Corporate Debtor's Appeal Dismissed, Settlement Reached Pre-Creditors' Committee, Payment Deadline Set

The appeal filed by the Corporate Debtor against the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code was found not maintainable. The parties settled before the constitution of the Committee of Creditors, allowing withdrawal of the application under Section 7. Consequently, the Corporate Debtor was released from the moratorium, and directed to pay outstanding fees to the Interim Resolution Professional within three weeks. Failure to comply could result in the revival of the Resolution Process. The appeal was allowed with specific directions, and no costs were imposed.

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Issues:
1. Maintainability of the appeal by the Corporate Debtor
2. Settlement between the parties before constitution of Committee of Creditors
3. Withdrawal of application under Section 7 of the Insolvency and Bankruptcy Code
4. Release of the Corporate Debtor from the moratorium
5. Payment of fees to the Interim Resolution Professional

Issue 1: Maintainability of the appeal by the Corporate Debtor
The appeal was filed by the Corporate Debtor against the order of the Adjudicating Authority admitting the application under Section 7 of the Insolvency and Bankruptcy Code. However, it was found that the appeal by the Corporate Debtor was not maintainable as per the decision of the Hon'ble Supreme Court in "Innoventive Industries Ltd. v. ICICI Bank". The appellant sought permission to file an application for substitution by one of the Directors/Shareholders of the Corporate Debtor.

Issue 2: Settlement between the parties before constitution of Committee of Creditors
The parties settled the matter on 28th February, 2019, before the constitution of the Committee of Creditors. The Terms of Settlement were brought on record, and it was acknowledged that no Committee of Creditors had been constituted at the time of settlement.

Issue 3: Withdrawal of application under Section 7 of the Insolvency and Bankruptcy Code
As the parties had settled the matter before the constitution of the Committee of Creditors, in line with the decision of the Hon'ble Supreme Court in 'Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors.', the Respondent was allowed to withdraw the application filed under Section 7. Consequently, the impugned order admitting the application was set aside, and the application was disposed of as withdrawn.

Issue 4: Release of the Corporate Debtor from the moratorium
Following the withdrawal of the application under Section 7 and the settlement between the parties, the Corporate Debtor was released from the moratorium. The Adjudicating Authority was directed to close the proceedings, allowing the Corporate Debtor to function independently through its Board of Directors immediately.

Issue 5: Payment of fees to the Interim Resolution Professional
The Interim Resolution Professional had incurred costs towards the Resolution Process, and the Corporate Debtor was directed to pay the remaining amount within three weeks. Post-dated cheques were to be issued for the payment, ensuring compliance with the Terms of Settlement. Failure to pay within the stipulated time could lead to the revival of the Resolution Process.

In conclusion, the appeal was allowed with specific observations and directions, and no costs were imposed.

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