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Judgment
O R D E R
10.01.2022 The Learned Counsel for the Appellant and Respondents are present.
The Learned Counsel for the Appellant while referring to the judgment passed by Hon’ble Supreme Court in Civil Appeal No. 3325 of 2020 “E S Krishnamurthy & Ors. Vs. M/s Bharath Hi Tech Builders Pvt. Ltd.” order dated 14.12.2021 relied on paragraph 28 as hereunder:
28 Undoubtedly, settlements have to be encouraged because the ultimate purpose of the IBC is to facilitate the continuance and rehabilitation of a corporate debtor, as distinct from allowing it to go into liquidation. As the Statement of Objects and Reasons accompanying the introduction of the Bill indicates, the objective of the IBC is to facilitate insolvency resolution “in a time bound manner” for maximisation of the value of assets, promotion of entrepreneurship, ensuring the availability of credit and balancing the interest of all stakeholders. What the Adjudicating Authority and Appellate Authority, however, have proceeded to do in the present case is to abdicate their jurisdiction to decide a petition under Section 7 by directing the respondent to settle the remaining claims within three months and leaving it open to the original petitioners, who are aggrieved by the settlement process, to move fresh proceedings in accordance with law. Such a course of action is not contemplated by the IBC.”
The Learned Counsel for the Appellant submits that the aforesaid judgment is supports his case as the settlement arrived between the parties outside the court is without the directions of this Tribunal.
The Learned Counsel for the Appellant also filed affidavit annexing terms of settlement arrived between the parties on 15.12.2021 which is reads as hereunder:
“ F. Notwithstanding anything to the contrary contained herein, the Debtors, jointly and severally agree and undertake to pay a sum of Rs. INR 7,04,52,980/- (Indian Rupees Seven Crore Four Lakh Fifty Two Thousand Nine Hundred Eighty Only) including interest to the Operational Creditor herein and the Operational Creditor agrees to accept the payment of the said sum of Rs. INR 7,04,52,980/- (Indian Rupees Seven Crore Four Lakh Fifty Two Thousand Nine Hundred Eighty Only) including any interest (“Agreed Settlement Amount”) towards full and final settlement of all claims between the Corporate Debtor and the Operational Creditor, inter alia as raised in the captioned Company Petition in the following manner:
i.On the date of signing of these Consent Terms, Mr. Singh shall file and move an application before the NCLAT, in accordance with law, seeking disposal of his Appeal, pursuant to these consent terms;
ii.On the date of signing of these Consent Terms, Mr Lyallpura shall provide 4 (four) undated Cheques drawn by him in favour of the Operational Creditor, for: (l) INR 2,00,00,000 (Indian Rupees Two Crores Only) (First Tranche security cheque); (ii) INR 2,00,00,000 (Indian Rupees Two Crores only) (Second Tranche security cheque); (iii) INR 2,00,00,000 (Indian Rupees Two Crores only) (Third Tranche security cheque) and (iv) INR 1,04,52,980/- (Indian Rupees One Crore Four Lakh Fifty Two Thousand Nine Hundred and Eighty only) (Fourth Tranche security cheque), cumulatively amounting to INR 7,04,52,980/- (Indian Rupees Seven Crore Four Lakh Fifty Two Thousand Nine Hundred Eighty Only), in favour of the Operational Creditor. These cheques shall be deposited by the Operational Creditor only in the event of a failure of the Debtors to make any payments as per clause F (vi) – F (ix) below, the Operational Creditor shall upon completion of each term/s stated in clause F(vi) – F (ix) return each tranche cheque issued by Debtors in favour of Operational Creditor to the Debtors and, Debtors have the right to issue instructions to the bank for cancellation of the said cheques without any objection from Operational Creditor.
iii.Within 7(seven) days from the date of the order disposal of the Appeal as above, if necessitated the Operational Creditor shall move an application before the NCLT, in accordance with law, withdrawing the Company Petition pursuant to these Consent Terms;
iv.Within 24 (twenty-four) hours from the date of the CIRP of the Corporate Debtor coming to an end; and the management of Company being restored back in the hands of erstwhile directors/ Debtors, the Debtors undertake to have these consent terms acceded to by the Corporate Debtor, by way of a Board resolution. By virtue of such accession, the Corporate Debtor shall be deemed to be jointly and severally liable to all obligations undertaken by the Debtors under these Consent Terms. A true copy of extracts of Board Resolution shall be provided to the operational Creditor immediately.
