Insolvency admission quashed after full one time settlement satisfied the admitted debt, leaving the withdrawal application open.

Admission of insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code was quashed because the financial creditor's claim had already been fully satisfied under an approved one time settlement before the admission order. The tribunal noted that the object of initiating CIRP stood achieved once the admitted debt was settled in full, and no useful purpose would be served by continuing insolvency proceedings. The pending application under Section 12A was left open for consideration by the adjudicating authority, subject to compliance with the required formalities, including submission of relevant financial statements.

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Issues: Whether the admission of insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 was liable to be quashed in view of the subsequent one time settlement and full payment of the admitted dues.

Analysis: The entire liability claimed by the financial creditor had been satisfied in terms of the approved one time settlement before the insolvency admission order. The purpose of initiating insolvency proceedings under Section 7 stood achieved once the financial debt had been fully settled, and no useful purpose would be served by continuing the corporate insolvency resolution process. The pending application under Section 12A of the Insolvency and Bankruptcy Code, 2016 was left open for consideration by the adjudicating authority on compliance with the requisite formalities, including submission of the relevant financial statements.

Conclusion: The admission order initiating CIRP was quashed and the company appeal was allowed in favour of the appellant.

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