Rajeev Anand vs Sapan Mohan Garg (Huf)

Rajeev Anand ...Appellant

Versus

Sapan Mohan Garg (HUF) ...Respondent

Present:

For Appellant : Mr. Muneesh Malhotra, Mr. Rajat Bhardwaj, Ms. Manpreet Kaur, Advocates along with Ex-Management

For Respondent 1 : Ms. Stuti Vatsa, Advocate

ORDER

30.01.2019 The Appellant has challenged the order dated 2nd January,

2019 passed by the Adjudicating Authority (National Company Law

Tribunal), New Delhi Bench admitting the application u/s 7 of Insolvency &

Bankruptcy Code (I&B) filed by Respondent-Sapan Mohan Garg (HUF).

Learned Counsel appearing on behalf of the Appellant referring a

compromise reached between the parties on 28th December, 2018 submitted

that the parties had settled the claim. The application u/s 7 was not

maintainable as on the date of admission i.e. 02.01.2019 there was no debt

payable in the eye of law or in fact. It is further submitted that the Counsel

could not bring the matter of settlement to the notice of the Adjudicating Authority because of the intervening winter vacations and the order was

passed on the reopening date. The Respondent- Sapan Mohan Garg (HUF)

(Financial Creditor) has appeared and accepted that they have settled the

claim on 28.12.2018 and, therefore, the application as on 02.01.2019 was

not maintainable.

'Resolution Professional' Ms. Preeti Jaiswal has appeared in person.

She submits that she has incurredcost of Rs. 31,300/- towards publication

of announcement and advocacy. This apart she quoted fee of Rs. 5 lacs per

month which was approved by the 'Financial Creditor' (first Respondent.

She further submits that the Committee of Creditors has not yet been

constituted. Thus, we find that her fee and cost cannot be ascertained or

approved by the 'Committee of Creditors'. However, it is accepted that she

has worked for about 15 days.

Mr. Kapil Santhal, Mr. Hashmat Nabi, Mr. Shubham Goyal and Mr.

Manish Khurana, Advocates appeared on behalf of other creditors and

wanted to file affidavit stating that they have also filed the claim pursuant

to the notice. Mr. Hashmat Nabi, learned Counsel for the Punjab National

Bank submitted that the Bank has also filed an application under Insolvency

and Bankruptcy Code (I&B) which was adjourned for 5th February, 2019.

The 'Resolution Professional' Ms. Preeti Jaiswal submitted that the

bank has not filed any claim before the Resolution Professional inspite of

notice to them and inspite of the details of the claim.

The Hon'ble Supreme Court in its judgement dated 25th January, (Swiss

case), 2019 observed as under: -

"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 101 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 hearing all the concerned parties and

considering all relevant factors on the facts of each case."

From the aforesaid, it is clear that even before the constitution of the

'Committee of Creditors', the party can settle the matter with the 'Operational

Creditor' or the 'Financial Creditor'. This apart, we have already noticed that the

matter has already been settled between the first Respondent (Financial Creditor) and the 'Corporate Debtor' on 28.12.2018 and thereby the application u/s 7 was

not maintainable on 22.01.2019.

From the record, we find that there was pre-existing dispute. We

accordingly hold that the application u/s 7 preferred by the Respondent- Sapan

Mohan Garg (HUF) was not maintainable even on this count. We accordingly

set aside the impugned order.

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

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 Sapan Mohan Garg (HUF)

Respondent under Section 7 of the I&B Code is dismissed. The Adjudicating

Authority will now close the proceeding. The 'Corporate Debtor' is released from

all the rigour of law and is allowed to function independently through its Board of

Directors from immediate effect.

Taking into consideration the cost incurred by the 'Resolution Professional'

and that she has worked for about 15 days, we determine her fee at Rs. 2.5 lacs for

15 days and Rs. 32,000/- (rounded off towards cost), the total sum of Rs. 2,82,000/-

to be paid by the 'Corporate Debtor' to the 'Resolution Professional' within 30 days.

So far as other creditors are concerned we are not expressing any opinion.

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)

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