Md Irshad Khan vs 1. Ajai Kumar Singh 2. Anil Kumar Sharma ...

Irshad Khan ....Appellant V Ajai Kumar Singh & Ors. ....Respondents

Present: For Appellant : Mr. Ruchin Midha, Advocate For Respondents : Mr. Dhananjay Sud, Ms. Shalya Agarwal and Mr. Aditya Gauri, Mr. Amar Vivek, Mr. Chaitanya Bansal, Advocates for R-2.

ORDER

(Through Virtual Mode) 05.05.2022:

The `Appellant/Applicant' being dissatisfied with the `impugned

order' passed by the `Adjudicating Authority' (`National Company Law

Tribunal'), New Delhi Bench V has focussed the instant IA No. 1043/2021

in CP (IB) No. 296/ND/2020 in Comp App (AT) (Ins.) No. 449 of 2021

dated 08.06.2021 before this Tribunal is an `Aggrieved' person.

2. The `Adjudicating Authority' while passing the `impugned order' on 08.06.2021 at paragraph 30 and 31, had observed as under:

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30.``Here in the case in hand, admittedly, the CoC has not been constituted but from the material available on record, it is crystal

clear, that claim of the financial creditor and other creditors (Operational Creditors) were received prior to the submission of the Form FA and as per the averment made in the application, the IRP instead of verifying the claims of the creditors, had waited for settlement, which was going to be arrived between the Applicant and Corporate Debtor , which in our considered view is not the letter and spirit of Section 12A and Regulation 30A of the IBBI (Insolvency Resolution of Corporate Persons) Regulation, 2016 as well as the decisions upon which the applicant has placed reliance.

31. Since, the IRP has received a claim of one of the financial creditor, which is more than One Crore. Therefore, it is the duty of the IRP, before considering the Form FA, verify the claim and if the claim is found to be genuine then constitute the CoC and if the claim is not genuine then reject the same. And only thereafter, submit

the Form FA before the Adjudicating Authority, within three days, as required under the law but IRP has not followed the law in the letter and spirit. Rather he interpreted the law, according to his own convenience, which is not permissible.''

and ultimately rejected the `Interlocutory Application' submitted by the

`Interim Resolution Professional' to permit the `Applicant/Appellant' to

withdraw the `Application'.

3. This `Tribunal' has heard the Learned Counsels for the `Appellant'

and `2nd Respondent' and noticed their contentions.

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4. There is no dispute that the CIRP in the instant subject matter was

initiated on 04.02.2021 and that the `Public Announcement' was made on

09.02.2021 and the last day for submission of claim(s) was 19.02.2021. On

20.02.2021, the parties had arrived at settlement between the `Corporate

Debtor' and the `Operational Creditor' and the entire dues according to

both sides were settled.

5. It comes to be known that the `Withdrawal Application' under

`Section 12A' of the `I & B' Code, 2016, coupled with `Regulation 30A

of Insolvency and Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons) Regulations, 2016, was filed before the

`Adjudicating Authority' on 22.02.2021 and it comes to be known that the

last date of `Committee of Creditors' was on 26.02.2021. As a matter of

fact, the `Adjudicating Authority' had opined in the `impugned order' that

the `Committee of Creditors' was not constituted and the claim of the

`Financial Creditor' and other `Creditors' (`Operational Creditors') were

received prior to the submission of `Form FA' and as per the averments

made in the `Application', the `Interim Resolution Professional' instead of

verifying the `Creditors Claim' for the settlement to be arrived at between

the `Applicant' and the `Corporate Debtor' and from the point of view of

the `Adjudicating Authority', the same was not in letter and spirit of

Company Appeal (AT) (INS) No. 449 of 2021 Page 3 of 7 Section 12A and Regulation 30A of the IBBI (Insolvency Resolution

Process for Corporate Persons) Regulations, 2016, etc.

6. Apart from the above, the `Adjudicating Authority' in the

`impugned order' had proceeded to observe that the `Interim Resolution

Professional' had received the name of one of the `Financial Creditor',

being more than Rs. One Crore and further that it is the duty of the `IRP'

before considering it to verify the `claim' and if the `claim' is found to be

genuine, then constitute the `Committee of Creditors' and if the claim is

not genuine, then reject the same etc., and finally rejected the `Application'

projected by the `Applicant/Appellant'.

7. There is no two opinion of a primordial fact that `Speed' is the gist

/ essence for an `effective', `efficacious' functioning / performance of the

`I & B', Code, 2016. While the `calm period' can assist in keeping a

`Company'/`Organisation' afloat, without full clarity of ownership and

control, significant decisions cannot be made without an `effective

`Head/Leadership', the firm will tend to `Atrophy' and `Fail'. When delays

induced `Liquidation', there is certainly a `Value Destruction', in the

considered `Opinion' of this `Tribunal'.

8. It cannot be gainsaid that the object and purpose of the `I & B' Code,

2016 is one of `Resolution' and not that of `Corporate Debtor's death'. The

Company Appeal (AT) (INS) No. 449 of 2021 Page 4 of 7 `Adjudicating Authority' under the `I & B' Code, 2016, is to promote

`Resolution' and the term `Liquidation' is the last resort.

9. No wonder, a timely resolution of `Insolvency and Bankruptcy' will

certainly support development of `Credit Markets', etc. Further, it will

facilitate the aspect of carrying on `Business' and facilitate more

investments, leading to higher economic growth and development in the

considered opinion of this `Tribunal'.

10. On a careful consideration of the contentions advanced by both the

parties, this `Tribunal' is of the considered view that the fact of initiation

of `CIRP' was on 04.02.2021 and the settlement being arrived at on

20.02.2021 and ultimately, Section 12A of the `I & B' Code, 2016

`Application' filed on 22.02.2021, the whole conspectus of events

clinchingly and unerringly points out that the view taken by the

`Adjudicating Authority' in dismissing the IA No. 1043/2021 in CP(IB)

No.296/ND/2020 in Comp. App (AT) (INS) No. 449 of 2021, based on the

surrounding facts and circumstances of the instant case, which float on the

surface, is clearly unsustainable in the `Eye of Law'.

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11. Viewed in above perspective, this `Appellate Tribunal' is perforced

to interfere with the `impugned order' of rejection of IA No. 1043/2021

dated 08.06.2021 in CP (IB) No. 296/ND/2020 and accordingly `sets

aside' the said order and the `Appeal' succeeds.

12. In fine, the instant Comp. App (AT) (INS) No. 449 of 2021 is

allowed. No costs. The `impugned order' dated 08.06.2021 in CP (IB) No.

296/ND/2020 is `set aside' by this `Appellate Tribunal' for the reasons

assigned in this `Appeal'. Furthermore, the observations made by the

`Adjudicating Authority', wherein the `Applicant/Appellant' was granted

liberty to move `fresh application' in accordance with the provision of law

is also set aside to prevent, an `aberration of justice' and to secure the `ends

of justice'.

13. The matter is remitted back to the `Adjudicating Authority' who is

directed to restore IA No. 1043/2021 in CP (IB) No. 296/ND/2020 to its

file within one week from the date of receipt of this order, and after

providing due opportunities to both sides are to proceed further in the

subject matter in issue, to dispose of the matter `de novo', of course, in the

manner known to Law and in accordance with Law, within three weeks

from the date of receipt of copy of this order (uninfluenced and

Company Appeal (AT) (INS) No. 449 of 2021 Page 6 of 7 unimpeded) with any of the observations made by this `Tribunal' in this

`Appeal.

[Justice M. Venugopal] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical)

shashi/sr/gc

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