TaxTMI 
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2022 (7) TMI 615
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....22 in C.P. IB No. 1101/PB/2020, had observed the following: "This is an application filed by the IRP Mr. Harish Taneja under Section 12A of the IBC r/w Regulation 30A of the IBBI (CIRP) Regulations, 2016 and Rule 11 of the NCLT Rules, 2016 for withdrawal of the CIRP proceedings initiated against the M/s. Anand Divine Developers Private Limited by the Financial Creditor i.e., ICICI Prudential Venture. The applicant has submitted that the Financial Creditor and the Corporate Debtor have entered into settlement, even before the formation of the CoC and he has filed an application enclosing Form-FA, in terms of Regulation 30A of the IBBI (CIRP), Regulations, 2016 on behalf of the Financial Creditor to withdraw the application admitted u/s 7 of the IBC." and ultimately allowed I.A. No. 2391 / 2022 and dismissed the `Corporate Insolvency Resolution Process' proceedings against the Corporate Debtor. Appellant's Submissions: 3. Challenging the `impugned order' dated 25.05.2022 in I.A. No. 2391 / 2022 in C.P. IB No. 1101/PB/2020, passed by the `Adjudicating Authority' (NCLT), Principal Bench, New Delhi, the Learned Counsel for the Appellant contends that the `Adjudicating Authority' ....
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....' to the extent of including the submissions projected by the `Appellant' vis-a-vis the `Settlement Terms' and granting `liberty' to the Appellant to restore/revive the `CIRP' proceedings against the Corporate Debtor. 8. The Learned Counsel for the Appellant refers to the `Order' of this `Tribunal' in I.A. No. 1346 of 2022 in Company Appeal (AT) (INS) No. 400 of 2022 between M/s. Anand Divine Developers Private Limited V ICICI Prudential Venture Capital Fund Real Estate Scheme, wherein at paragraphs 3 and 4, it is observed as under: 3."An Application I.A. No.1346 of 2022 has been filed by the parties bringing on record a Settlement dated 21.04.2022. The Settlement contemplates that both the parties shall withdraw respectfully the Appeal being Company Appeal (AT) (Ins.) No. 400 of 2022 as well as the Application under Section 7 filed by the Financial Creditor. 4. Considering the aforesaid, we allow the I.A. No. 1346 of 2022, take the Settlement on record and permit the Appellant to withdraw the Company Appeal (AT) (Ins.) No. 400 of 2022 to enable the parties to approach the Adjudicating Authority by filing an Application for withdrawal of Section 7 Application. With regard to e....
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.... 13. The plea of the Appellant is that the `Adjudicating Authority' has committed an `error' in passing a simpliciter order of withdrawal observing that the `Appellant' and the `Respondent' had entered into a `Settlement', but failed to take on record the `Terms of Settlement' and to make it as `part and parcel' of the `impugned order' dated 25.05.2022 in I.A No. 2391 / 2022 in C.P. IB No. 1101/PB/2020. 14. The forceful contention advanced on behalf of the Appellant is that no hardship and prejudice would be caused to the Respondent in the event of `Terms of Settlement' was taken on record and `liberty' being granted to the `Appellant', to revive the main C.P. IB No. 1101/PB/2020, on the file of the `Adjudicating Authority'. 15. It is represented on behalf of the Appellant that the Respondent (acting through its Promoters and Shareholders owing to the Respondent at the concerned time having been admitted into `CIRP') had unconditionally agreed in the `Terms of Settlement' that the `Appellant' would be at `liberty' to `Restore/Revive' the Section 7 Application in the `event of default' committed by the Respondent in abiding the `Settlement Terms'. In fact, both the `Parties' were....
