Settlement before CoC led to setting aside insolvency admission and closure of all consequential CIRP proceedings.

Where parties settled before constitution of the Committee of Creditors, the NCLAT accepted the compromise under Rule 11 of its Rules and set aside the insolvency admission order. The Section 7 application was treated as withdrawn, and all consequential CIRP measures, including the moratorium and the actions of the Interim Resolution Professional, were directed to stand closed. The parties were held bound by the settlement terms, with further directions for release of the deposited draft and payment of the professional fee and costs by the corporate debtor.

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Issues: Whether the insolvency admission order and consequent corporate insolvency resolution process proceedings were liable to be set aside in view of the settlement reached between the parties, and whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 should be treated as withdrawn.

Analysis: The parties had arrived at a settlement before the constitution of the Committee of Creditors. Acting under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, the Tribunal accepted the settlement, set aside the impugned admission order, and directed that the insolvency application and all consequential orders, including the moratorium and the appointment and actions of the Interim Resolution Professional, would stand closed. The parties were held bound by the settlement terms, and consequential directions were issued regarding release of the deposited draft and payment of the professional's fee and costs by the corporate debtor.

Conclusion: The appeal was allowed, the insolvency proceedings were set aside, and the Section 7 application was disposed of as withdrawn in favour of the appellant.

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