Settlement cannot divest a corporate debtor's asset unless approved within the insolvency framework and in accordance with law.
A settlement in insolvency proceedings cannot, by itself, divest the corporate debtor of an asset or exclude it from the CIRP unless it is embedded in the resolution framework and approved in accordance with law. The commercial complex 'i-Ring' was found to remain part of the corporate debtor's asset pool because the prior agreement, information memorandum and settlement terms all treated it as such, with allotment contemplated only on payment of consideration. Approval by the committee of creditors did not change the asset's character, and the exclusion challenge failed.
Issues: Whether the commercial complex known as 'i-Ring' formed part of the corporate debtor's assets and whether the settlement dated 30.05.2023 could be treated as excluding that asset from the corporate insolvency resolution process.
Analysis: The settlement itself proceeded on the basis that the disputed commercial complex was part of the corporate debtor's asset pool and contemplated allotment on payment of consideration. The prior agreement, the information memorandum, and the settlement terms all supported the view that the project remained within the corporate debtor's estate. A settlement between the resolution professional and a third party could not, by itself, override the insolvency framework or divest the corporate debtor of an asset. The approval of the committee of creditors did not alter the character of the asset, and the adjudicating authority was justified in declining to treat the settlement as an approval of exclusion of the project from the corporate debtor's assets.
Conclusion: The 'i-Ring' commercial complex continued to be an asset of the corporate debtor, and the challenge seeking its exclusion and approval of the settlement failed.
Final Conclusion: The appeal was dismissed, while the appellant's interest was left to be considered in accordance with law in the resolution process.
Ratio Decidendi: A settlement in insolvency proceedings cannot, without being embedded in the resolution framework and approved in accordance with law, divest the corporate debtor of an asset or convert it into the private asset of an allottee.
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