Ashish Naithani vs Anil Matta & Anr

Dr. Ashish Naithani ...Appellant

Vs.

Anil Matta & Anr. ...Respondents

Present: For Appellant: - Mr. Mrinal Harshvardhan and Mr. Kartik Sarin, Advocates.

For Respondents: - Mr. Dhairya Madan and Mr. shwetank Singh, Advocates.

O R D E R

24.05.2019─ Having heard learned counsel for the Appellant and

being satisfied with the grounds, the delay of 1 day in preferring the

appeal is hereby condoned. I.A. No. 1737 of 2019 stands disposed of.

This appeal has been preferred by Dr. Ashish Naithani, Director of

'Primrose Infratech Pvt. Ltd.'- ('Corporate Debtor') against the order dated

8th April, 2019 passed by the Adjudicating Authority (National Company

Law Tribunal), New Delhi Bench, rejecting the prayer of the Appellant for

withdrawal of the application under Section 9 of the Insolvency and

Bankruptcy Code, 2016 ("I&B Code" for short).

Contd/-.............

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2. Learned counsel for the Appellant submitted that the parties

having settled with the 'Operational Creditor', the Adjudicating Authority

ought to have allowed the Appellant to withdraw the application.

3. It is further submitted that the Appellant was agreed to settle the

matter with the rest of the parties also after withdrawal.

4. Reliance has been placed on the decision of the Hon'ble Supreme

Court in "Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─

2019 SCC OnLine SC 73" wherein the Hon'ble Supreme Court observed

and held as follows:

"79. 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

Company Appeal (AT) (Insolvency) No. 564 of 2019 -3-

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 Rule 11 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."

5. In the present case, learned counsel appearing on behalf of one of

the 'Financial Creditors' submits that the 'Committee of Creditors' was

constituted on 4th February, 2019. However, this is disputed by learned

counsel for the Appellant. According to him, much prior to the

constitution of the 'Committee of Creditors' the settlement has been

reached.

6. In the case of "Swiss Ribbons Pvt. Ltd." (Supra), the Hon'ble

Supreme Court has made it clear that 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 Rule 11 of the

Company Appeal (AT) (Insolvency) No. 564 of 2019 -4-

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.

7. In the present case, there is dispute about the date of constitution

of the 'Committee of Creditors'. This apart, learned counsel for the

Appellant submits that the settlement has been reached. The

'Operational Creditor' filed an application under Section 9 and giving

undertaking that after withdrawal he will settle with the other creditors

that means who are the other creditors who have filed claim.

8. Further, except the 'Operational Creditor', who has filed application

under section 9, no other person asked to withdraw the application and

thereby the Director/ Promoter of the 'Corporate Debtor' cannot request

for withdrawal.

9. This apart, as we find that the 'Financial Creditor' has already

appeared before us, we are also not inclined to exercise inherent power

under Rule 11 of the National Company Law Tribunal Rules, 2016 to

allow even the Respondent- 'Operational Creditor' to withdraw the

application on oral prayer.

Company Appeal (AT) (Insolvency) No. 564 of 2019 -5-

The appeal is accordingly dismissed. No costs.

(Justice S.J. Mukhopadhaya) Chairperson

(Kanthi Narahari) Member(Technical) Ar/g

Company Appeal (AT) (Insolvency) No. 564 of 2019