TMI Blog2022 (9) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... l stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India and matters connected therewith or thereto - A reading of the statement of objects and reasons with the statutory Rule 11 of the NCLT Rules enables the NCLT to pass orders for the ends of justice including order permitting an applicant for CIRP to withdraw its application and to enable a corporate body to carry on business with ease, free of any impediment. Considering the number of people dependant on the Corporate Debtor for their survival and livelihood, there is no reason why the applicant for the CIRP, should not be allowed to withdraw its application once its disputes have been settled - the settlement cannot be stifled before the constitution of the Committee of Creditors in anticipation of claims against the Corporate Debtor from third persons. The withdrawal of an application for CIRP by the applicant would not prevent any other financial creditor from taking recourse to a proceeding under IBC. The urgency to abide by the timelines for completion of the resolution process is not a reason to stifle the settlement. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res in its existing manufacturing facilities and had further invested about Rs.900 Crores in an integrated Greenfield Mega Project for Speciality Chemicals. 3. According to the Appellant, the Corporate Debtor is the source of livelihood for about 150 workmen, 40 unskilled workers and 75 employees on its payroll and is engaged with more than 200 Customers/Vendors. It is claimed that the Corporate Debtor has a net worth of Rs. 972 Crores and fixed assets worth more than Rs.1500 Crores. 4. In order to expand its chemical manufacturing plant at Tarapur, Palghar (Maharashtra), the Corporate Debtor raised capital and the Respondent No.1 - M/s Beacon Trusteeship Limited (hereinafter referred to as Beacon Trusteeship ) committed to invest Rs. 100 Crores in the said integrated Greenfield Mega Project, in the form of Rs.20 Crores, towards Compulsorily Convertible Preference Shares (CCPS) and Rs. 80 Crores, by way of Non-Convertible Debentures (NCDs). Thereafter the Appellant, the Corporate Debtor and Respondent-Beacon Trusteeship executed a Debenture Trust Deed (DTD), inter-alia, recording the terms and conditions of the issue of said NCDs. The Respondent No. 1 was appointed, the Debe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporate Debtor filed its statement of claim seeking an award aggregating to Rs.848,75,30,000/- for losses and damages suffered by it. 12. On 26th February 2020, the Respondents filed statement of defence and counter claim seeking an award for payment of its claim amounting to Rs.73,56,59,238/-. 13. On 24th March 2021, the Arbitrator passed an interim award in favour of Beacon Trusteeship and other Respondents and directed the Corporate Debtor to make payment of Rs.72,06,99,244/- along with interest. 14. On 21st April 2021, being aggrieved by the order of the Arbitrator, the Appellant and Corporate Debtor preferred an arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the High Court of Bombay which is still pending. 15. The NCLT, Mumbai Bench heard the matter and reserved its order on 13th May 2021. On 1st July 2021, the Corporate Debtor and the Respondents Nos. 1 to 3 filed a joint application before the NCLT, Mumbai Bench requesting to defer the order as the parties were in the process of arriving at a settlement and sought time till 10th July 2021. 16. On 12th July 2021, the Corporate Debtor and the Respondents Nos. 1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant. The question of approval of the Committee of Creditors by the requisite percentage of votes, can only arise after the Committee of Creditors is constituted. Before the Committee of Creditors is constituted, there is, in our view, no bar to withdrawal by the applicant of an application admitted under Section 7 of the IBC. 25. In exercise of power conferred by Section 469 of the Companies Act, 2013, the Central Government has made the National Company Law Tribunal Rules, 2016, hereinafter, referred to as the NCLT Rules . Rule 11 of the NCLT Rules reads as :- 11. Inherent Powers.- Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. 26. As stated in its statement of objects and reasons, the object of the IBC is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement. It was held thus: 82. It is clear that once the Code gets triggered by admission of a creditor's petition under Sections 7 to 9, the proceeding that is before the adjudicating authority, being a collective proceeding, is a proceeding in rem. Being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a Committee of Creditors is constituted (as per the timelines that are specified, a Committee of Creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case. (emphasis supplied) (4) In the instant case, as noticed earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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