2017 (7) TMI 1274 - SC - Insolvency and Bankruptcy

Supreme Court Enforces Consent Terms for Amicable Settlement

LOKHANDWALA KATARIA CONSTRUCTION PRIVATE LIMITED Versus NISUS FINANCE AND INVESTMENT MANAGERS LLP

The Supreme Court upheld the National Company Law Appellate Tribunal's decision that the inherent power under Rule 11 could not be used to allow a ... NCLT inherent power to allow a compromise before by the parties after admission of the matter - inherent power recognized by Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - HELD THAT:- National Company Law Appellate Tribunal was of the view that the inherent power could not be so utilized. According to us, prima-facie this appears to be the correct position in law. Since all the parties are before us today, we utilize our powers under Article 142 of the Constitution of India to put a quietus to the matter before us. We take the Consent Terms dated 28.06.2017 and 12.07.2017 entered into between the parties on record and also record the undertaking of the appellant before us to abide by the Consent Terms in toto. The appellant also undertakes to pay the sums due on or before the dates mentioned in the aforesaid Consent Terms. Issues:1. Interpretation of Rule 8 of the I&B (Application to Adjudicating Authority) Rules, 2016.2. Utilization of inherent power under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 for allowing a compromise after admission of the matter.Analysis:The Supreme Court, comprising Justices Rohinton Fali Nariman and Sanjay Kishan Kaul, considered the issue raised in the appeal regarding the permissibility of utilizing the inherent power recognized by Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 to allow a compromise after the admission of the matter, in light of Rule 8 of the I&B Rules, 2016. The National Company Law Appellate Tribunal had previously held that the inherent power could not be used in such a manner. The Court, prima facie, agreed with this view as a correct interpretation of the law.However, with all parties present before the Court, they invoked their powers under Article 142 of the Constitution of India to resolve the matter efficiently. The Court accepted the Consent Terms agreed upon by the parties and the undertaking of the appellant to adhere to these terms completely, including the payment of due sums within the specified timelines. Consequently, the Court disposed of the appeal based on these agreements and actions taken by the parties in line with the Consent Terms.As a result of the Court's order and the parties' compliance with the Consent Terms, the appeal was deemed to be fully resolved, with no further actions or proceedings required in relation to the matter before the Court. The Court's use of its constitutional powers under Article 142 facilitated the amicable resolution of the dispute, bringing the legal proceedings to a conclusive end based on the agreements reached between the parties.