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2020 (8) TMI 396 - NATIONAL COMPANY LAW APPEALLATE TRIBUNAL, NEW DELHIMaintainability of application - initiation of CIRP - Settlement of disputes between the parties - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not. Whether this is a fit case for invoking Rule 11 of the NCLAT Rules to allow the parties to settle the dispute? - HELD THAT:- Whether the allottees in the instant case are speculative investors or want to jump the ship, is for the Adjudicating Authority to determine when approached under Section 65 of the ‘I&B Code’. That situation is not obtaining in the instant case as of now the joint Settlement of the Corporate Debtor with Respondent Nos.1 and 2 is confined to their claims and nothing beyond that. No issue of the nature referred to hereinabove has been raised in this appeal, therefore, the same does not require consideration. Admittedly, the Interim Resolution Professional has received 283 claims from allottees of different projects, Financial Creditors, Operational Creditors, other Creditors and Employees as detailed in para 10 of the reply filed by Respondent No.3 and the Settlement Deed does not take care of the interest of Claimants other than Respondent Nos.1 & 2. Therefore, allowing of withdrawal of application on the basis of such Settlement which is not all-encompassing and being detrimental to the interests of other Claimants including the allottees numbering around 300 would not be in consonance with the object of ‘I&B Code’ and purpose of invoking of Rule 11 of the NCLAT Rules. In a case where interests of the majority of stakeholders are in serious jeopardy, it would be inappropriate to allow settlement with only two creditors which may amount to perpetrating of injustice. Exercise of inherent powers in such cases would be a travesty of justice. Whether application filed by Respondent Nos. 1 & 2 under Section 7 of the ‘I&B Code’ was not maintainable? - HELD THAT:- The impugned order dated 17th March, 2020 initiating Corporate Insolvency Resolution Process against Corporate Debtor cannot be sustained. The Adjudicating Authority has landed in grave error in admitting the application of Respondent Nos.1 and 2 under Section 7 who claimed to be the ‘Financial Creditors’ in their capacity as ‘decree-holders’ against the Corporate Debtor on account of non-payment of the amount due under the Recovery Certificate dated 10th August, 2019 issued by the ‘UP RERA’ while execution of decree/ recovery of amount due under Recovery Certificate would not justify triggering of Corporate Insolvency Resolution Process. We are also of the firm view that the application of Respondent Nos. 1 and 2 was moved for execution/ recovery of the amount due under the Recovery Certificate and not for insolvency resolution of the Corporate Debtor. The impugned order suffers from grave legal infirmity and cannot be supported. Application dismissed.
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