2026 (3) TMI 1251 - AT - IBC

Settlement in insolvency proceedings rendered the admission challenge infructuous; third-party impleadment was refused under dominus litis.

Settlement between the operational creditor and the corporate debtor rendered the challenge to the section 9 admission order infructuous, because the ... Seeking withdrawal of section 9 proceedings on settlement - settlement between the operational creditor and the corporate debtor - Initiation of the CIRP - Impleadment by third party in insolvency appeal - Principle of dominus litis. Withdrawal of section 9 proceedings on settlement - Challenge to admission order becoming infructuous - HELD THAT:- The Appellate Tribunal recorded that the operational creditor, on the basis of the memorandum of understanding, expressed its willingness to withdraw the company petition itself. Once the applicant in the section 9 proceedings sought withdrawal of the petition, nothing survived in the appeal against the admission order initiating CIRP, and the Tribunal held that the merits of the impugned order were no longer required to be examined. [Paras 2, 6, 7] The appeal was dismissed as withdrawn in terms of the settlement, and the company petition was treated as withdrawn. Impleadment by third party in insolvency appeal - Dominus litis - HELD THAT: - The Tribunal found that the person seeking audience was neither a party to the original section 9 petition nor had any impleadment application been placed on record or numbered before the Appellate Tribunal. It held that, when the original applicant itself sought withdrawal, no third party could compel impleadment or continue the proceeding in its place. Applying the principle of dominus litis, the Tribunal held that the applicant is master of its own proceedings and no outsider can impose itself as a petitioner after the applicant has elected to withdraw. [Paras 4, 5, 6] The request of the non-party to intervene or be impleaded was not accepted. Final Conclusion: Recording the settlement between the operational creditor and the corporate debtor, the Appellate Tribunal held that the appeal against admission of the section 9 petition had become infructuous. It also declined to entertain objections of a non-party seeking impleadment, and dismissed the appeal as withdrawn. Outcome: Company Appeal dismissed as withdrawn.