2022 (9) TMI 911 - AT - Insolvency and Bankruptcy

Appeal Dismissed in Company Petition Dispute

The appeal challenging the disposal of a Company Petition by the Adjudicating Authority was dismissed. The Financial Creditor's unwillingness to settle ... CIRP proceedings - Financial Creditors - Corporate Debtor submitted that Corporate Debtor is now ready to deposit the entire amount within 45 days - HELD THAT:- In the present case, Section 7 Application was filed claiming an amount of Rs. 15,79,41,658/-. On the earlier date, when the Company Petition was taken i.e. on 06th July, 2022, Corporate Debtor came with an offer of Rs. 12.75 Crores to be paid within 45 days on which, Court directed the Financial Creditor to obtain instructions. Amount of Rs. 12.75 Crores which was offered on 06th July, 2022 by the Corporate Debtor was not the entire amount claimed by the Financial Creditor in the Application. But on the next date i.e. 11th July, 2022, when the case was taken, Learned Counsel for the Corporate Debtor submitted that Corporate Debtor is now ready to deposit the entire amount within 45 days. Submission of the Appellant is that since the Appellant expressed its unwillingness to settle the matter, the course adopted by the Adjudicating Authority is impermissible. The present is a case where the Adjudicating Authority has not directed the Financial Creditor to enter into settlement with the Corporate Debtor, the Adjudicating Authority has only recorded the statements of the Corporate Debtor that they are ready to deposit the entire defaulted amount within 45 days and has permitted the Corporate Debtor to deposit the amount within 45 days. The Adjudicating Authority by the same order has also granted liberty to the Financial Creditor to revive the Company Petition if the amount is not paid within 45 days. In the facts of the present case, the Adjudicating Authority has only given an opportunity to the Corporate Debtor to deposit the entire defaulted amount for which Section 7 Application was filed, within 45 days with liberty reserve to the Financial Creditor to revive the Section 7 Application in event the amount is not deposited - in consequence of the Order of the Adjudicating Authority, the Corporate Debtor deposits the entire defaulted amount whether still the Adjudicating Authority was required to necessarily admit the Section 7 Application. Appeal dismissed. Issues:1. Disposal of Company Petition by Adjudicating Authority.2. Financial Creditor's unwillingness to settle with Corporate Debtor.3. Jurisdiction of Adjudicating Authority under Section 7 of IBC, 2016.Issue 1: Disposal of Company Petition by Adjudicating Authority:The appeal was filed by the Financial Creditor against the Order passed by the Adjudicating Authority in a Company Petition. The Corporate Debtor had acknowledged its liability to pay and made an offer to settle the amount claimed by the Financial Creditor. The Adjudicating Authority directed the Corporate Debtor to deposit the amount within 45 days. The Financial Creditor expressed unwillingness to settle, leading to the appeal challenging the disposal of the Company Petition.Issue 2: Financial Creditor's unwillingness to settle with Corporate Debtor:The Financial Creditor contended that the Adjudicating Authority erred in allowing the Corporate Debtor to deposit the amount despite the Financial Creditor's unwillingness to settle. The Corporate Debtor offered to pay the entire defaulted amount within 45 days, which the Financial Creditor refused, citing lack of confidence in the Corporate Debtor's past conduct. The Adjudicating Authority permitted the deposit and granted the Financial Creditor liberty to revive the Company Petition if the amount was not paid within the specified period.Issue 3: Jurisdiction of Adjudicating Authority under Section 7 of IBC, 2016:The judgment referred to a recent Supreme Court case emphasizing that the Adjudicating Authority must consider factors beyond debt and default before initiating the Corporate Insolvency Resolution Process (CIRP). The Supreme Court highlighted the importance of assessing feasibility and relevant circumstances before admitting a Section 7 Application. In this case, the Adjudicating Authority's decision to allow the Corporate Debtor to deposit the defaulted amount within 45 days was deemed appropriate, with the Financial Creditor retaining the option to revive the application if necessary.In conclusion, the Appeal was dismissed as the Adjudicating Authority's decision to permit the Corporate Debtor to deposit the defaulted amount was found to be in line with the provisions of the IBC, 2016. The interests of the Financial Creditor were safeguarded with the liberty granted to revive the application if the amount was not paid within the specified period. The judgment highlighted the importance of considering various factors beyond debt and default in insolvency proceedings.