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....ass the following order to be read in sub para 4 of para 9 of the impugned order dated 17.08.2020 as under: "It is made clear that in the event of default not adhering to the terms of 'settlement agreement' as regards the payment of the outstanding instalments, the 'Financial Creditor' shall be at liberty to seek revival/restoration of the 'Corporate Insolvency Resolution Process' proceedings before the Adjudicating Authority in CP No.199 of 2018." 19. The Learned Counsel for the Appellant refers to the Judgment of this Tribunal in Krishna Garg and Anr. V Pioneer Fabricators Pvt. Ltd. (Vide Company Appeal (AT) (INS) No. 92 of 2021, wherein at paragraphs 2 and 3, it is observed as under: 2. "...... The Adjudicating Authority banking upon the judgment of the Hon'ble Apex Court in "Swiss Ribbons Pvt. Ltd. & Anr. V. Union of India & Ors.- 2019 SCC OnLine SC 73" allowed the Appellants - Financial Creditors to withdraw the application and terminated the CIRP. It further emerges from the order that neither the settlement terms were filed nor the same were brought on record and incorporated in the order of the Adjudicating Authority with liberty to revive/ restore the CIRP in the even....
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....ent to the admission of the said Section 7 Application, the Corporate Debtor Group has offered to make payment of an amount of INR 7,18,78,600 (Indian Rupees Seven Crore Eighteen Lacs Seventy Eight Thousand Six Hundred Only) ("Settlement Amount'') to the Financial Creditor towards the Outstanding SOCDs, in a time bound manner as stated hereinafter. 11. Based on the assurances, undertaking and covenants of the Corporate Debtor Group to make payment of the Settlement Amount strictly in the manner stated herein, the Financial Creditor has agreed to accept the settlement Amount towards the Outstanding SOCDs subject only to the same being strictly paid on the dates as mentioned herein and accordingly, the Parties are entering into these Terms of Settlement to record (i) the manner in which ADDPL and Individual Promoter shall pay the Settlement Amount to the VCF/Financial Creditor; (ii) consequences of failure on the part of ADDPL and Individual Promoter to make payment of the Settlement Amount to the VCF/Financial Creditor in accordance with these Terms of Settlement; and (iii) the withdrawal of Section 7 Application, on the terms and conditions set out herein and as per the applicabl....
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....28,500/- (Indian Rupees Three Crore Sixty Five Lacs Twenty Eight Thousand Five Hundred Only) Total INR 7,18,78,600/-(Indian Rupees Seven Crore Eighteen Lacs Seventy Eight Thousand Six Hundred Only) 2. In furtherance of the aforesaid payment obligation of the Corporate Debtor Group towards the Settlement Amount, the Corporate Debtor Group has provided demand drafts / postdated cheques to the VCF/Financial Creditor for an amount of INR 6,48,08,600/- (Indian Rupees Six Crore Forty Eight Lac Eight Thousand Six Hundred Only) being the amount equivalent to the Second Tranche to Eight Tranche of the Settlement Amount, the receipt of which is hereby acknowledged by the VCF/Financial Creditor. Details of such demand drafts / postdated cheques handed over by the Individual Promoter to the Financial Creditor is set out in Annexure-2 hereto. 3. The Corporate Debtor Group hereby unconditionally and irrevocably, agree, acknowledge and undertake that in addition to the default / breach / Event of Default as contemplated under the Investment Agreement and other Definitive Agreements, the occurrence of any breach / default / failure by the Corporate Debtor Group to comply with any of ....
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....up shall forthwith and in any case, within 2 (two) days of such event repay all such amounts due in terms of the Investment Agreement, in full, without any protest or demur. (b) Subject to sub-clause (c) of the Clause 4, the Corporate Debtor Group hereby unconditionally and irrevocably agree, undertake and acknowledge that upon occurrence of default / breach / Event of Default or if an application for insolvency of ADDPL or the Corporate Debtor Group (or any one or more of them) or the Confirming Parties (or any one or more of them) filed by any other creditor under the Insolvency Code has been admitted on or before the Last Tranche Payment Date or a similar proceeding is initiated against ADDPL or the Corporate Debtor Group (or any one or more of them) or the Confirming Parties (or any one or more of them, then unless the entire Settlement Amount has already been paid by the Corporate Debtor Group to the VCF/Financial Creditor before such default / breach / Event of Default / admission of insolvency against ADDPL or the Corporate Debtor Group (or any one or more of them) or the Confirming Parties (or any one or more of them or initiation of similar proceedings, as the case may b....
