passed a `simpliciter order of withdrawal' without expressly recording the `Settlement Terms'. 16. According to the Learned Counsel for the Appellant although the Appellant had prayed for the grant of liberty for `Revival of CIRP', the `Tribunal' without assigning any reasons for its refusal, failed to grant the `Reliefs', as prayed for, thereby causing `prejudice and injustice' to the `Appellant'. Besides this, the `Adjudicating Authority' had failed to take into consideration of the fact that the `Settlement Terms' requires the `Respondent' to have continuing obligations, even after the `conditional withdrawal of C.P. IB No. 1101/PB/2020. 17. The Learned Counsel for the Appellant refers to the Judgment of this `Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. & Anr. V. Union of India & Ors.- 2019 SCC OnLine SC 73" allowed the Appellants - Financial Creditors to withdraw the application and terminated the CIRP. It further emerges from the order that neither the settlement terms were filed nor the same were brought on record and incorporated in the order of the Adjudicating Authority with liberty to revive/ restore the CIRP in the event of the Corporate Debtor not adhering to the terms of the settlement or post dated cheques issued to Appellants being dishonoured. 3. In view of this position, it cannot be said that the Settlement Terms not incorporated in the order of the Adjudicating Authority assumed the character of the decree of the Court, breach whereof would entitle the Appellants - Financial Creditors to come back and seek restoration/ revival of CIRP.'' 20. The Learned Counsel for the Appellant points out the Judgment of this `Tribunal' in Himadri Foods Ltd. V Credit Suisse Funds AG (Vide Company Appeal (AT) (INS) No. 1060 of 2020), wherein it is observed as under: "It appears that the Terms of Settlement providing a repayment schedule was incorporated in the order thereby making it an order / decree of the Court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual Promoter shall pay the Settlement Amount to the VCF/Financial Creditor; (ii) consequences of failure on the part of ADDPL and Individual Promoter to make payment of the Settlement Amount to the VCF/Financial Creditor in accordance with these Terms of Settlement; and (iii) the withdrawal of Section 7 Application, on the terms and conditions set out herein and as per the applicable provisions of the Insolvency Code and other relevant regulations, while reserving and without prejudice to all rights, remedies, recourse and benefits available to the Financial Creditor under the Investment Agreement or any Definitive Agreements, the Insolvency Code and / or any other applicable laws, upon the occurrence of any breach / default / failure on the part of the Corporate Debtor Group in making payments as mentioned in these Terms of Settlement or otherwise complying with any provision hereunder and / or upon occurrence of any other default / breach / Event of Default under the Investment Agreement and other Definitive Agreements and / or upon admission of any Insolvency or proceedings of similar nature initiated by any creditor against the Corporate Debtor Group (or any one or more of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is set out in Annexure-2 hereto. 3. The Corporate Debtor Group hereby unconditionally and irrevocably, agree, acknowledge and undertake that in addition to the default / breach / Event of Default as contemplated under the Investment Agreement and other Definitive Agreements, the occurrence of any breach / default / failure by the Corporate Debtor Group to comply with any of the terms, conditions, covenants and / or undertakings of the Corporate Debtor Group under these Terms of Settlement and any other documents / deeds / undertakings / writings pursuant hereto, including without limitation, any default in making payment of any amounts in the manner as mentioned in these Terms of Settlement and any other documents / deeds / undertakings / writings pursuant hereto or aforementioned post-dated cheques towards Settlement Amount not being honoured shall also be deemed and construed as an `Event of Default' under the Investment Agreement and other Definitive Agreements and under these Terms of Settlement, with the intended costs and consequences as those stated in the Investment Agreement and other Definitive Agreements as well as those set out herein and under applicable laws. