Pre-CoC settlement can justify setting aside CIRP admission orders and restoring the corporate debtor to board control.

Settlement reached before constitution of the committee of creditors can justify setting aside admission orders initiating corporate insolvency resolution proceedings. Where the operational creditors confirmed receipt of payment and the interim resolution professional confirmed payment of fees and costs, the appellate tribunal invoked its inherent power under Rule 11 to undo the admission orders and restore control of the corporate debtor to its board of directors. The insolvency petitions were accordingly disposed of on the basis of settlement.

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Issues: Whether the admission orders initiating the corporate insolvency resolution process could be set aside on the basis of settlement between the operational creditors and the appellant, when the committee of creditors had not yet been constituted.

Analysis: The parties placed settlement agreements before the appellate tribunal, and the operational creditors confirmed receipt of payments in terms of the settlements. The interim resolution professional also confirmed receipt of his fees and costs. As the committee of creditors had not been constituted, the tribunal exercised its inherent power under Rule 11 to undo the admission orders and to permit restoration of the corporate debtor to the control of its board of directors.

Conclusion: The admission orders were set aside and the insolvency petitions stood disposed of in view of the settlement, in favour of the appellant.

Ratio Decidendi: Where parties settle before constitution of the committee of creditors, the appellate tribunal may invoke its inherent powers to set aside the admission order and terminate the insolvency process.

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