Mritunjay Kumar vs Propertree Real Estate Solutions Pvt ...
- CitationCompany Appeal (AT) (Insolvency) No. 950 of 2021
Ratio decidendi
The rule this decision rests on
Where a settlement between the corporate debtor and the operational creditor is reached and an application for withdrawal is made under Rule 11 of the NCLT Rules, 2016 before the Committee of Creditors has been constituted, the approval of the Committee of Creditors under Section 12A is not required, and the Adjudicating Authority may entertain such an application without it being moved through the Interim Resolution Professional. Once the Adjudicating Authority has been moved in good time and the requirement of Section 12A is not attracted, the Adjudicating Authority, in exercise of its inherent powers, may permit withdrawal of the Corporate Insolvency Resolution Process on the basis of the parties' settlement. Fees and expenses of the Interim Resolution Professional are limited to the period during which the insolvency process was subsisting and operative; once the process has been stayed by the Tribunal, no further fee or expense accrues, and the fee already paid satisfies the fee entitlement, with proper bills for expenses incurred up to the date of the stay being payable by the Corporate Debtor.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Mritunjay Kumar Member of the Suspended Board of Director Unibera Developers Pvt. Ltd. ...Appellant
Versus
Propertree Real Estate Solutions Pvt. Ltd. & Anr. ...Respondents
Present: For Appellant: Mr. Abhishek Anand and Mr. Kunal Godhwani, Advocates. For Respondents: Mr. Gautam Singhal, Advocate for R-1. Mr. Gaurav Mittra, Mr. Amar Vivek, Mr. Shalya Agarwal, Mr. Aditya Gauri, Advocates for R-2. Mr. Arvind Shukla and Mr. Saket Shubham, Advocates for Intervenor.
With
Company Appeal (AT) (Insolvency) No. 1023 of 2021
IN THE MATTER OF:
Mritunjay Kumar Member of the Suspended Board of Director Unibera Developers Pvt. Ltd. ...Appellant
Versus
Propertree Real Estate Solutions Pvt. Ltd. & Anr. ...Respondents
Present: For Appellant: Mr. Abhishek Anand and Mr. Kunal Godhwani, Advocates. For Respondents: Mr. Gautam Singhal, Advocate for R-1. Mr. Gaurav Mittra, Mr. Amar Vivek, Mr. Shalya Agarwal, Mr. Aditya Gauri, Advocates for R-2. Mr. Akash Sinha, Mr. Arvind Shukla and Mr. Saket Shubham, Advocates for Intervenor.
Cont'd.../ -2-
ORDER
(Virtual Mode)
08.02.2022: Heard Shri Abhishek Anand, learned counsel for the
Appellant, Shri Gaurav Mittra, learned counsel appearing for Respondent No.2
- Resolution Professional and Mr. Gautam Singhal, learned counsel appearing
for Respondent No.1.
2. One of the Member of Suspended Members has filed these two Appeals
against the orders dated 12.11.2021 and order dated 01.12.2021, respectively.
The CIRP proceedings were initiated by order dated 12.11.2021 on application
filed by Respondent No. 1 - 'Propertree Real Estate Solutions Pvt. Ltd.'. The
Company Appeal (AT) (Ins.) No. 950 of 2021 has been filed by suspended
Director challenging the order initiating the CIRP proceeding.
3. The Company Appeal (AT) (Ins) No. 1023 of 2031 has been filed against
order dated 01.12.2021. The case of the Appellant in Company Appeal (AT)
(Ins.) No. 1023 of 2021 is that there was settlement entered between the
Corporate Debtor and the Operational Creditor and email dated 24.11.2021
was issued to the IRP regarding the fee and expenses and again on 25.11.2021
an email was sent. In the email dated 25.11.2021, a request was made to the
IRP that the matter has been settled and he is requested to not constitute the
Committee of Creditors. He was also requested to send details of the CIRP
cost as on the date including the fee and expenses. It was also communicated
that an amount Rs.2 Lakhs drawn on IDBI Bank dated 22.11.2021 bearing
number 796335 has already been paid to the IRP in terms of order passed by
Company Appeal (AT) (Insolvency) No. 950 of 2021 & 1023 of 2021 -3-
the NCLT. The IRP replied by its email dated 25.11.2021 wherein it
communicated a total cost of Rs.31,01,484/-. After receiving the said email,
the Corporate Debtor as well as the Operational Creditor jointly filed an
application under Rule 11 of the NCLT Rules, 2016 seeking withdrawal of the
Company Petition. The said application was filed on 25.11.2021. The IRP
subsequently constituted the Committee of Creditors on 30.11.2021. When
the application came for consideration before the Adjudicating Authority on
01.12.2021, the Adjudicating Authority rejected the application observing that
Section 12A of the IBC makes it mandatory for the Applicant to file the
withdrawal application before this Adjudicating Authority with the approval of
CoC. Further it was observed that Regulation 30A(a) makes it mandatory for
Applicant to move withdrawal application through IRP. On these grounds the
Application was rejected.
