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2023 (5) TMI 662 - AT - Insolvency and BankruptcySeeking closure (withdrawal) of CIRP proceedings - Section 7 Application admitted - Financial Creditor has already settled the dispute with the Appellant and ‘Terms and Conditions’ of the Settlement have been brought on record vide Settlement Letter dated 08th May, 2023 - It is submitted that claim of the intervener having been already filed, CIRP process against the Corporate Debtor be allowed to continue rejecting prayer of the Appellant to close the CIRP. HELD THAT:- From the facts of the present case, it is clear that CIRP was initiated against the Corporate Debtor vide Order dated 23rd December, 2022 admitting Section 7 Application filed by the IDFC First Bank Limited Respondent No. 1 herein. On 04th January, 2023, Interim Order was passed in this Appeal directing that Committee of Creditors (CoC in short) may not be constituted. Interim Order passed in this Appeal still continues as on date. In the I&B Code as enacted in 2016, there was no statutory provision permitting withdrawal of an Application under Section 7 and 9 of the Code. Hon’ble Supreme Court Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors. [2019 (1) TMI 1508 - SUPREME COURT] held that before a Committee of Creditors is constituted, a party can approach the NCLT directly under inherent powers of Rule 11 for withdrawal of Section 7 or 9 Application. The present is a case where Committee of Creditors has not yet been constituted and the Appellant after filing settlement agreement by the Financial Creditor dated 08th May, 2023, prays for withdrawal of the CIRP in exercise of inherent power of this Tribunal under Rule 11 of NCLAT Rules, 2016. A categorical observation made by the Hon’ble Supreme Court in Ashok G. Rajani v. Beacon Trusteeship Ltd. & Ors. [2022 (9) TMI 1011 - SUPREME COURT] is that Settlement cannot be stifled before the Constitution of Creditors in anticipation of the claims against the Corporate Debtor from 3rd Persons. In another recent Judgment of the Hon’ble Supreme Court Abhishek Singh v. Huhtamaki PPL Ltd. & Anr. [2023 (3) TMI 1285 - SUPREME COURT], Hon’ble Supreme Court again referring to the Judgment of Ashok G. Rajani again reiterated the same preposition. In the above case, Appeal was filed against the Order of NCLT by which an Application under Section 12A filed for withdrawal of the CIRP was rejected by the NCLT. The Application filed under Section 12A was opposed by intervener who claimed to have raised their claim before the IRP. The above judgement of the Hon’ble Supreme Court in Ashok G Rajani and Abhishek Singh where the cases were Application for withdrawal was filed before the Committee of Creditors was constituted - Present is also a case where Settlement has been entered between the parties and prayer is being made to withdraw the CIRP in exercise of jurisdiction under Rule 11 of NCLAT Rule, 2016. The Financial Creditor having settled the matter with the Corporate Debtor and Settlement letter dated 08th May, 2023 having been brought on record, it is deemed to be a fit case to exercise jurisdiction under Rule 11 of NCLAT Rules, 2016 to close the CIRP. On account of objection raised by the intervener of his filing claim before the IRP, the CIRP can not be allowed to proceed since the debt for which CIRP has been initiated, has been settled with the Financial Creditor. The Intervener is free to take such legal proceedings as may be advised to protect his interest. Taking the settlement letter dated 08th May, 2023 on record, the CIRP against the Corporate Debtor is closed, setting aside the Order dated 23.12.2022 - appeal disposed off.
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