Dhiraj Prabhu vs Rajeev Shetty & Anr

Dhiraj Prabhu ...Appellant

Vs.

Rajeev Shetty & Anr. ...Respondents

Present: For Appellant: - Mr. P.V. Dinesh, Mr. Ashwini Kumar Singh and Ms. Sindhu T.P., Advocate.

Mr. Dhiraj Prabhu, Appellant in person.

For Respondents: - Mr. Abhishek Singh, Advocate for Operational Creditor.

Mr. Gautam Singh, Advocate for IRP.

O R D E R

07.02.2020─ The Respondent- Mr. Rajeev Shetty was Associate Vice

President of 'M/s. Skyline Construction & Housing Pvt. Ltd.' ('Corporate

Debtor'). He moved Application under Section 9 of the Insolvency and

Bankruptcy Code, 2019 ("I&B Code" for short) in the year 2017, but on

objection it was withdrawn. Subsequently, another Application under

Section 9 of the 'I&B Code' was filed after Demand Notice under Section

8(1) to the 'Corporate Debtor' which was admitted by the Adjudicating

Authority (National Company Law Tribunal), Bengaluru Bench on 27th

November, 2019.

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

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2. The Appellant- Promoter of 'M/s. Skyline Construction & Housing

Pvt. Ltd.' ('Corporate Debtor') preferred the Appeal on the ground that the

Application under Section 9 was barred by limitation.

3. On 19th December, 2019, when the matter was taken up, learned

counsel for the Appellant submitted that 'Leave Travel Allowance' or

'Leave Encashment' or 'Bonus' cannot be claimed as a matter of right by

an employee. Therefore, the Respondent- Mr. Rajeev Shetty does not

come within the definition of 'Operational Creditor' as defined under

Section 5(20) & (21) of the 'I&B Code'. It was further informed that the

Application under Section 9 with regard to the claim of 'Leave Travel

Allowance' or 'Leave Encashment' or 'Bonus' was barred by limitation.

Notice was issued on the Respondents and as no 'Committee of

Creditors' was constituted, this Appellate Tribunal stayed the

constitution of the 'Committee of Creditors'.

4. The Appellant instead of pursuing the Appeal on merit wanted to

settle the matter with Mr. Rajeev Shetty (Ex- Vice President). As the

settlement has not been finalised, we vacated the interim order on 30th

January, 2020, but subsequently on 5th February, 2020, the settlement

has been reached. Formal agreement of Settlement was reached in a

stamp paper on 6th February, 2020.

Company Appeal (AT) (Insolvency) No. 1501 of 2019 -3-

5. In the meantime, in view of the vacation of the interim order, the

'Committee of Creditors' was formally constituted on 4th February, 2020

and was informed on 5th February, 2020 to the Adjudicating Authority

and by the aforesaid period, the parties have reached settlement.

6. In the light of the decision of the Hon'ble Supreme Court in "Swiss

Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─ 2019 SCC OnLine

SC 73", this Appellate Tribunal can exercise inherent powers under Rule

11 of the National Company Law Appellate Tribunal Rules, 2016

accepting the settlement and thereby to allow the Respondent to

withdraw the application under Section 9 as prayed for, but technically

constitution of the 'Committee of Creditors' was intimated on the same

date i.e. 5th February, 2020, the day the parties reached the settlement.

7. As we find that the parties have been negotiating and almost

reached a final settlement and on merit the Appellant has also raised

certain issues, taking into consideration that the 'Corporate Debtor' is an

Infrastructure Housing Company on which a large number of allottees

are dependant and if the 'Corporate Debtor' goes on 'Corporate Insolvency

Resolution Process', then it may delay the completion, we in exercise of

powers conferred under Rule 11 of the National Company Law Appellate

Tribunal Rules, 2016 accept the settlement reached between the parties

and allow Mr. Rajeev Shetty to withdraw the application under Section 9.

Company Appeal (AT) (Insolvency) No. 1501 of 2019 -4-

The Appellant is directed to comply with the Terms of Settlement

dated 5th February, 2020, as recorded in the Indian Non-Judicial paper

on 5th February, 2020. The Appellant will ensure that the cheques are

encashed. On failure, this Appellate Tribunal may initiate Contempt

Proceeding against Mr. Dhiraj Prabhu and may also direct to re-initiate

the 'Corporate Insolvency Resolution Process'. This order is passed in the

presence of Mr. Dhiraj Prabhu, who is present in person. It will also be

open to the Appellant to prepone the payment by way of Draft and may

take back the post-dated cheques.

8. So far as fees of the 'Interim Resolution Professional' is concerned,

we assess fee at Rupees One Lakh per month. He having worked for about

2 ½ months, will be paid a sum of Rs. 2,50,000/- towards fee.

9. So far as the 'Corporate Insolvency Resolution Process Cost' is

concerned, as the 'Interim Resolution Professional' has made publication,

taken time to constitute the 'Committee of Creditors' by informing them

and engaged Lawyers, we assess another sum of Rupees One Lakh for

payment towards the 'Corporate Insolvency Resolution Process Cost' in

favour of the 'Interim Resolution Professional'. The total cost of

Rs.2,50,000/- towards fee plus Rs.1,00,000/- towards the 'Corporate

Insolvency Resolution Process Cost' i.e. Rs.3,50,000/- will be paid by Mr.

Dhiraj Prabhu/ Corporate Debtor within three weeks.

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10. However, if the expenses towards the publication etc. are more, the

bill should be forwarded to the Appellant/ 'Corporate Debtor' who will

pay the rest.

11. The impugned order dated 27th November, 2019 is set aside. The

'Corporate Debtor'- 'M/s. Skyline Construction & Housing Pvt. Ltd.' is

released from the rigours of 'Corporate Insolvency Resolution Process'.

The 'Interim Resolution Professional' will handover the records and assets

of the 'Corporate Debtor' to the Promoters.

The Appeal is allowed with aforesaid observations and directions.

No costs.

[Justice S.J. Mukhopadhaya] Chairperson

(Shreesha Merla) Member(Technical) Ar/Rr

Company Appeal (AT) (Insolvency) No. 1501 of 2019