Amit Katyal vs Manjula Khullar & Ors

Amit Katyal ...Appellant

Vs

Manjula Khullar & Ors. ....Respondents

Present: For Appellant: Dr. Abhishek Manu Singhvi, Mr. Amit Sibal and Mr. Virender Gnada, Sr. Advocates with Mr. Pulkit Deoria, Ms. Devanshi and Mr. Prashant Katara, Advocates. For Respondents: Mr. Praveen Kumar Aggarwal, Advocate for R-1 to 3 (Financial Creditors). Mr. Ashok Kumar Juneja and Mr. Akash Srivastava, Advocates for IRP.

ORDER

04.02.2019: 'Manjula Khullar and Ors.' filed application under Section 7

of the I&B Code for initiation of Corporate Insolvency Resolution Process against

'M/s Krrish Shalimar Projects Pvt. Ltd.' (Corporate Debtor). The Adjudicating

Authority by impugned order dated 16th January, 2019 admitted the application

being C. P. No. (IB)-1148(PB)/2018. During the pendency of the aforesaid

petition and this appeal and before constitution of Committee of Creditors,

Mr. Amit Katyal, Shareholder of the Corporate Debtor reached settlement with

the Respondent No. 1, 2 and 3 (Financial Creditors) on 27th January, 2019.

Thereafter Appellant filed application for withdrawal of the Insolvency Resolution

Proceeding in view of the decision of Hon'ble Supreme Court in 'Swiss Ribbons

Pvt. Ltd. & Anr. Vs. Union of India & Ors.', Writ Petition (Civil) No. 99/2018 dated

25th January, 2019, wherein the Hon'ble Supreme Court observed as follows: -2-

"52. 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 the NCLT directly, which Tribunal may, in exercise

of its inherent powers under Rule11 of the NCLT Rules, 2016,

allow or disallow an application for withdrawal or settlement.

This will be decided after hearing all the concerned parties and

considering all relevant factors on the facts of each case."

2. In the aforesaid background, the prayer has been made before this

Appellate Tribunal to pass appropriate order under Rule 11 of the National

I. A. No.229 of 2019 in Company Appeal (AT) (Insolvency) No. 79 of 2019 -3-

Company Law Appellate Tribunal Rules, 2016 as had been passed in the case of

'Arjun Puri Vs. Kunal Prasad & Ors.' in Company Appeal (AT) (Insolvency) No. 52

of 2019, disposed of on 31st January, 2019.

3. Learned counsel appearing on behalf of the Resolution Professional

accepts that no Committee of Creditors was constituted and the parties have

reached settlement. This is also accepted by learned counsel for Respondent

Nos. 1, 2 and 3 (Financial Creditors).

4. Mr. Rakesh Kumar, learned counsel appears on behalf of one Mr. Jyoti

Handa, who is not party to the present appeal. He submits that he also filed

application under Section 7 of the I&B Code against the same Corporate Debtor

but in view of the admission by impugned order dated 16th January, 2019, the

application has been disposed of by order dated 16th January, 2019, which reads

as follows:-

"ORDER

In connected matter namely C.P. No. (IB)-

1148(PB)/2018, Manjula Khullar & Ors. v. M/s. Krrish

Shalimar Projects Pvt. Ltd. we have already initiated the

Corporate Insolvency Resolution Process vide order

I. A. No.229 of 2019 in Company Appeal (AT) (Insolvency) No. 79 of 2019 -4-

pronounced today i.e. 16.01.2019. The petitioner may file its

claim before the Resolution Professional and the same shall be

considered in accordance with law. However, if for any reason

the order dated 16.01.2019 passed today in C. P. No. (IB)-

1148(PB)/2018, Manjula Khullar & Ors. v. M/s. Krrish

Shalimar Projects Pvt. Ltd. is set aside. The parties shall be at

liberty to file appropriate application for revival of the petition.

C.P. No. (IB)-113(PB)/2019 stands disposed of."

4. In the present case, as we find that the parties have reached settlement

before constitution of the Committee of Creditors, exercising our power under

Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we set

aside the impugned order dated 16th January, 2019 and thereby dismiss C. P.

No. (IB)-1148(PB)/2018 as withdrawn. The parties are directed to abide by the

settlement reached on 27th January, 2019, which should be treated as direction

of this Appellate Tribunal.

5. In so far as Mr. Jyoti Handa, who claims to be another Financial Creditor

is concerned, we are not expressing any opinion in view of the observation made

by the Adjudicating Authority (National Company Law Tribunal) Special Bench,

New Delhi in C.P. No. (IB)-113(PB)/2019. It will be also open to the Corporate

I. A. No.229 of 2019 in Company Appeal (AT) (Insolvency) No. 79 of 2019 -5-

Debtor to settle the matter with Mr. Jyoti Handa without admission of the

application under Section 7 filed by Mr. Jyoti Handa. If it is revived, in case of

non-settlement, the Adjudicating Authority may pass appropriate order in

accordance with law uninfluenced by the order passed by the Appellate

Authority.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial) am/uk

I. A. No.229 of 2019 in Company Appeal (AT) (Insolvency) No. 79 of 2019