2021 (12) TMI 1343 - AT - Insolvency and Bankruptcy

Adjudicating Authority's Discretion in Insolvency Settlements Raises Concerns

The Adjudicating Authority rejected the parties' Joint Application for settlement approval despite an existing agreement, prompting questions on ... Seeking permission of the Adjudicating Authority to settle the matter - HELD THAT:- Issue Notice. Notice is accepted by Mr. Gautam Singhal, Advocate on behalf of Respondent No. 1. Ms. Shalya Agarwal, Advocate accepts notice on behalf of Respondent No. 2. No further notice needs to be issued on any of the Respondent. List the Appeal on 11th January, 2022. Issues:1. Settlement agreement between the parties.2. Rejection of settlement by the Adjudicating Authority.3. Cost imposed by the IRP.4. Impleadment application by Home Buyers.Settlement Agreement:The Appellant submitted that a settlement was reached between the parties on 25.11.2021, after the initiation of CIRP proceedings on 12.11.2021. A Memorandum of Settlement was executed and informed to the IRP on the same date. However, the IRP hastily constituted the CoC on 30.11.2021. A Joint Application seeking permission to settle the matter was filed before the Adjudicating Authority, which was rejected by the impugned order.Rejection of Settlement:The Adjudicating Authority rejected the Joint Application filed by the parties seeking permission to settle the matter, despite the existence of a settlement agreement between the parties. This rejection raises questions regarding the authority's discretion in approving settlements during insolvency proceedings.Cost Imposed by IRP:The IRP intimated the parties about a cost of 31 Lakhs and insisted on the deposit of the cost before the application could be filed. This raises concerns about the imposition of costs during the insolvency resolution process and the impact it may have on the parties involved.Impleadment Application by Home Buyers:Shri Shubham Saket, Learned Counsel, requested permission to file an Impleadment Application on behalf of the Home Buyers, which was granted with a timeline of two weeks. This indicates the involvement of additional stakeholders in the insolvency proceedings and the need to address their interests.The Tribunal accepted notice on behalf of the Respondents and directed them to file a reply within two weeks, with a provision for a rejoinder within a further two weeks. The Appeal was listed for hearing on 11th January 2022. In the interim, the Tribunal ordered a halt to any further proceedings in pursuance of the insolvency resolution process initiated on 12.11.2021, instructing the IRP not to proceed further in the matter. This indicates a temporary stay on the insolvency proceedings to allow for the resolution of the issues raised regarding the settlement agreement, rejection by the Adjudicating Authority, cost imposition, and the impleadment of Home Buyers.