Appeal Withdrawn After Fresh Settlement Between Director and Operational Creditor, Bringing Final Closure to Dispute

The NCLAT, Principal Bench, New Delhi, dismissed the restored appeal as withdrawn based on a joint request by counsel for the appellant (director of the corporate debtor) and the operational creditor, who reported that a fresh settlement had been reached and that the appellant did not wish to pursue the appeal. The Tribunal accepted the joint request and dismissed the appeal simpliciter, expressly without reserving any liberty to the appellant to revive or re-agitate the matter, thereby giving finality to the settlement and terminating the appellate proceedings.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the restored appeal against the admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 could be dismissed as withdrawn on a joint request of the director of the corporate debtor and the operational creditor, without reserving liberty to revive or re-agitate it.

1.2 Whether any finding was required or could be rendered by the Appellate Tribunal on the fate or continuance of the corporate insolvency resolution process pending before the Adjudicating Authority.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Withdrawal of restored appeal without liberty

Interpretation and reasoning

2.1 The appeal had earlier been disposed of on the basis of a settlement and later restored on an application allowed under the Tribunal's inherent powers, in view of non-compliance with the settlement terms by the corporate debtor.

2.2 Upon restoration, and before the appeal could be heard on merits, the director of the corporate debtor (appellant in the appeal) and the operational creditor jointly submitted that a fresh settlement had been arrived at between the parties and that the appellant was no longer willing to pursue the appeal.

2.3 Both sides expressly requested that the appeal be dismissed as withdrawn "simplicitor" and, in particular, that it be dismissed without reserving any liberty in favour of the appellant.

2.4 The Court accepted the joint statement and treated the express joint request as sufficient basis to terminate the appellate proceedings in the manner prayed, without examining the merits of the appeal or the underlying disputes.

Conclusions

2.5 The restored appeal was dismissed as withdrawn in terms of the joint request of the parties, and specifically "without reserving any liberty to the Appellant."

Issue 2: Effect of withdrawal of appeal on the pending CIRP

Legal framework (as discussed)

2.6 The underlying corporate insolvency resolution process had been initiated by an order of the Adjudicating Authority under Section 9 of the Insolvency and Bankruptcy Code, 2016, and the appeal before the Appellate Tribunal arose from that admission order.

Interpretation and reasoning

2.7 In dismissing the appeal as withdrawn, the Court consciously refrained from making any observation on the status or outcome of the corporate insolvency resolution process then pending before the Adjudicating Authority.

2.8 The Court clarified that it was not adjudicating, modifying, or directing how the CIRP should proceed and that the Adjudicating Authority must independently carry the CIRP to its logical conclusion.

Conclusions

2.9 No opinion was expressed on the fate or conduct of the CIRP; it was explicitly left to be taken to its logical end "strictly in accordance with law" by the Adjudicating Authority.

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