Insolvency settlement proposals may be placed before creditors for voting, while fresh independent valuation can be refused.

An adjudicating authority may direct a promoter's settlement proposal to be placed before the Committee of Creditors for consideration and voting where no express legal bar exists, relying on residuary and inherent powers to prevent injustice; the commercial merits remain for the Committee of Creditors to assess. The second settlement proposal was therefore directed to be placed before the Committee. A request for a fresh independent valuation of the corporate debtor's assets, and supply of that report to the applicant, was rejected because valuation had already been undertaken in the insolvency process.

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Issues: (i) whether the promoter's second settlement proposal could be directed to be placed before the Committee of Creditors for consideration and voting; (ii) whether the request for an independent valuation of the corporate debtor's assets and supply of the report to the applicant was liable to be accepted.

Issue (i): whether the promoter's second settlement proposal could be directed to be placed before the Committee of Creditors for consideration and voting.

Analysis: The application was treated as a precursor to a possible withdrawal under section 12A of the Insolvency and Bankruptcy Code, 2016. The Tribunal held that there is no express legal bar preventing a promoter from forwarding a settlement proposal, and that the Adjudicating Authority can act under section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the National Company Law Tribunal Rules, 2016 to prevent injustice and ensure proper consideration. It accepted that the Committee of Creditors must examine such a proposal on its own merits and commercial wisdom, and that the proposal warranted consideration because it was stated to offer a substantially higher amount and could benefit creditors and small depositors.

Conclusion: The issue was decided in favour of the petitioner, and the Administrator was directed to place the second settlement proposal before the Committee of Creditors for consideration, decision and voting.

Issue (ii): whether the request for an independent valuation of the corporate debtor's assets and supply of the report to the applicant was liable to be accepted.

Analysis: The Tribunal accepted the respondents' stand that valuation had already been carried out in the insolvency process and declined to interfere with the existing valuation framework. The prayer for a further independent valuation and disclosure of the report to the applicant was therefore not entertained.

Conclusion: The issue was decided against the petitioner.

Final Conclusion: The interlocutory application succeeded only to the extent of securing placement of the second settlement proposal before the Committee of Creditors, while the ancillary prayer for a fresh independent valuation was rejected.

Ratio Decidendi: In a corporate insolvency process, the Adjudicating Authority may direct placement of a settlement proposal before the Committee of Creditors under its residuary and inherent powers, while leaving the commercial assessment of the proposal to the Committee of Creditors.

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