2022 (7) TMI 615 - AT - Insolvency and Bankruptcy

Tribunal modifies order, grants liberty for CIRP revival. Appellant empowered to act on default. Appeal disposed.

ICICI Prudential Venture Capital Fund Real Estate Scheme I Versus Anand Divine Developers Private Limited

The Tribunal modified the impugned order to include the Terms of Settlement, granting the Appellant liberty to restore/revive the CIRP proceedings and ... Seeking withdrawal of the CIRP proceedings initiated against the M/s. Anand Divine Developers Private Limited by the Financial Creditor i.e., ICICI Prudential Venture - Section 12A of the IBC r/w Regulation 30A of the IBBI (CIRP) Regulations, 2016 and Rule 11 of the NCLT Rules, 2016 - HELD THAT:- An Inherent Power, is to be pressed into service by a Tribunal/ an Appellate Tribunal based on the well settled proposition of Law that an Act of Tribunal/ Court of Law, shall cause any prejudice, hardship, inconvenience to an Homo-sapien in the considered opinion of this Tribunal. In aid of delivering justice to the Stakeholders, an Inherent Power can be exercised by a Tribunal. An inherent powers breadth is co-extensive with the necessity. It transpires that the Adjudicating Authority (NCLT), Principal Bench, New Delhi, on 25.05.2022, had allowed I.A. No. 2391 of 2022 filed by the Appellant/Petitioner/Financial Creditor (under Section 12A of the I & B Code read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016, for withdrawal of the Corporate Insolvency Resolution Process) initiated against the Respondent/Corporate Debtor, based on the Settlement entered into between the Parties, prior to the formation of the Committee of Creditors. In reality, as per the Terms of Settlement read in terms of the Deed of Adherence, the Respondent in unambiguous and unequivocal terms had consented and agreed for Revival/Restoration of Corporate Insolvency and Resolution Process against the Respondent/Corporate Debtor in the event of any default, being committed thereto. This Tribunal pertinently points out that in the Terms of Settlement dated 21.04.2022, in Clause 12, it was mentioned that because of the Settlement, the Appellant/Petitioner wished to conditionally withdraw the Section 7 Petition filed against the Corporate Debtor, subject to the Corporate Debtor, Corporate Debtor Group and Confirming Parties (as defined in the Terms of Settlement) unconditionally complying with all covenants contained in the Terms of Settlement. In the instant Appeal, the Appellant is an individual whose right is infringed upon by an act complained of, having substantial and tangible, reasonable, grouse and a genuine grievance and as such, the instant Appeal preferred by the Appellant is perfectly maintainable in Law, as opined by this Tribunal. The impugned order dated 25.05.2022, passed by the Adjudicating Authority (NCLT), Principal Bench, New Delhi, in I.A. No. 2391 of 2022 in C.P. IB No. 1101 (PB)/2020, stands modified by this Tribunal and the instant Company Appeal (AT) (INS) No. 703 of 2022 is disposed of. Issues Involved:1. Validity of the impugned order dated 25.05.2022.2. Inclusion of the Terms of Settlement in the impugned order.3. Liberty to restore/revive the CIRP proceedings.4. Liberty to initiate contempt or other legal proceedings in case of default.Detailed Analysis:1. Validity of the Impugned Order Dated 25.05.2022:The Appellant challenged the impugned order dated 25.05.2022, passed by the Adjudicating Authority (NCLT), Principal Bench, New Delhi, in I.A. No. 2391/2022 in C.P. IB No. 1101/PB/2020. The NCLT had allowed the withdrawal of the Corporate Insolvency Resolution Process (CIRP) proceedings against the Corporate Debtor based on a settlement between the Financial Creditor and the Corporate Debtor. The Appellant contended that the NCLT failed to take on record the Terms of Settlement and did not grant liberty to restore/revive the CIRP proceedings in case of default by the Respondent.2. Inclusion of the Terms of Settlement in the Impugned Order:The Appellant argued that the NCLT, while permitting the withdrawal of the application, did not expressly record the Terms of Settlement in the impugned order. The Appellant emphasized that the Terms of Settlement dated 21.04.2022 should have been made part and parcel of the impugned order to ensure that the settlement terms are enforceable. The Tribunal noted that the Terms of Settlement included specific clauses regarding the payment schedule and consequences of default, which were crucial for the enforcement of the settlement.3. Liberty to Restore/Revive the CIRP Proceedings:The Appellant sought liberty to restore/revive the CIRP proceedings against the Corporate Debtor in case of default in complying with the settlement terms. The Tribunal observed that the Terms of Settlement explicitly mentioned the right to revive the CIRP proceedings upon default. The Tribunal referred to various judgments, including the case of ICICI Bank Limited V Opto Circuits (India) Limited, where similar liberty was granted to revive the CIRP proceedings in case of default. The Tribunal concluded that the Appellant should be granted liberty to seek restoration/revival of the CIRP proceedings in accordance with the Terms of Settlement.4. Liberty to Initiate Contempt or Other Legal Proceedings in Case of Default:The Appellant also sought liberty to initiate contempt proceedings or other suitable legal actions against the Corporate Debtor and the Corporate Debtor Group in case of any default in complying with the settlement terms. The Tribunal noted that the Terms of Settlement included provisions for initiating such proceedings in case of default. The Tribunal emphasized that granting such liberty would ensure compliance with the settlement terms and protect the rights of the Financial Creditor.Conclusion:The Tribunal modified the impugned order dated 25.05.2022 to include the Terms of Settlement dated 21.04.2022 as part and parcel of the order. The Tribunal granted liberty to the Appellant to seek restoration/revival of the CIRP proceedings and to initiate contempt or other legal proceedings in case of default by the Corporate Debtor. The appeal was disposed of with these modifications, and no costs were awarded.