Neeraj Walia Suspended Board Of ... vs Idbi Trusteeship Services Limited And ...
- CitationCompany Appeal (AT) (Ins) No. 377 of 2024
Ratio decidendi
The rule this decision rests on
The appellant's own statement that it is pursuing settlement of the financial creditor's claim amounts to an acceptance of the existence of debt and default; where the corporate debtor has accepted both, a finding by the Adjudicating Authority that debt and default are proved cannot be faulted, and the admission of a Section 7 application cannot be set aside on that ground. Interim protection that has been extended over a long period, and that holds up the Corporate Insolvency Resolution Process, is not a basis for keeping an appeal pending; the court may close the appeal, uphold the order of admission, and direct that the CIRP proceed in accordance with law. A corporate debtor retains the right, notwithstanding the admission of the Section 7 application and the continuation of the CIRP, to submit a settlement proposal under Section 12A of the Insolvency and Bankruptcy Code, 2016, which is to be considered in accordance with Section 12A and Regulation 30 of the CIRP Regulations, 2016.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE MATTER OF: Neeraj Walia ...Appellants Suspended Board of Director of Shipra Estate Ltd. Versus IDBI Trusteeship Services Ltd. & Anr. ...Respondents
Present: For Appellant : Mr. Abhishek Anand, Mr. Karan Kohli, Mr. Rudra Pratap, Mr. Tushar Randhawa, Ms. Palak Kalra, Ms. Shivani Gera, Mr. Rajat Gupta, Advocates. For Respondents : Mr. Sumesh Dhawan, Mr. Abhirup Dasgupta, Mr. Ishaan Duggal, Ms. Ruchi Goyal, Mr. Shaurya Shyam and Ms. Kavya Tekriwal, Advocates for R1. Mr. Rishi Kumar Singh Gawthan, Mr. Tamilarasan Varadarasan, Advocates for R2. Mr. Abhinav Mukerji, Ms. Rushali Agarwal and Mr. Harsh Kesharia, Advocates for R3.
ORDER
(Hybrid Mode)
30.07.2025: Heard counsel for the Appellant, Ld. Counsel appearing for
the Respondent and Mr. Mukherjee appearing for Intervenor.
2. This appeal has been filed against the order passed on 24.01.2024 by
which order National Company Law Tribunal, New Delhi Bench, Court-IV has
admitted Section 7 application filed by IDBI Trusteeship Service Limited
finding debt and default on the part of the Corporate Debtor. The appeal has
been filed by the suspended board of director of M/s Shipra Estate Limited
when the appeal came for consideration interim order was passed on which
date counsel for the appellant submits that appellant has reached to the
Financial Creditor and settlement is likely to take place on which interim order was passed on 21.02.2024. The subsequent to 21.02.2024 on several
dates the matter was taken and interim order was extended, some of the
order sheets recorded the appellant's statement that settlement is under
process. On 24.05.2025 it was stated before the Court that Committee of
Creditors has already been constituted, it was observed that in event the
settlement proposal is placed before the CoC for approval of 90% of CoC to
adopt Section 12A process. On 24.05.2025 following order was passed:-
"O R D E R (Hybrid Mode) 24.05.2024: In this Appeal on 21.02.2024, we passed following order:
"O R D E R (Hybrid Mode) 21.02.2024: Learned counsel for the Appellant submits that the Appellant has reached out to the Financial Creditor and settlement is likely to take place. Learned counsel for the Financial Creditor does not dispute the statement. Parties pray that appeal be taken after three weeks. Learned counsel for the Resolution Professional submits that the CoC has already been constituted.
List this Appeal on 14.03.2024.
In the meantime, no further steps shall be taken in pursuance of the impugned order.
2. In the order it has been noted that CoC has already been constituted. Learned counsel for the Appellant submitted that Appellant is likely to settle with the Financial Creditor.
3. Two Intervention Application have also been filed and now in view of CoC having been constituted, there has to be approval of 90% of CoC for settlement of any claim.
3. In view of the above, the order dated 21.02.2024 is modified as "CoC may proceed and it will be open for the Appellant to
2 of 4 Company Appeal (AT) (Ins) No. 377 of 2024 place settlement proposal before the CoC for approval of 90% of the CoC to adopt Section 12A process".
4. Let Reply be filed by the Respondents within three weeks.
5. Shri Ramji Srinivasan, learned counsel for the IIFL seeks liberty to file an Intervention Application. Intervention Application may be filed within three weeks.
6. List this Appeal on 10.07.2024."
Subsequently, on 10.07.2024 again matter was adjourned to
29.08.2025 and interim protection was extended. The interim order has been
continuing from time to time. On 29.08.2024 it was noticed that the proposal
was given to the CoC. On perusal of the different order sheets, orders passed
in the matter from time to time indicate that the interim order was continued
from time to time and today when the appeal was taken for hearing Ld.
Counsel for the appellant submitted that 12A proposal has been given to the
IRP on 20.07.2025. Ld. Counsel for the IRP submits that there was certain
shortcoming in the proposal hence it was returned back to the financial
creditor on 24.07.2025.
3. Ld. Counsel for the appellant submitted that appellant shall resubmit
the proposal of 12A to the IRP. Ld. Counsel for the Financial Creditor submits
that for last more than a year opportunity was taken to submit 12A
application and on that ground the interim order has been continuing by
which the entire CIRP Process is held up. It is submitted that in event the
proposal is accepted by the CoC by 90%, application for withdrawal can be
filed by the Financial Creditor and process under 12A can take place for
withdrawal in accordance with law but that cannot be a ground to keep the
appeal pending and continue the interim order for last more than a year.
3 of 4 Company Appeal (AT) (Ins) No. 377 of 2024
4. The statement made on behalf of the appellant that proposal are being
submitted for settlement itself accept the debt and default hence we do not
find any error in the finding of Adjudicating Authority holding that debt and
default is proved. Hence, the admission of Section 7 proceedings cannot be
faulted. This court has granted enough opportunity to the appellant to file
application under Section 12A on the ground that the appellant has settled
with the Financial Creditor. Ld. Counsel for the Financial Creditor submits
that the proposal submitted by the appellant is not acceptable to the CoC.
The statement has made by the counsel for the CoC that proposal is not
acceptable to the CoC.
5. In view of the facts as noted above, we are of the view that the ends of
justice be served in closing the appeal by up-holding the order of admission
dated 24.01.2024, the CIRP may proceed in accordance with law. The
appellant shall at liberty to submit 12A proposal which may be considered in
accordance with Section 12A and Regulation 30 of the CIRP Regulation, 2016.
Subject to the above, Appeal is dismissed.
Ld. Counsel for the appellant submits that he shall take steps to file
12A application within two weeks.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical) harleen/NN
4 of 4 Company Appeal (AT) (Ins) No. 377 of 2024
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