Rizwan Ahmad & Anr vs Sojitz India Pvt Ltd & Anr

Rizwan Ahmad & Anr. ...Appellants

Vs.

M/s. Sojitz India Pvt. Ltd. & Anr. ...Respondents

Present: For Appellants: - Mr. Amit Sibal, Senior Advocate with Ms. Ranjana Roy Gawai and Mr. Parvinder Tanwar, Advocates.

For Respondents: - Mr. Arun Kathpalia, Senior Advocate with Mr. Saket Sukla, Mr. Vasanth Rajasekaran and Ms. Soumya AK., Advocates.

O R D E R

11.03.2019─ This appeal has been preferred by the Appellants- Mr.

Rizwan Ahmad & Anr., Shareholder and Director of 'M/s. Oren

Hydrocarbons Private Limited'- ('Corporate Debtor') against the order

dated 12th February, 2019 passed by the Adjudicating Authority (National

Company Law Tribunal), Division Bench, Chennai, whereby and

whereunder, the application preferred under Section 9 of the Insolvency

and Bankruptcy Code, 2016 ("I&B Code" for short) filed by 'M/s. Sojitz

India Private Limited'- ('Operational Creditor') has been admitted, order

of 'Moratorium' has been passed and 'Interim Resolution Professional'

has been appointed.

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2. On 22nd February, 2019, when the matter was taken up, following

order was passed:

"22.02.2019 According to counsel for the

Appellant, the relationship between the parties is

not that of 'Corporate Debtor' or the 'Operational

Creditor' but as a business partner. Further,

according to him, there is a pre-existing dispute.

Learned counsel further submits that the

Appellants are ready to settle the claim with the

first Respondent and time should be allowed for

such settlement, as the Interim Resolution

Professional has not yet constituted the Committee

of Creditors'.

Mr. Vasant Rajshekharan, Advocate accepts

notice on behalf of 1st Respondent. No further

notice need be issued to him. The first Respondent

may file reply-affidavit within 7 days. Rejoinder,

if any, be filed within 7 days thereof.

Let notice be issued on rest of the

Respondent by speed post and by Dasti. Requisite

along with process fee, if not filed, be filed by 25th

February, 2019. If the appellants provide the e-

Company Appeal (AT) (Insolvency) No. 170 of 2019 3

mail address of rest of the respondent, let notice

be also issued through e-mail.

Post the case 'for Orders' on 11th March,

2019.

Until further order, the Interim Resolution

professional will not constitute Committee of

Creditors, if not constituted, to enable the

Appellants to settle the claim with the first

Respondent.

However, the Interim Resolution Professional

(IRP) will ensure that the company remains going

concern and the manufacturing and production of

the company do not suffer; payment of wages to

the employees/ workmen are made on time and if

any material is supplied during corporate

resolution process, the payment should be paid to

the supplier/ creditor. The Insolvency Resolution

Professional will also take aid of (suspended)

Board of Directors and the officers and the

employees. The Banks having account of the

corporate debtor will also cooperate with the

Insolvency Resolution Professional to ensure

compliance of this order."

Company Appeal (AT) (Insolvency) No. 170 of 2019 4

3. Learned counsel appearing on behalf of the Appellants submits

that the matter has been settled by agreement dated 8th March, 2019

prior to the constitution of the 'Committee of Creditors'. It is also accepted

by the learned counsel appearing on behalf of the Respondent-

('Operational Creditor').

4. The 'Terms of Settlement' of the agreement has been enclosed in

terms of which the amount will be paid by the Appellant to the

'Operational Creditor' in terms of clause 1.1 of the settlement agreement,

which reads as follows:

"1.1 OREN hereby undertakes and confirms that

it shall, and RA and RK hereby undertake and

assure SJI that they shall take all such actions

as may be necessary to ensure that OREN pays

an amount of INR 24,27,64,004 ("Settlement

Amount") to SJI, without any deductions,

reductions or set-offs whatsoever, in the

respective amounts set out in the second column

of the following table (each such amount being

referred to as "Instalment") and in the

scheduled dates set out against each Instalment

in third column of the following (each such

amount being referred to as "Due Date"):

Company Appeal (AT) (Insolvency) No. 170 of 2019 5

S.No. Instalment (INR) Due Date

1. 7,00,00,000 ("First Instalment") 8 April 2019

2. 6,00,00,000 ("Second Instalment") 8 May 2019 (if such day is not a business day for banks in New Delhi (Business Day) then the next Business Day

3. 6,00,00,000 ("Third Instalment") 7 June 2019 (if such day is not a Business Day for banks in New Delhi then the next Business Day)

4. 5,27,64,004 ("Final Instalment") 8 July 2019 (if such day is not a Business Day for banks in New Delhi then the next Business Day)

5. In the case of "Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India

& Ors.', Writ Petition (Civil) No. 99/2018 (2019 SCC OnLine SC 73)",

the Hon'ble Supreme Court observed and held:

"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

Company Appeal (AT) (Insolvency) No. 170 of 2019 6

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

Rule11 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."

6. In view of the aforesaid fact, while we are not going into the

question of relationship between the 'Corporate Debtor' and the

Respondents or whether there was a pre-existence of dispute or not, allow

the prayer of the Respondents to withdraw the application in view of the

agreement reached subject to compliance of the agreement by the

Appellants.

7. In the circumstances, while we direct the parties particularly the

Appellants to comply with the 'Terms of Settlement' dated 8th March,

2019 and pay the amount within the period as mentioned therein, we set

aside the impugned order dated 12th February, 2019 passed by the

Adjudicating Authority and dispose of the application under Section 9

filed by the 'Operational Creditor' as withdrawn.

Company Appeal (AT) (Insolvency) No. 170 of 2019 7

8. In effect, order (s), passed by the Adjudicating Authority declaring

moratorium and action, if any, taken by the 'Interim Resolution

Professional' all such orders and actions are set aside. The 'Corporate

Debtor' (company) is released from all the rigour of law and is allowed to

function independently through its Board of Directors with immediate

effect.

9. The matter is remitted to the Adjudicating Authority for

determination of the fee of the 'Interim Resolution Professional'; the

'Corporate Debtor' will pay the same.

10. We make it clear that in case agreement is not complied with in its

letter and spirit, it will be open to the Respondents not only to file a

petition for contempt for flouting the direction of this Appellate Tribunal,

it will also be open to the Respondents to revive the prayer for any

proceeding under 'Corporate Insolvency Resolution Process' and request

this Appellate Tribunal to recall the order and to dismiss the appeal for

non-compliance.

The appeal stands disposed of with aforesaid observations and

directions. No cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) Member(Judicial) Ar/g

Company Appeal (AT) (Insolvency) No. 170 of 2019