v.Within 3 (three) days from the date on which the CIRP of the Corporate Debtor comes to an end; and the management of Corporate Debtor being restored back in the hands of erstwhile directors, the Debtors undertake that the Corporate Debtor shall unconditionally withdraw the arbitration proceedings bearing reference no. DIAC/3146/09-21 pending with the Delhi International Arbitration Centre.
vi.Within 7 (seven) days from the date on which the CIRP of the Corporate Debtor comes to an end, and the management of Company is restored back in the hands of erstwhile directors, pursuant to an order of the NCLT or NCLAT, as applicable, Debtors shall through the Corporate Debtor pay an amount of INR 2,00,00,000 (Indian Rupees Two Crores Only) (“First Tranche”);
vii.Within 15 (Fifteen) days from the date of receipt of the First Tranche by the Operational Creditor, Debtors shall through the Corporate Debtor pay an amount of INR 2,00,00,000 (Indian Rupees Two Crores Only) to Operational Creditor; (Second Tranche)
viii.Within 15 (Fifteen) days from the date of receipt of the Second Tranche by the Operational Creditor, Debtors shall through the Corporate Debtor pay an amount of INR 2,00,00,000 (Indian Rupees Two Crores Only) to Operational Creditor; (Third Tranche)
ix.Within 15 (Fifteen) days from the date of receipt of the Third Tranche by the Operational Creditor, Debtors shall through the Corporate Debtor pay the balance of INR 1,04,52,980/- (Indian Rupees One Crore Four Lakh Fifty Two Thousand Nine Hundred and Eighty only) to Operational Creditor; (Final Tranche).
G. Debtors shall complete their obligations their obligations under these Consent Terms within a total period of 45 (forty-five) days from the date CIRP in respect of the Corporate Debtor comes to an end, and the powers of the Board of the Corporate Debtor are restored.
Provided, that in the event of the announcement of a ‘national lockdown’ announced by the Central Government, identical to that which was announced on 24 March 2020, the Debtors shall make their best endeavors to honor the terms and timelines stated these Consent Terms, in case the same is not possible the Debtors shall have an additional period of 10 (ten) days, after the completion of the aforesaid period of 45 (forty-five) days, subject to a maximum period of 55 (fifty-five) days from the date of CIRP ending, and the management of Corporate Debtor is restored back in the hands of erstwhile directors, to complete its obligations under these Consent Terms.
H. The Operational Creditor undertakes to file all necessary application(s), as required under law, including before NCLT/ NCLAT/ CoC or any other authority in order to ensure that the effect of the Order of Admission in nullified and powers of the Board of the Corporate Debtor are restored.
I. Notwithstanding anything to the contrary contained in these Consent Terms, in the event of a breach of any provision of these Consent Terms by the Debtors, following consequences shall follow:
i.The total debt claimed in the Company Petition, by the Operational Creditor against the Corporate Debtor shall stand admitted, without any dispute whatsoever;
ii.It is made clear that payments made, if any, under these Consent Terms, shall be deducted from the total debt claimed in the Company Petition, for the purposes of Clause I (I) above;
iii.The Operational Creditor herein shall be at liberty to institute an application/ petition for revival of CIRP in respect of the Corporate Debtor, for the default in payment of the total debt claimed in the Company Petition;
iv.The Debtors shall jointly and severally stand personally liable for the amounts claimed by the Operational Creditor in the Company Petition; and
v.The Operational Creditor shall have the right to approach Hon’ble NCLT and the Hon’ble NCLAT under Section 425 of the Companies Act, 2013, against the Debtors, severally or jointly.
J. It is reiterated that the payment or discharge of the entire Agreed Settlement Amount by Debtors to Operational Creditor, as set out above, shall be the consideration for full and final settlement of all dispute, differences and claims between the Parties, and from the upon the execution of these presents, the Parties agree not to raise any fresh claims and/or to initiate and/or continue any proceedings against the other in respect of disputes, differences or claims between the Parties, save as contemplated herein.
K. It is agreed that the balance fees of the IRP as approved by the CoC, shall be borne by the Debtors.
L. Parties represent and warrant that they have the requisite authority to sign the present Consent Terms.”
The aforesaid affidavit including terms of settlement arrived between the parties is kept on record.
In view of the settlement, the Learned Counsel for the Appellant seeks permission to withdraw this Appeal.
In view of the circumstances, this Appeal is dismissed as withdrawn.