Insolvency application withdrawn after settlement between parties - Section 7 of Insolvency & Bankruptcy Code

The Tribunal allowed the application for withdrawal of the insolvency application under Section 7 of the Insolvency & Bankruptcy Code, 2016. This decision was based on the settlement reached between the Promoter, Director & Shareholder of the Corporate Debtor and the Financial Creditor, where the agreed amount was paid, and both parties expressed their intention to withdraw the petition. The Tribunal, considering the settlement and mutual agreement for withdrawal, ordered the withdrawal of the application, bringing the matter to a close.

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Issues: Application for withdrawal of insolvency application under Section 7 of the Insolvency & Bankruptcy Code, 2016.

Analysis:
1. The application was filed by a Promoter, Director & Shareholder of the Corporate Debtor seeking withdrawal of the insolvency application admitted under Section 7 of the Insolvency & Bankruptcy Code, 2016.

2. The Applicant agreed to pay the Financial Creditor an amount of Rs. 58,78,794/-, including the principal and interest amount, via Demand Draft and two Cheques issued on different dates and drawn on different banks, settling the claim admitted in the petition.

3. The application was filed before the Constitution of Committee of Creditors, thus the necessity of approval by ninety percent voting by the CoC can be waived as per the judgment of the Hon'ble Supreme Court in the matter of Swiss Ribbons & Ors. v. Union Of India & Ors. The Supreme Court empowered the NCLT to allow withdrawal of applications admitted under Sections 7, 9, or 10 without CoC approval if the CoC has not been constituted.

4. The Petitioner also made a request for withdrawal of the petition on receiving the settled amount, and both the Petitioner and the Corporate Debtor expressed their intention to withdraw the petition due to the settlement of debt. The IRP has also been paid his dues, further supporting the withdrawal of the petition.

5. Considering the settlement between the parties and the circumstances where both the Petitioner and the Corporate Debtor seek withdrawal, the Tribunal allowed the application for withdrawal of the insolvency application.

6. The Tribunal ordered the withdrawal of the application accordingly, bringing the matter to a close based on the settlement reached between the parties.

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