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then unless the entire Settlement Amount has already been paid by the Corporate Debtor Group to the VCF/Financial Creditor before such default / breach / Event of Default / admission of insolvency against ADDPL or the Corporate Debtor Group (or any one or more of them) or the Confirming Parties (or any one or more of them or initiation of similar proceedings, as the case may be, the repayment of the outstanding SOCDs shall be governed solely by the terms and conditions of the Investment Agreement and the Definitive Agreements and in such an event, the Corporate Debtor Group further unconditionally and irrevocably agrees, undertakes and acknowledges that the outstanding dues in respect of the Outstanding SOCDs (in accordance with the terms of the Investment Agreement being the amounts due to the Financial Creditor as of November 20, 2020 as stated in the Section 7 Application), together with further default IRR of 30% on such amounts calculated till the date of actual payment, shall be forthwith due and payable by ADDPL and the Individual Promoter to the Financial Creditor, after taking into consideration any amounts received by the Financial Creditor from the Corporate Debtor Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, remedies, recourse or action that it may have, reserves its right to revive / file an application or re-initiate proceedings before the Hon'ble NCLT (at its discretion) under the Insolvency Code and / or initiate any other proceedings which it can initiate in terms of the Investment Agreement / other Definitive Agreements or under any applicable laws, at its discretion and upon such default / breach / Event of Default, the Corporate Debtor shall become liable to make payments of the amounts due and payable to the VCF in terms of the Investment Agreement and Definitive Agreements, and such obligation shall not be affected in any manner (including the amounts payable) by virtue of these Terms of Settlement. 8. That based on the aforesaid promises, undertakings and covenants of the Corporate Debtor Group and the Confirming Parties, and only upon receipt by the VCF / Financial Creditor of the First Tranche of Settlement Amount into its bank account, the VCF / Financial Creditor has agreed to conditionally (subject to and with full rights to revive / re-initiate at the discretion of Financial Creditor) withdraw the Section 7 Application as per the applicable provisions of the Insol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor Group hereby agrees that upon execution of such deed of adherence, the term `Corporate Debtor Group' under these Terms of Settlement shall include `ADDPL'. Notwithstanding anything to the contrary, the obligation of ADDPL and the Corporate Debtor Group shall be joint and several in respect of all the outstanding amounts payable under these Terms of Settlement.'' 24. Resting on the `Settlement Terms' dated 21.04.2022, the `Appellant' on 17.05.2022 in respect of `Withdrawal Application' in C.P. IB No. 1101/PB/2020 admitted for `CIRP' of `Respondent/Corporate Debtor (Anand Divine Developers Private Limited) had addressed a letter to Mr. Harish Taneja, IRP of Anand Divine Developers Private Limited stating under the head the Settlement Amount Clause 1 and Clause 2 of the `Terms of Settlement' as under : 1. "The Corporate Debtor Group hereby unconditionally and irrevocably, agree, confirm and undertake to make payment of the Settlement Amount i.e., an aggregate amount of INR 7,18,78,600/- (Indian Rupees Seven Crore Eighteen Lacs Seventy Eight Thousand Six Hundred only) to the Financial Creditor in 8 (Eight) tranches in the following manner, towards repayment of the dues of the VC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Agreement and Definitive Agreements." (F) Annexure-2 of the Terms of Settlement: "Annexure-2 (Refer Clause 2) Details of demand drafts/post-dated cheques Sr. No. Demand Draft / Cheque No. Cheque Dated Cheque Amount Drawn on Bank Drawn by 1 001861 30-Jun-22 47,13,400 Kotak Mahindra Bank Getamber Anand 2 001860 31-Jul-22 47,13,300 Kotak Mahindra Bank Getamber Anand 3 001864 31-Aug-22 47,13,400 Kotak Mahindra Bank Getamber Anand 4 001862 30-Sep-22 47,13,300 Kotak Mahindra Bank Getamber Anand 5 001865 31-Oct-22 47,13,400 Kotak Mahindra Bank Getamber Anand 6 001863 30-Nov-22 47,13,300 Kotak Mahindra Bank Getamber Anand 7 001866 15-Dec-22 3,65,28,500 Kotak Mahindra Bank Getamber Anand 26. By virtue above settlement, the Appellant had wished to conditionally withdraw the Section 7 Petition filed against the Corporate Debtor, subject to the Corporate Debtor, Corporate