2023 (4) TMI 778 - AT - Insolvency and Bankruptcy

Appeal Dismissed: Operational Creditor's Section 9 Application Upheld

Rajendra Pandurang Barde Versus Amit Steels, Mr. Ranjan Garg, Resolution Professional of Truly Creative Developers Pvt. Ltd., Truly Creative Developers Pvt. Ltd.

The National Company Law Appellate Tribunal upheld the order admitting the Section 9 Application filed by the Operational Creditor against the Corporate ... CIRP - NCLT admitted the application - Appellant submitted that, there being settlement entered into by the parties on 07.12.2021, which was acted upon, there was no occasion to admit the Company Petition and the Operational Creditor did not bring into the notice of the Adjudicating Authority about the settlement - HELD THAT:- Operational Creditor proceeded with the Application even after 07.12.2022, which indicates that Operational Creditor was not fully satisfied with the settlement, if any reached. Even according to the Appellant’s case, full payment under the said settlement was never made before admission of Section 9 Application. The Corporate Debtor does not appear before the Adjudicating Authority, nor raised any defense and the debt and default is proved as held by the Adjudicating Authority, no error was committed by the Adjudicating Authority in admitting Section 9 Application. The Appellant has relied on another settlement entered vide Minutes of Meeting dated 30.11.2022 with Agreement dated 08.12.2022 under which the Appellant has claimed to have paid the amount of Rs.8.5 lakhs by 08.12.2022. From the facts which have been brought on record, it is clear that CoC was constituted on 02.12.2022 by the RP and the first Meeting of the CoC has also been held on 10.12.2022. After constitution of the CoC, settlement if any, needs to be approved by the CoC with 90% of vote share as per Section 12A read with CIRP Regulation 30A. Any settlement after passing of the impugned order and after constitution of the CoC is only permissible when the same is approved with 90% vote share of CoC. Hence, the settlement dated 08.12.2022, which is relied by the Appellant in this Appeal can be of no ground to interfere with the impugned order dated 11.11.2022. The RP has brought on record the claims received in pursuance of public announcement and the RP has stated in his reply that before holding of the first CoC Meeting, the claims upto INR 1067.97 crores were received. Some of the Intervenors are the Members of the CoC, who have filed Intervention Applications opposing the Appeal - there are no grounds made out in this Appeal to interfere with the impugned order. Appeal dismissed. Issues Involved:The issues involved in the judgment are the admission of a Section 9 Application by the National Company Law Tribunal, Mumbai Bench, Court - II, and the subsequent appeal by a Suspended Director of the Corporate Debtor challenging the said order. The issues also include the validity of settlements between the parties, the competence of the Operational Creditor in filing the application, and the claims made by various intervenors in the case.Admission of Section 9 Application:The National Company Law Appellate Tribunal dismissed the appeal filed by the Suspended Director of the Corporate Debtor challenging the order admitting the Section 9 Application. The Operational Creditor had filed the application claiming a total amount of Rs. 18,73,937/- after issuing demand notices and receiving no response from the Corporate Debtor. The Tribunal noted that the Corporate Debtor did not file any reply to the notices or the petition, and the debt and default were proven. The Tribunal found no error in the Adjudicating Authority's decision to admit the application.Validity of Settlements:The Appellant claimed to have entered into settlements with the Operational Creditor on two occasions, one on 07.12.2021 and another on 30.11.2022. However, the Operational Creditor proceeded with the application even after the first settlement, indicating dissatisfaction. The second settlement was executed after the constitution of the Committee of Creditors (CoC), which requires approval for settlements with a 90% vote share. As the second settlement was not approved by the CoC, it could not be grounds for interfering with the impugned order admitting the Section 9 Application.Competence of Operational Creditor:The Appellant raised an objection regarding the competence of the Operational Creditor's Power of Attorney holder to file the Section 9 Application. The Tribunal noted that the Power of Attorney for Amit Steels was duly executed but was not initially filed with the application. However, as the Corporate Debtor did not raise any objection before the Adjudicating Authority, the defect was considered removed. The Tribunal found no incompetency in the application based on this technical objection.Claims by Intervenors:Several Intervention Applications were filed by different Applicants claiming to be creditors of the Corporate Debtor. The Claims received by the Resolution Professional (RP) amounted to INR 1067.97 crores before the first CoC Meeting. Some Intervenors, who are members of the CoC, opposed the appeal, stating that any settlement with Operational Creditors must be approved by the CoC with a 90% vote share. The Tribunal concluded that there were no grounds to interfere with the impugned order based on the claims and interventions made by the creditors.Conclusion:In conclusion, the National Company Law Appellate Tribunal dismissed the appeal and upheld the order admitting the Section 9 Application. The Tribunal found no errors in the Adjudicating Authority's decision, considering the proven debt and default of the Corporate Debtor. The settlements entered into by the parties were not approved by the CoC, and the technical objection regarding the competence of the Operational Creditor's Power of Attorney holder was deemed removed. The claims made by various Intervenors were also considered, leading to the dismissal of the appeal.