2021 (2) TMI 87 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - settlement deed for withdrawal of application - HELD THAT - The Applicant/Operational Creditor filed a withdrawal memo stating that in terms of the settlement agreed between the parties in the Deed of Settlement dated 7th January, 2021, this Tribunal may be pleased to permit the Operational Creditor to withdraw the above application under Rule of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. In view of the settlement arrived between the parties and in view of the Memo filed by the Operational Creditor, nothing survives for further consideration in this matter - Application disposed off as withdrawn.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of IBC, 2016 based on outstanding payments. Settlement agreement between the Operational Creditor and the Corporate Debtor leading to withdrawal of the application.

Analysis:
1. Initiation of Corporate Insolvency Resolution Process: The Operational Creditor filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for non-payment of outstanding dues amounting to ?3,10,19,340/- along with interest. Despite various communications and demands, the Corporate Debtor failed to clear the dues, leading to the Operational Creditor filing the insolvency application. The Corporate Debtor acknowledged the demand but failed to make the payment, resulting in the initiation of the insolvency resolution process.

2. Settlement Agreement and Withdrawal of Application: Subsequently, the parties entered into a Deed of Settlement on 7th January, 2021, agreeing on the payment terms and resolving the outstanding dues issue. As per the settlement, the Corporate Debtor agreed to make an initial payment of ?2,00,00,000/- and further payments in instalments to settle the total outstanding amount. The Operational Creditor agreed to waive off the interest claim mentioned in the insolvency petition. Following the settlement, the Operational Creditor filed a withdrawal memo on 18th January, 2021, seeking permission to withdraw the insolvency application based on the settlement agreement. The Tribunal disposed of the matter as withdrawn, directing both parties to adhere to the conditions outlined in the Deed of Settlement. It was specified that in case of default by the Corporate Debtor, the Operational Creditor could pursue appropriate legal remedies to recover the outstanding amount.

In conclusion, the judgment highlights the process of initiating corporate insolvency resolution under Section 9 of IBC, 2016 due to non-payment of dues by the Corporate Debtor, followed by a detailed settlement agreement between the parties leading to the withdrawal of the insolvency application. The Tribunal emphasized the importance of honoring the terms of the settlement and outlined the recourse available in case of any default by the Corporate Debtor.