Coal India Ltd vs Gulf Coil Lubricants India Ltd. & Anr

Coal India Ltd. ...Appellant

Vs.

Gulf Coil Lubricants India Ltd. & Anr. ...Respondents

Present: For Appellant: - Mr. Arun Kathpalia, Senior Advocate with Mr. Ranjan Kumar Pandey, Mr. Sandeep Bisht, Mr. Anuj Tiwari, Mr. Shikhar Shivastan and Mr. Vinay Ranjan, Advocates.

For Respondents: - Mr. Shwetaank Nigam, Advocate for R-1.

ORDER

11.02.2019─ An application under Section 9 of the Insolvency and

Bankruptcy Code, 2016 ("I&B Code" for short) was filed by 'M/s. Gulf Oil

Lubricants India Limited'- ('Operational Creditor') for initiation of the

'Corporate Insolvency Resolution Process' against 'Eastern Coalfields

Limited'. The said application has been admitted by impugned order

dated 19th December, 2018 by the Adjudicating Authority (National

Company Law Tribunal), Kolkata Bench, Kolkata. The present appeal has

been preferred by 'Coal India Limited'.

2. On 22nd December, 2018, when the matter was taken up, taking

into consideration the submissions made by learned Senior Counsel for

the Appellant, the following order was passed:

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

-2-

"22.12.2018 Learned Senior Counsel referred

to the impugned order and enclosures annexed thereto,

to suggest that the principal amount had already been

paid and as per the terms of Agreement/ Contract, no

interest is payable. This fact, though, noticed by the

Adjudicating Authority (National Company Law

Tribunal, Kolkata Bench), Kolkata, in spite of that

impugned order dated 19th December, 2018 has been

passed in an application under Section 9 of the I&B

Code, 2016.

It is also informed that parties have already

settled the claim and nothing payable to the

respondents (Operational Creditor).

Let notice be issued on respondents by Speed

Post.

The requisite be filed by 26th December, 2018

by 11:00 AM. If the appellant provides email address

of the respondents, let notice be issued through e-mail

also.

Post the matter for admission before the 1st

Court on 29th January, 2019 within two cases. Appeal

may be disposed of at the stage of admission.

Until further orders, the operation of the

impugned order dated 19th December, 2018 passed in

Company Appeal (AT) (Insolvency) No. 807 of 2018 -3-

CP (IB) No. 228/KB/2018 by NCLT Kolkata Bench

shall remain stayed. The Resolution Professional, if

joined may report."

3. Pursuant to the notice, the Respondent has appeared.

4. Learned counsel appearing on behalf of the contesting Respondent-

'M/s. Gulf Oil Lubricants India Limited'- ('Operational Creditor') accepts

that the principal amount was paid prior to the admission of the

application under Section 9 and interest has been paid and matter has

been settled by agreement dated 26th January, 2019.

5. It is submitted that such settlement has already been made prior

to the constitution of the 'Committee of Creditors'.

6. In the case of 'Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India

& Ors. - Writ Petition (Civil) No. 99 of 2018', the Hon'ble Supreme

Court observed as follows:

"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

Company Appeal (AT) (Insolvency) No. 807 of 2018 -4-

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

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."

7. In view of the fact that the parties have now settled the matter prior

to the constitution of the 'Committee of Creditors' and the Adjudicating

Authority has failed to notice that the principal amount has already been

paid and original plea of the 'Corporate Debtor' was that no interest was

payable in terms of the Agreement/ Contract, we set aside the impugned

order dated 19th December, 2018 passed by the Adjudicating Authority.

8. In effect, order (s), passed by the Adjudicating Authority appointing

'Interim Resolution Professional', declaring moratorium, freezing of

Company Appeal (AT) (Insolvency) No. 807 of 2018 -5-

account, and all other order (s) passed by the Adjudicating Authority

pursuant to impugned order and action, if any, taken by the 'Interim

Resolution Professional', including the advertisement published in the

newspaper calling for applications all such orders and actions are

declared illegal and are set aside. The application preferred by

Respondent under Section 9 of the 'I&B Code' is dismissed. Learned

Adjudicating Authority will now close the proceeding. The 'Corporate

Debtor' (company) is released from all the rigour of law and is allowed to

function independently through its Board of Directors from immediate

effect.

9. The Adjudicating Authority will fix the fee of 'Interim Resolution

Professional' and the 'Corporate Debtor' will pay the fees of the 'Interim

Resolution Professional' for the period he has functioned. The appeal is

allowed with aforesaid observation. However, in the facts and

circumstances of the case, there shall be no order as to cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial) Ar/uk

Company Appeal (AT) (Insolvency) No. 807 of 2018