TaxTMI 
TaxTMI 
2022 (7) TMI 615
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....ned order' dated 25.05.2022 in I.A. No. 2391 / 2022 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 ....
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....dicating Authority' is required to be modified by the `Adjudicating Authority' 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....
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....the `Petition' and appointed the `Interim Resolution Professional' Mr. Harish Taneja and declared moratorium, etc. 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 i....
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....lear that the entire sub para 4 of para 9 is hereby set aside by passing the following directions. 24. Accordingly, this Tribunal pass 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 wer....
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....tion of the Outstanding SOCDs as on April 18, 2022 is INR 36,84,44,669 (Indian Rupees Thirty Six Crore Eighty Four Lacs Forty Four Thousand Six Hundred Sixty Nine Only). 10. Subsequent 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 Amou....
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....d Only) On or before November 30, 2022 Seventh Tranche INR 47,13,300/-(Indian Rupees Forty Seven Lacs Thirteen Thousand Three Hundred Only) On or before December 15, 2022* ("Last Tranche Payment Date'') Eighth Tranche /Last Tranche INR 3,65,28,500/- (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 irrevoca....
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.... Agreements shall become applicable with immediate effect and thereupon the Financial Creditor shall be entitled to declare all amounts due and payable in accordance with the terms of the Investment Agreement to be paid forthwith and in such an event, ADDPL and the Corporate Debtor Group 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....
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....time bound manner and as contemplated in these Terms of Settlement, the VCF / Financial Creditor shall not be entitled to claim any further amounts towards the outstanding SOCDs under the Investment Agreement or any other Definitive Agreements. 6. The Corporate Debtor Group hereby unconditionally and irrevocably, 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 i....
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....nd the Confirming Parties hereby agree and acknowledge that withdrawal of all such proceedings, suits, actions, notices, applications and claims shall be a precondition to withdrawal of Section 7 Application and the Financial Creditor shall not be obligated to withdraw Section 7 Application until the same are withdrawn to its 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....
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....housand 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 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....
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.... the Financial Creditor to initiate contempt proceedings or such other suitable proceedings against the Corporate Debtor and Corporate Debtor Group in case of any default / breach / failure on the part of the Corporate Debtor or Corporate Debtor Group 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, including without limitation, any default in making payment of any amounts in 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 (....
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....ers' of the National Company Law Tribunal and reads as follows: 11. Inherent Powers.- Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. 9. From the aforesaid Rule 11, it is clear that the Tribunal (Adjudicating Authority herein) can make any such order as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. 10. From the aforesaid provisions, 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 ....
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....for Revival/Restoration of `Corporate Insolvency and Resolution Process' against the `Respondent/Corporate Debtor' in the event of any `default', being committed thereto. 37. For a better and fuller appreciation of the subject matter in issue, it is relevant to mention Clause 7 of the `Settlement Terms' dated 21.04.2022, which proceeds to the following effect: 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 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 t....
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.... C.P. IB No. 1101 (PB) /2020 in the event of the Corporate Debtor or Corporate Debtor Group fails to perform its obligations by adhering to `Terms of Settlement' dated 21.04.2022 including in respect of the `Settlement Amount' (as defined under the `Terms of Settlement'), even though, such a prayer was sought for by the `Appellant/Petitioner/Financial Creditor' in this regard. 42. Likewise, the `Adjudicating Authority' (NCLT), Principal Bench, New Delhi, in the `impugned order' dated 25.05.2022 in I.A. No. 2391 of 2022 in C.P. IB No. 1101 (PB) /2020 had not granted `liberty' to the `Appellant/Petitioner/Financial 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, reason....