Pawan Sethi Shareholder Of Pcl And ... vs Union Bank Of India & Anr
- CitationCompany Appeal (AT) (Insolvency) No.1638 of 2023
Ratio decidendi
The rule this decision rests on
Where a financial creditor has sanctioned a one-time settlement (OTS) of the debt before the Adjudicating Authority admits an application under Section 7, the subsisting debt and default on which that application rests are no longer capable of supporting admission, so the Section 7 application cannot be sustained and the admission order must be set aside.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Pawan Sethi Shareholder Of PCL Oil and Solvents Ltd. & Ors. ...Appellant
Versus
Union Bank of India & Anr. ...Respondents
Present: For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Rajat Sinha, Ms. Arveena Sharma, Ms. Komal Abrol and Ms. Pooja Mahajan, Advocates. For Respondents: Mr. Sanjay Bajaj and Mr. Shivam Thakkar, Advocates.
ORDER
15.12.2023: This Appeal arises out of order dated 04.12.2023 which has
been passed by the Adjudicating Authority admitting Section 7 application
filed by the Union Bank of India. The Bank has filed the application alleging
debt and default. The Adjudicating Authority heard the parties and reserved
the order on 15.09.2023. After the order was reserved, an OTS was sanctioned
by the Bank on 04.10.2023, which letter has been brought on the record at
page 76, where Bank has sanctioned the OTS. The said letter was brought to
the notice of the Adjudicating Authority by I.A. No. 5018 of 2023, by other
shareholder of the Corporate Debtor where the deferment was sought of the
pronouncement. However, the Adjudicating Authority by the impugned order
pronounced the order admitting Section 7 application.
2. We have heard learned counsel for the Appellant as well as learned
counsel appearing for the Bank.
Cont'd.../ -2-
3. It is not disputed by learned counsel for the Bank that Bank has
sanctioned the OTS on 04.10.2023. In view of the sanction of OTS it cannot
be said that there was any debt or default enabling the Financial Creditor to
proceed under Section 7. We, thus, are of the view that order dated
04.12.2023 is unsustainable. Order dated 04.12.2023 is set aside and Section
7 application filed by the Bank is dismissed. Liberty is granted to the Bank to
revive this appeal as and when any occasion arises. Appeal is disposed of
accordingly.
[Justice Ashok Bhushan] Chairperson
[Arun Baroka] Member (Technical) Archana/nn
Company Appeal (AT) (Insolvency) No.1638 of 2023
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