Supreme Court Grants Liberty to Director for Settlement Application

Shaji Purushothaman Versus Union Bank of India & Ors.

Shaji Purushothaman Versus Union Bank of India & Ors. - TMI Issues:
1. Appeal against rejection of Miscellaneous application.
2. Settlement with Financial Creditors.
3. Setting aside the order of admission.
4. Claim of 'M/s. Edelweiss Asset Reconstruction Company Ltd.'
5. Approval of Resolution Plan by Committee of Creditors.
6. Liberty to move application u/s 12A for settlement.

Issue 1: Appeal against rejection of Miscellaneous application
The appeal was filed by the Director of a Corporate Debtor against the rejection of a Miscellaneous application by the Adjudicating Authority. The application under section 7 of the Insolvency & Bankruptcy Code, 2016 (I&B Code) by 'Union Bank of India' was admitted against the Corporate Debtor on a previous date. The Appellant had challenged this order before the Appellate Tribunal and subsequently before the Supreme Court. The Supreme Court granted liberty to move an application before the Adjudicating Authority.

Issue 2: Settlement with Financial Creditors
The Appellant informed the court that he had settled the matter with 'Union Bank of India' and other Financial Creditors. A miscellaneous application was filed by the Appellant seeking to set aside the previous order of admission. However, the Adjudicating Authority observed that the admission order could not be set aside unless an application under section 12A was filed, settling the matter with all Creditors with the approval of 90% of the voting share of the Committee of Creditors.

Issue 3: Setting aside the order of admission
The Adjudicating Authority, in the impugned order, stated that the order of admission could only be set aside by filing an application under section 12A, with the approval of 90% of the Committee of Creditors. The Appellant expressed readiness to settle the claim with all Creditors, including 'M/s. Edelweiss Asset Reconstruction Company Ltd.'

Issue 4: Claim of 'M/s. Edelweiss Asset Reconstruction Company Ltd.'
The counsel for the Appellant argued that 'M/s. Edelweiss Asset Reconstruction Company Ltd.' was not entitled to any claim. However, the court declined to decide on this issue at that stage as it was not raised before the Adjudicating Authority, finding no illegality in the order.

Issue 5: Approval of Resolution Plan by Committee of Creditors
The Resolution Plan had already been approved by the Committee of Creditors, taking into account the claim of 'M/s. Edelweiss Asset Reconstruction Company Ltd.' The Appellant was given liberty to move an application under section 12A for settling the claims of all Creditors, including the guarantors.

Issue 6: Liberty to move application u/s 12A for settlement
The court granted liberty to the Appellant to move an application under section 12A for settling the claims of all Creditors, including the guarantors. The Committee of Creditors was to decide whether the proposal for settlement by the Appellant was better than the approved Resolution Plan. The court refrained from expressing any opinion on this matter, leaving the decision to the Committee of Creditors.

The appeal was disposed of with no costs awarded.