Debtor group and the Confirming Parties (as defined in the `Terms of Settlement') unconditionally complying with all the covenants contained in the `Terms of Settlement' and hence requested the `Interim Resolution Professional' to file appropriate application before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 29. Also, this `Tribunal', adverts to the Judgment dated 25.01.2019 of the Hon'ble Supreme Court in the matter of Swiss Ribbons Pvt. Ltd. V Union of India whereby and whereunder at Paragraph 52, it is observed as under: 52. "It is clear that once the Code gets triggered by admission of a creditors petition under Sections 7 to 9, the proceeding that is before the Adjudicating Authority, being a collective proceeding, is a proceeding in rem. Being a proceeding in rem, it is necessary that 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 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal Bench, New Delhi, in Comp. App (AT) (INS) No. 664 of 2019. Invocation of an `Inherent Power': 32. To be noted, that an `Inherent Power', is to be pressed into service by a `Tribunal' / `an Appellate Tribunal' based on the well settled proposition of `Law' that an `Act of Tribunal' / `Court of Law', shall cause any `prejudice', hardship, inconvenience to an `Homo-sapien' in the considered opinion of this `Tribunal'. In aid of delivering justice to the Stakeholders, an `Inherent Power' can be exercised by a `Tribunal'. An inherent powers' breadth is co-extensive with the necessity. 33. It transpires that the `Adjudicating Authority' (NCLT), Principal Bench, New Delhi, on 25.05.2022, had allowed I.A. No. 2391 of 2022 filed by the `Appellant/Petitioner/Financial Creditor' (under Section 12A of the I & B Code read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016, for `withdrawal of the Corporate Insolvency Resolution Process) initiated against the Respondent/Corporate Debtor, based on the `Settlement' entered into betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that in the `Terms of Settlement' dated 21.04.2022, in Clause 12, it was mentioned that because of the `Settlement', the `Appellant/Petitioner' wished to conditionally withdraw the Section 7 Petition filed against the `Corporate Debtor', subject to the Corporate Debtor, Corporate Debtor Group and Confirming Parties (as defined in the Terms of Settlement) unconditionally complying with all covenants contained in the `Terms of Settlement'. 39. Apart from the above, in Clause 13 (a) of the `Terms of Settlement' dated 21.04.2022, an additional prayer was sought to be included before the `Interim Resolution Professional Mr. Harish Taneja', of the Respondent/Corporate Debtor on 17.05.2022, Viz. granting of liberty to the `Appellant/Petitioner/Financial Creditor' to approach the `National Company Law Tribunal' again to revive and restore the proceedings of the C.P. No. 1101 (PB) / 2020 if the Respondent/Corporate Debtor or Corporate Debtor Group (as defined under the `Terms of Settlement') fails to abide by the `Terms of Settlement' dated 21.04.2022 including in respect of the `Settlement' (as defined under the `Terms of Settlement'). 40. Besides the above, in Clause 13 (b) of the ` ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns advanced on behalf of either side in the instant `Appeal' and taking into account of the attendant facts and circumstances of the case, especially in the teeth of the express covenants mentioned in the `Terms of Settlement' dated 21.04.2022, which was agreed to by the respective `Parties' (which cannot be brushed aside so lightly) to meet the ends of justice, hereby orders / directs; (a) The modification of the `impugned order' dated 25.05.2022 in I.A. No. 2391 of 2022 in C.P. IB No. 1101 (PB)/2020, passed by the `Adjudicating Authority' (NCLT), Principal Bench, New Delhi, to the effect that the `Terms of Settlement' dated 21.04.2022 shall form part and parcel of the `impugned order'; (b) Accords permission to the `Appellant/Petitioner/Financial Creditor' to seek `restoration / revival' of main C.P. IB No. 1101 (PB) / 2020 as per `Terms of Settlement Terms' dated 21.04.2022; (c) To initiate contempt proceedings or any other permissible proceedings, based on `Terms of Settlement' dated 21.04.2022, in the happening of contingency of the Respondent/Corporate Debtor in committing `Breach' of the `Terms of Settlement' dated 21.04.2022 and the `impugned order' dated 25.05.2022 p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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