Appellate Tribunal Upholds NCLT Decision on Insolvency Appeal

The appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 was dismissed by the Appellate Tribunal. The NCLT's decision to admit the application for Corporate Insolvency Resolution Process (CIRP) due to the financial debt default was upheld. However, the Appellate Tribunal granted the appellant liberty to negotiate a settlement with the financial creditor, emphasizing the importance of resolving the dispute amicably. The appellant was advised to propose a reasonable settlement to the financial creditor for potential resolution of the matter.

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Issues involved:
The judgment involves an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 against an order admitting an application for Corporate Insolvency Resolution Process (CIRP) by a Financial Creditor due to default in payment of a significant financial debt.

Details of the Judgment:

1. The appellant, a Suspended Director of the corporate debtor, failed to clear a financial debt of Rs. 15,81,63,867, leading to the initiation of CIRP by the Financial Creditor. Despite valid notice, the corporate debtor did not participate in the proceedings before the NCLT, resulting in an ex-parte order initiating CIRP.

2. The appellant argued that a substantial amount had been paid in a proceeding before the Debt Recovery Tribunal, but these details were not reflected in the impugned order. The appellant also claimed to have taken steps to regularize the loan account with the financial creditor.

3. The appellant presented evidence to show efforts made to settle the debt and requested the court to issue a notice to the Respondent for resolving the dispute. The appellant highlighted that a portion of the financial debt had been paid and sought intervention for settling the matter.

4. Despite the absence of the corporate debtor in the proceedings, the NCLT admitted the application for CIRP based on the outstanding financial debt and the lack of participation from the appellant. The NCLT's decision was upheld, as the debt was not disputed, and the application was filed within the limitation period.

5. The Appellate Tribunal found no apparent error in the impugned order but granted liberty to the appellant to approach the financial creditor for settling the dispute. It was suggested that if the appellant proposes a reasonable settlement to Karnataka Bank, the financial creditor may consider resolving the matter in accordance with the law.

6. The appeal was disposed of with the above observations, emphasizing the importance of potential settlement discussions between the appellant and the financial creditor to bring the dispute to a resolution.

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