Prakash Assar vs Mrs. Meena Sakariya Anr
- CitationCompany Appeal (AT) (Insolvency) No. 677 of 2023
Ratio decidendi
The rule this decision rests on
Where a Section 9 application is filed and the corporate debtor's prior non-compliance with a settlement arrangement, together with its failure to meaningfully reduce the claimed debt after filing, establishes both debt and default, the Adjudicating Authority is right to admit the application; a part-payment made after filing that does not materially mitigate the debt and default does not displace that conclusion. Where the corporate debtor expresses willingness to settle, the appropriate course is for the appellant to enter into a settlement with the operational creditor and apply under Section 12A to the Adjudicating Authority, which is to consider the application in accordance with law; pending that, a short time may be granted during which the Interim Resolution Professional does not constitute the Committee of Creditors, failing which the CIRP proceeds in accordance with law.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Prakash Assar ...Appellant
Versus
Meena Sakariya & Anr. ...Respondents
Present: For Appellant: Mr. Abhinav Agrawal, Advocate. For Respondents: Mr. Anoop Prakash Awasthi, Advocate for R-2 (RP).
ORDER
24.05.2023: Heard learned counsel for the parties. This Appeal has
been filed against the order dated 12.05.2023 by which the Section 9
application filed by the Operational Creditor has been admitted. The
Appellant is Suspended Director of the Corporate Debtor.
2. It is submitted by learned counsel for the Appellant that even prior to
filing of the Section 9 application MOU was entered between the parties on
05.09.2019, under which MOU payment of Rs.11,53,544/- was made. It is
submitted that after filing of the application also Corporate Debtor has made
payment of Rs.6,00,000/-. It is submitted that the Appellant is ready to settle
with the Operational Creditor and an opportunity be given to the Corporate
Debtor to make settlement.
3. We have considered the submissions of learned counsel for the parties
and perused the record.
Cont'd.../ 2
4. Section 9 application was filed by the Operational Creditor claiming an
amount of Rs.1,60,82,805/-. The fact that even prior to filing of the
application an MOU was entered between the parties which was not honoured
by the Corporate Debtor, clearly indicate that the Corporate Debtor is unable
to pay the dues. After filing of the application, only Rs.6 Lakhs, as claimed
by the Appellant, does not in any manner mitigate the amount of debt and
default. Present is a case where debt and default are clearly proved, hence,
the Adjudicating Authority committed no error in admitting Section 9
application.
5. Insofar as submission of learned counsel for the Appellant that
Corporate Debtor is still willing to settle the matter, it is open for the Appellant
to enter into settlement with the Operational Creditor and file appropriate
application under Section 12A before the Adjudicating Authority, which may
be considered and decided by the Adjudicating Authority in accordance with
law. For enabling the Appellant to settle the matter, we allow 30 days' time
during which period the IRP shall not constitute the CoC, if not already
constituted. However, after 30 days in event no settlement is reached, the
IRP shall proceed to constitute the CoC and continue CIRP process in
accordance with law. Subject to above, the Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical) Archana/nn
Company Appeal (AT) (Insolvency) No. 677 of 2023
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