Rahul Singhwal vs Sarvottam Rolling Mills (P) Ltd

Rahul Singhwal ...Appellant

Versus

M/s. Sarvottam Rolling Mills (P) Ltd. & Anr. ...Respondents

Present:

For Appellant : Mr. Rajeev Ranjan, Senior Advocate assisted by Mr. Ramanjit Singh and Mr. Upender Singh, Advocates

For Respondent : Mr. Arjun Sanjay, Advocate Mr. Rohit Rathi, Advocate for R.P.

ORDER

08.02.2019 Respondent - 'M/s. Sarvottam Rolling Mills (P) Ltd.' filed an

application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for

short, 'I&B Code') for initiating 'corporate insolvency resolution process' against

M/s. Panchsheel Realtech Pvt. Ltd (Corporate Debtor). The application preferred

by the Director/Shareholder has been admitted by the Adjudicating Authority

(National Company Law Tribunal), New Delhi Bench by impugned order dated

17th December, 2018.

2. Learned counsel appearing on behalf of the appellant submits that there

is a 'pre-existing dispute' about supply of material, for which reliance has been

placed on copy of the FIR enclosed at page 138. It is also submitted that

'Committee of Creditors' has not been constituted and before that parties have 2

settled the claim. Reliance has been placed on the decision of the Hon'ble

Supreme Court in 'Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.

- Writ Petition (Civil) No. 99 of 2018', wherein Hon'ble Supreme Court

observed as follows:

"52. It is clear that once the Code gets triggered by

admission of a creditor's petition under Sections 7

to 9, the proceeding that is before the Adjudicating

Authority, being a collective proceeding, is a

proceeding in rem. Being a proceeding in rem, it is

necessary that the body which is to oversee the

resolution process must be consulted before any

individual corporate debtor is allowed to settle its

claim. A question arises as to what is to happen

before a committee of creditors is constituted (as per

the timelines that are specified, a committee of

creditors can be appointed at any time within 30

days from the date of appointment of the interim

resolution professional). We make it clear that at

any stage where the committee of creditors is not

yet constituted, a party can approach the NCLT

directly, which Tribunal may, in exercise of its

inherent powers under Rule 11 of the NCLT Rules,

2016, allow or disallow an application for

withdrawal or settlement. This will be decided after

Company Appeal (AT) (Insolvency) No. 21 of 2019 3

hearing all the concerned parties and considering

all relevant factors on the facts of each case."

3. Mr. Arjun Sanjay, learned counsel appearing on behalf of the respondent

- 'M/s. Sarvottam Rolling Mills (P) Ltd. ('Operational Creditor') accepts that the

parties have settled the matter. Mr. Rohit Rathi, learned counsel appearing on

behalf of the 'Resolution Professional' also accepts that the 'Committee of

Creditors' had not been constituted before the parties settled the matter. He

further submits that a sum or Rs. 8.37 Lakhs is payable to Mr. Rameshwar

Dayal, 'Resolution Professional' towards the fee and the cost incurred.

4. Having heard the learned counsel for the parties and taking into

consideration that the parties have settled the matter prior to constitution of the

'Committee of Creditors' and 'pre-existing dispute' as emanating from the FIR

enclosed at page 138, we set aside the impugned order dated 17th December,

2018.

5. In effect, order (s) passed by Ld. Adjudicating Authority appointing

'Resolution Professional', declaring moratorium, freezing of account and all other

order (s) passed by Adjudicating Authority pursuant to impugned order and

action taken by the 'Resolution Professional', including the advertisement

published in the newspaper calling for applications all such orders and actions

are declared illegal and are set aside. The application preferred by the 1st

Respondent under Section 9 of the I&B Code is dismissed. The Adjudicating

Authority will now close the proceeding. The 2nd Respondent Company is

released from all the rigour of law and is allowed to function independently

through its Board of Directors from immediate effect.

Company Appeal (AT) (Insolvency) No. 21 of 2019 4

6. So far as the fee and cost of 'Resolution Professional' is concerned, we allow

Rs. 8.37 lakhs and direct the 'corporate debtor' to pay the amount within two

weeks. The appeal is allowed with aforesaid observation and direction. However,

in the facts and circumstances of the case, there shall be no order as to cost.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial)

/ns/uk/

Company Appeal (AT) (Insolvency) No. 21 of 2019