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....evocably, agree to create additional security which is acceptable to the VCF / Financial Creditors and having a minimum value equivalent to the Settlement Amount, in favour of the Debenture Trustee (as defined in the Investment Agreement) for the benefit of the VCF / Financial Creditor latest by July 31, 2022 in order to secure the outstanding amounts payable by ADDPL and the Corporate Debtor Group to the VCF / Financial Creditor in accordance with the Investment Agreement, Definitive Agreements and these Terms of Settlement. 7. The Corporate Debtor Group hereby agree and confirm that upon occurrence of a default / breach / Event of Default, including a breach / default / failure by the Corporate Debtor Group in making payments as per these Terms of Settlement, the VCF, without prejudice to any other rights, remedies, recourse or action that it may have, reserves its right to revive / file an application or re-initiate proceedings before the Hon'ble NCLT (at its discretion) under the Insolvency Code and / or initiate any other proceedings which it can initiate in terms of the Investment Agreement / other Definitive Agreements or under any applicable laws, at its discretion and up....
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....satisfaction, with a written confirmation being provided to the Financial Creditor in that regard. 9. The Corporate Debtor Group hereby unconditionally and irrevocably agrees and undertakes that the Corporate Debtor Group shall procure and ensure compliance of these Terms of Settlement by ADDPL including by way of signing a deed of adherence in the format acceptable to the VCF / Financial Creditor. The Corporate Debtor Group hereby further agrees and undertakes that immediately and in any event no later than 1 (one) day of the VCF / Financial Creditor conditionally withdrawing the Section 7 Application, the Corporate Debtor Group shall ensure and cause ADDPL to enter into the deed of adherence for acknowledging to be bound by the terms and conditions of these Terms of Settlement. Further, the Corporate Debtor Group hereby agrees that upon execution of such deed of adherence, the term `Corporate Debtor Group' under these Terms of Settlement shall include `ADDPL'. Notwithstanding anything to the contrary, the obligation of ADDPL and the Corporate Debtor Group shall be joint and several in respect of all the outstanding amounts payable under these Terms of Settlement.'' 24. Resting....
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....ian Rupees Six Crore Forty Eight Lac Eight Thousand Six Hundred Only) being the amount equivalent to the Second Tranche to Eighth Tranche of the Settlement Amount, the receipt of which is hereby acknowledged by the VCF/Financial Creditor. Details of such demand drafts/posted dated cheques handed over by the Individual Promoter to the Financial Creditor is set out in Annexure-2 hereto." 25. Added further, Clause 13 of the `Terms of Settlement' reads as under: 13."Notwithstanding anything contained herein or elsewhere, the Investment Agreement and other Definitive Agreements shall continue to be valid, binding and subsisting until the Last Tranche Payment Date and in case of occurrence of default / breach / Event of Default till such time that the Outstanding SOCDs are repaid in full in accordance with the Investment Agreement and Definitive Agreements." (F) Annexure-2 of the Terms of Settlement: "Annexure-2 (Refer Clause 2) Details of demand drafts/post-dated cheques Sr. No. Demand Draft / Cheque No. Cheque Dated Cheque Amount Drawn on Bank Drawn by 1 001861 30-Jun-22 47,13,400 Kotak Mahindra Bank Getamber Anand 2 001860 31-Jul-22 47,13,300 Kotak Mahindra Ban....
