CIRP admission challenged based on settlement after full payment and no other creditor claims, leading to setting aside of admission

Challenge to admission of a resolution application centered on settlement after payment of the claimed debt and absence of any creditor claims other than the applicant. Relying on precedent, the tribunal concluded that where due publication by the interim resolution professional yields no competing creditor claims, the appellate forum may exercise jurisdiction to settle the dispute between the parties despite the usual route under section 12A, the principle being affirmed by reference to higher court authority; consequently the impugned admission order was set aside and the appeal disposed of.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, after admission of an application under Section 7 of the Code, the Tribunal could dispose of the appeal by setting aside the admission order on the basis that the entire default amount has been paid and no other creditor has filed any claim pursuant to the IRP's publication, instead of requiring withdrawal through Section 12A.

(ii) What directions should be issued regarding payment of the IRP's fee and expenses where the admission order is set aside following settlement/payment, including consequences of non-payment.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Setting aside Section 7 admission order on payment/settlement in absence of any other creditor's claim

Legal framework (as discussed): The Court considered the post-admission situation in a proceeding initiated under Section 7 of the Code, and whether it must necessarily route settlement through Section 12A (as argued with reference to a Supreme Court decision), or whether the appeal could be disposed of by setting aside the admission order in the specific factual matrix before it.

Interpretation and reasoning: The Court treated as material that (a) pursuant to its interim order the entire amount for which insolvency was initiated was paid within the time granted; (b) the IRP, after appointment, issued publication and fixed a deadline for submission of claims; (c) no claims were received from any creditors other than the applicants under Section 7; and (d) the admission order's operation had been stayed shortly after admission. Relying on its own earlier approach in a similar situation, the Court held that where, despite due publication, no other creditor has come forward, the Tribunal can exercise jurisdiction to settle the dispute between the parties before it and dispose of the appeal by setting aside the admission order, without insisting upon an application for withdrawal under Section 12A.

Conclusions: In both appeals, the Court concluded that, given full payment of the admitted default amount and absence of any other creditor claims after publication, the impugned admission orders could be set aside and the appeals disposed of accordingly.

Issue (ii): Directions on IRP fee and expenses and remedy for non-payment

Interpretation and reasoning: The Court accepted the IRP's request for directions regarding his fee and expenses incurred after admission and publication. Since the proceedings were being brought to an end by setting aside the admission orders, the Court apportioned responsibility for these costs between both sides.

Conclusions: The Court directed that the IRP's fee and expenses shall be paid equally by both parties within 15 days. If such fee and expenses are not paid, the IRP was granted liberty to file an application seeking recall of the order setting aside the admission.

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