TaxTMI 
TaxTMI 
2026 (9) TMI 1428
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....026, whereby the application filed by Respondent No. 1 under Section 9 of the Code came to be admitted and Corporate Insolvency Resolution Process ("CIRP") was initiated against the Corporate Debtor. Vidres India Ceramics Private Limited, who is the Operational Creditor. Is Respondent No. 1, herein Mr. Chetan Patel, who is the Interim Resolution Professional, is the pendentent No. 2, herein. 2. The Respondent No. 1 had instituted the aforesaid proceedings under Section 9 of the Code in respect of an operational debt. During the pleadings of the present Appeal before us, the parties entered into a Settlement Agreement dated 12.09.2026. An application under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 has consequently been preferred seeking to bring the said Settlement Agreement on record and, on the basis thereof, to set aside the Impugned Order dated 31.08.2026 and release the Corporate Debtor from the CIRP. 3. We have heard the learned Counsel appearing for the Appellant and learned Counsel appearing for Respondent No. 1 and have perused the records, including the Settlement Agreement dated 12.09.2026 and the documents placed on record in support ....
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....urther records an undertaking to withdraw the pending complaints under Section 138 of the Negotiable Instruments Act, 1881. 10. The Settlement Agreement further records that, upon the settlement, no outstanding dues, claims or demands, including principal, interest, penalty or legal costs, shall remain against the Corporate Debtor or its Directors/shareholders in respect of the transactions forming the subject matter of C.P. (IB) No. 2/(AHM)/2026, the pending criminal complaints and the present Appeal. It is also relevant to note that the Settlement Agreement contains a specific stipulation that, in the event either of the Demand Drafts is defective or is not handed over in terms of the Agreement, the settlement shall stand rendered void and Respondent No. 1 shall be at liberty to pursue the CIRP proceedings and oppose the Appeal. 11. Insofar as the expenses occasioned by commencement of the CIRP are concerned, the Settlement Agreement records that Respondent No. 1 had deposited Rs. 1,00,000/- with the IRP towards CIRP costs and fees and that the Appellant had paid Rs. 2,00,000/- to Respondent No. 1 towards CIRP costs and fees. 12. The principal question which, therefore, ....
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....cating Authority has not passed an order within such period, it shall record the reasons for such delay in writing.". 16. The aforesaid issue has recently been considered by the coordinate bench of this Appellate Tribunal in Aayush Prashant Agarwal, Suspended Director of EPIC Yarns Private Limited v. Uma Export Limited & Anr., I.A. No. 5601 of 2026 in Company Appeal (AT) (Insolvency) No. 1366 of 2026, decided on 24.08.2026. In the said case, the settlement between the parties was arrived at after initiation of CIRP but before constitution of the CoC. Taking note of the amendment to Section 12A of the Code, this Appellate Tribunal observed that the procedure for withdrawal of an application for CIRP had been made more stringent and that sub-section (2) of Section 12A, commencing with a non-obstante clause, stipulates that an application admitted under Sections 7, 9 or 10 shall not be withdrawn before constitution of the CoC or after issuance of the first invitation for submission of a resolution plan. The paragraph of Aayush Prashant Agarwal (Supra) reads as under: "4.6 We note that in the above cited case the settlement had taken place prior to initiation of CIRP wherea....
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....ttlement, therefore, cannot be treated as operating, by itself, to efface the order of admission dated 31.08.2026. 21. The fact that Respondent No. 1, being the Operational Creditor, has given its unconditional consent to the settlement and to the setting aside of the admission order is undoubtedly a relevant subsequent circumstance. Likewise, the fact that the settlement amount has been agreed to be accepted in full and final satisfaction of the operational debt and that the CoC has not yet been constituted are circumstances which may be considered by the Adjudicating Authority while examining the appropriate application under Section 12A. 22. However, these circumstances do not warrant this Appellate Tribunal bypassing the statutory mechanism which has been specifically provided for withdrawal of an admitted insolvency application. The appropriate course, consistent with the statutory scheme and the approach adopted by this Appellate Tribunal in Aayush Prashant Agarwal (Supra), would therefore be to permit the IRP to place the settlement before the Adjudicating Authority and seek appropriate orders in accordance with Section 12A of the Code. 23. We make it clear that we ....