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.... the manner as mentioned in the Terms of Settlement." 28. It may not be out of place for this `Tribunal' to refer to the Judgment of this `Tribunal' (Three Member Bench) in the matter of Ruchita Modi V Kanchan Ostwal in Comp. App (AT) (INS) No. 1000 of 2019 dated 04.11.2019, wherein at Paragraph 7, it is observed and held as under: 7. "Both parties state that they will be bound by this settlement. In exercise of inherent powers under Rule 11 of the NCLAT Rules, 2016, we allow the Company Appeal (AT) (Ins) No.1000 of 2019 settlement and set aside the Impugned Order dated 18th September, 2019 passed by Adjudicating Authority (NCLT) Jaipur (Court No.1). Company Petition No.(IB)-93/9/JPR/2018 filed by Mrs. Kanchan Ostwal against MEC Shot Blasting Equipment Private Limited is disposed of as withdrawn. The Appellant as well as shareholders, Directors of the Corporate Debtor will be bound by the terms of settlement. In case there is default in the payment in terms of the settlement, it will be open for the Operational Creditor to move this Appellate Tribunal for recall of this Order and to revive the CIRP process against the Corporate Debtor. The Operational Creditor may also file Appl....
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....rovisions, it is clear that once an application under Sections 7 or 9 is filed by the Adjudicating Authority, it is not necessary for the Adjudicating Authority to await hearing of the parties for passing order of 'Moratorium' under Section 14 of the 'I&B Code'. To ensure that one or other party may not abuse the process of the Tribunal or for meeting the ends of justice, it is always open to the Tribunal to pass appropriate interim order.'' 31. In fact, the Hon'ble Supreme Court of India had dismissed the Civil Appeal No. 6697 of 2019 through its Order dated 11.09.2019, preferred by the Appellant (NUI Pulp and Paper Industries Private Limited) against the Respondent (M/s. Roxcel Trading GMBH) thereby affirming the `Order' dated 17.07.2019, passed by the `National Company Law Appellate Tribunal', Principal Bench, New Delhi, in Comp. App (AT) (INS) No. 664 of 2019. Invocation of an `Inherent Power': 32. To be noted, that an `Inherent Power', is to be pressed into service by a `Tribunal' / `an Appellate Tribunal' based on the well settled proposition of `Law' that an `Act of Tribunal' / `Court of Law', shall cause any `prejudice', hardship, inconvenience to an `Hom....
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....t, the VCF, without prejudice to any other rights, remedies, recourse or action that it may have, reserves its right to revive / file an application or re-initiate proceedings before the Hon'ble NCLT (at its discretion) under the Insolvency Code and / or initiate any other proceedings which it can initiate in terms of the Investment Agreement / other Definitive Agreements or under any applicable laws, at its discretion and upon such default / breach / Event of Default, the Corporate Debtor shall become liable to make payments of the amounts due and payable to the VCF in terms of the Investment Agreement and Definitive Agreements, and such obligation shall not be affected in any manner (including the amounts payable) by virtue of these Terms of Settlement." 38. In this connection, this `Tribunal' pertinently points out that in the `Terms of Settlement' dated 21.04.2022, in Clause 12, it was mentioned that because of the `Settlement', the `Appellant/Petitioner' wished to conditionally withdraw the Section 7 Petition filed against the `Corporate Debtor', subject to the Corporate Debtor, Corporate Debtor Group and Confirming Parties (as defined in the Terms of Settlement) unconditiona....
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.... Creditor' to initiate `contempt proceedings' or `such other suitable proceedings' against the `Corporate Debtor' and the `Corporate Debtor Group' in case of default / breach / failure on their part to comply with `any of the terms, conditions, covenants and / or undertakings of the Corporate Debtor Group' under the `Terms of Settlement' and any other documents / deeds / undertakings / writings pursuant thereto. 43. In the instant `Appeal', the `Appellant' is an `individual' whose right is infringed upon by an act complained of, having substantial and tangible, reasonable, grouse and a genuine grievance and as such, the instant `Appeal' preferred by the `Appellant' is perfectly maintainable in `Law', as opined by this Tribunal. 44. In the light of foregoing discussions, this `Tribunal' taking note of the contentions advanced on behalf of either side in the instant `Appeal' and taking into account of the attendant facts and circumstances of the case, especially in the teeth of the express covenants mentioned in the `Terms of Settlement' dated 21.04.2022, which was agreed to by the respective `Parties' (which cannot be brushed aside so lightly) to meet the ends of justice, hereby o....