2020 (1) TMI 1479 - AT - Insolvency and Bankruptcy

Tribunal revokes order, releases company from insolvency process under Section 9

Vishal Gupta Versus M/s Aanav Construction & Anr.

The Tribunal set aside the impugned order and withdrew the application under Section 9 of the Insolvency and Bankruptcy Code, releasing 'Shri Balaji ... CIRP initiated - ‘Committee of Creditors’ was not constituted - ‘Corporate Debtor’ has issued ‘Work Order’ and ‘Work Completion Certificate’ and parties were allowed to settle the matter - Rule 11 of the NCLAT Rules, 2016 - HELD THAT:- A Settlement Agreement dated 18th January, 2020 has been produced to suggest that M/s Translite Scaffolding Limited has reached ‘Terms of Settlement’ with one of the Directors of the ‘Corporate Debtor’. So, three more documents relating to settlement has been placed before us. The total fee payable to the ‘Interim Resolution Professional’ is assessed at ₹ 2,00,000/-, which he is entitled to receive in addition to ₹ 1,25,000/- already incurred towards cost, i.e., total ₹ 3,25,000/-. The ‘Operational Creditor’, who initiated the proceedings has already paid a sum of ₹ 1,00,000/- to the ‘Interim Resolution Professional’, which will be adjusted against his fee. The rest of the amount of ₹ 2,25,000/- is payable, which the Appellant agrees to pay. The learned Counsel for the Appellant submits that he has come with a cheque of ₹ 1,00,000/- and the rest amount, if allowed, will be paid within fifteen days. The Promoters have settled the claim of all the 11 Claimants and the ‘Committee of Creditors’ has not been constituted - in exercise of powers conferred by Rule 11 of the NCLAT Rules, 2016, the impugned order dated 20th September, 2019 is set aside and the application under Section 9 of the I&B code preferred by M/s Aanav Construction Co. is disposed off as withdrawn. The Appellant is directed to comply with the ‘Terms and Conditions’ as reached with the parties pursuant to settlement. If amount is not paid, it will be open to the parties to move before this Appellate Tribunal for revival of the ‘Corporate Insolvency Resolution Process’/ initiation of contempt proceedings - appeal allowed. Issues:Application under Section 9 of the Insolvency and Bankruptcy Code, 2016; Lack of documents to suggest debt payable; Settlement agreements and acknowledgments produced; Claims settled with various parties; Fees payable to Interim Resolution Professional; Setting aside the impugned order and withdrawal of application under Section 9; Release of Corporate Debtor from Corporate Insolvency Resolution Process; Payment to Interim Resolution Professional; Compliance with settlement terms; Revival of Corporate Insolvency Resolution Process if payment not made.Analysis:The judgment pertains to an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, where 'M/s Aanav Construction Co.' initiated Corporate Insolvency Resolution Process against 'Shri Balaji Infradevelopers Private Limited'. The Appellant raised concerns about the lack of documentation to prove the debt payable, highlighting only a Contract Agreement was enclosed in 'Form 5'. However, the Corporate Debtor had issued a Work Order and Work Completion Certificate, leading to settlement discussions due to the absence of a Committee of Creditors.The Appellant submitted multiple settlement agreements and acknowledgments with various parties, including Tata Motors Finance Ltd., Akashganga Infraventures India Limited, and others. The Interim Resolution Professional confirmed the settlement with 11 claimants, indicating that the Promoters settled with all claimants as the Committee of Creditors was not constituted. The Interim Resolution Professional incurred costs amounting to approximately Rs. 1,25,000 towards various expenses and legal engagements.Considering the settlements and payments made, the Appellant agreed to pay the remaining fee of Rs. 2,25,000 to the Interim Resolution Professional. The Tribunal, exercising powers under Rule 11 of the NCLAT Rules, 2016, set aside the impugned order and withdrew the application under Section 9. Consequently, 'Shri Balaji Infradevelopers Private Limited' was released from the Corporate Insolvency Resolution Process, with directions for the Interim Resolution Professional to hand over all assets to the Promoters.The Appellant was directed to pay the outstanding amount to the Interim Resolution Professional within 15 days and comply with the terms and conditions of the settlements. Failure to make the payment would allow parties to seek revival of the Corporate Insolvency Resolution Process or initiate contempt proceedings. The appeal was allowed with no costs, and emails and settlement agreements produced were to be kept on record for reference.