4. Learned counsel for the Appellant challenging the order dated
01.12.2021 submits that in the present case the Corporate Debtor and the
Operational Creditor were compelled to file an application before the
Adjudicating Authority under Rule 11 of the NCLT Rules, 2016 because the
IRP has claimed a cost of Rs.31,01,484/- for a period of 15 days it was an
astronomical figure and IRP was not ready to file an application without the
said cost is paid. This was the reason due to which the Operational Creditor
and the Corporate Debtor has filed Application.
5. We have looked into the emails referred to by learned counsel for the
Appellant and email sent by the IRP which have been brought on record at
page 64 and 65 of the Company Appeal (AT)(Ins) No.1023 of 2021. Law is well
Company Appeal (AT) (Insolvency) No. 950 of 2021 & 1023 of 2021 -4-
settled that when application for withdrawal is filed before constitution of the
Committee of Creditors, the approval of the Committee of Creditors is not
required as contemplated in Section 12A. Present is a case where on
25.11.2021 although email was sent to the IRP by the Operation
Creditor and the Corporate Debtor, application for withdrawal was not filed by
the IRP. The present is case which clearly give the reason for exercise of
inherent powers under Rule 11 to be exercised by the NCLT to entertain the
application for withdrawal without it being filed through the IRP. When the
parties have settled and Committee of Creditors was not constituted till
25.11.2021, when application was filed before the Adjudicating Authority, it
could have considered the application since requirement of Section 12A was
not attracted by that time.
6. We, thus, are of the view that in view of the Operational Creditor and
the Corporate Debtor having settled on 25.11.2021, which is also admitted
before us, we see no reason for the CIRP proceedings not having withdrawn by
the Adjudicating Authority, in exercise of its jurisdiction.
7. Now coming to the cost which may be entitle to IRP/RP, we notice our
order dated 07.12.2021 when following interim order was passed by this
Tribunal:
"O R D E R
07.12.2021: Learned Counsel for the Appellant submits that in the present case CIRP proceedings were initiated on 12.11.2021 against which an Appeal
Company Appeal (AT) (Insolvency) No. 950 of 2021 & 1023 of 2021 -5-
being Company Appeal (AT) (Ins) No. 950 of 2021 was filed in which this Tribunal issued notice on 22.11.2021. It is submitted that on 25.11.2021, Appellant and Respondent No. 1 entered a settlement and executed Memorandum of Settlement which was informed to the IRP on the same date. However, the IRP hurriedly constituted the CoC on 30.11.2021. A Joint Application has been filed by the parties before the Adjudicating Authority about the settlement seeking permission of the Adjudicating Authority to settle the matter, which has been rejected by the impugned order. Learned Counsel for the Appellant also submitted that IRP intimated the parties about cost of 31 Lakhs and had insisted for deposit of the cost before the application can be filed by the IRP.
Issue Notice. Notice is accepted by Mr. Gautam Singhal, Advocate on behalf of Respondent No. 1. Ms. Shalya Agarwal, Advocate accepts notice on behalf of Respondent No. 2. No further notice needs to be issued on any of the Respondent.
Let reply be filed by the Respondents within two weeks. Rejoinder may be filed within further two weeks' time.
Shri Shubham Saket, Learned Counsel submits that he may be permitted to file Impleadment Application on behalf of the Home Buyers. He may do so within two weeks.
List the Appeal on 11th January, 2022.
In the meantime, we direct that in pursuance of insolvency resolution process initiated on 12.11.2021
Company Appeal (AT) (Insolvency) No. 950 of 2021 & 1023 of 2021 -6-
no further proceedings shall take place and IRP shall not proceed any further in the matter."
8. When this Tribunal on 07.12.2021 has stayed the entire CIRP, there was
no question of incurring any cost or claiming any fee after 07.12.2021. In view
of the accepted fact that fee amounting to Rs.2 Lakhs has already been paid
to the IRP, that should suffice towards payment of fee. With regard to
expenses till 07.12.2021, on submission of proper bills said bills shall be paid
by the Corporate Debtor. IRP may submit the necessary bills to the Corporate
Debtor for payment of necessary bills till 07.12.2021.
9. In above view of the matter, Company Appeal (AT) (Ins) No. 1023 of 2021
is allowed. The settlement entered between the parties in terms of application
filed on 25.11.2021 is accepted and the result is that CIRP stood withdrawn.
10. In view of order passed above, Company Appeal (AT) (Ins) No. 950 of
2021 has become infructuous. It goes without saying that the parties will be
bound by the settlement entered on 25.11.2021. Learned counsel for the
parties submit that they will abide by the settlement. Order accordingly.
[Justice Ashok Bhushan] Chairperson
[Dr. Ashok Kumar Mishra] Member (Technical)
[Dr. Alok Srivastava] Member (Technical) Archana/nn
Company Appeal (AT) (Insolvency) No. 950 of 2021 & 1023 of 2021
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