Tribunal denies stay request in CoC formation appeal under IBC, sets hearing date

The Tribunal denied the Appellant's request for a stay on the formation of the Committee of Creditors (CoC) in the context of an appeal against the Impugned Order admitting the Section 7 application under the Insolvency and Bankruptcy Code (IBC). Emphasizing the time-sensitive nature of the IBC process, the Tribunal indicated that any future success by the Appellant would lead to appropriate orders. The Tribunal directed the parties to file Reply-Affidavits within two weeks, with an Appeal Hearing scheduled for October 7, 2021, after receiving Written-Submissions and Copies of Judgments.

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Issues: Appeal against Impugned Order admitting Application under Section 7 of IBC; Grievance of not being heard regarding Settlement offer; Effect of settlement attempt during pendency of Section 7 Application; Stay on Constitution of Committee of Creditors (CoC) requested.

Analysis:
1. The Appellant, through their Senior Counsel, raised concerns that the Impugned Order admitting the Application under Section 7 of IBC did not provide them with an opportunity to present a Settlement offer. The Appellant highlighted that a significant amount was already deposited, but due to pandemic-induced lockdown and the subsequent application of Section 10A of IBC, further action against the Corporate Debtor was unwarranted.

2. On the contrary, the Respondent, representing Central Bank of India, argued that prior settlement offers made by the Corporate Debtor were not honored, and the default triggering the Section 7 Application predated any subsequent settlement attempts. The Respondent contended that post-application settlement efforts could not absolve the Corporate Debtor of the initial default.

3. The Appellant's Senior Counsel sought to delve into the legal implications of settlement attempts made during the pendency of the Section 7 Application. The Appellant aimed to challenge the formation of the Committee of Creditors (CoC) based on these grounds, advocating for a stay on the CoC's constitution.

4. Despite the Appellant's plea for a stay on the formation of the CoC, the Tribunal did not find sufficient grounds to grant such relief. Emphasizing the time-bound nature of the IBC process, the Tribunal indicated that any success by the Appellant in the future would result in appropriate orders being issued.

5. Additionally, the IRP's Counsel highlighted that the CoC had already been constituted, with the first meeting scheduled shortly. This further solidified the Tribunal's decision not to interfere with the CoC's formation, given the procedural timeline and ongoing developments in the case.

6. Consequently, the Tribunal issued notices to the parties, requiring the Respondents to file Reply-Affidavits within two weeks and allowing for subsequent rejoinders. The parties were instructed to submit concise 'Written-Submissions' and relevant 'Copies of Judgments' within three weeks, setting the Appeal Hearing 'For Admission (After Notice)' on 07th October, 2021.

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