S. Venkatasubramaniam vs Anitha Kumaran & Anr

Mr. S. Venkatasubramaniam ...Appellant

Vs

Ms. Anitha Kumar & Anr. ....Respondents

Present:

For Appellant: Ms. Anannya Ghosh, Advocates

For Respondents: Mr. Arun Mohan, Mr. K.V. Balakrishnan and Ms. Prashanti, Advocates.

ORDER

11.02.2019 Mr. Anita Kumaran and Mr. K. Kumaran ("Financial

Creditors') have filed an application under Section 7 of Insolvency & Bankruptcy

Code, 2016 (hereinafter referred to as "I&B Code') for initiation of 'Corporate

Insolvency Resolution Process' against M/s K.G.S. Developers Ltd ('Corporate

Debtor'). The application having admitted on 3rd January, 2019, Mr.

Venkatasubramaniam, one of the Directors (Appellant herein) has preferred this

Appeal against the said order.

2. Earlier when the matter was take up, this Appellate Tribunal noticed the

submissions made on behalf of the Appellant that the Respondent Nos. 1 & 2 do

not come within the meaning of "Financial Creditor". Subsequently, on 8th

February, 2019 when Respondent Nos. 1 & 2 appeared, learned Counsels for

both the parties submitted that they have already settled the claims and 'Terms

of Settlement' will be brought on record on the next date.

Company appeal (AT)(Insolvency) No. 59 of 2019 Page 1 of 3

Today, an Interlocutory Application has been filed in the Court stating that

the 'Terms of Settlement' has been reached on 7th February, 2019. A copy of

'Terms of Settlement' dated 7th February, 2019 has also been filed. The office is

directed to keep Interlocutory Application and 'Terms of Settlement' in the

records of file.

3. Learned Counsel appearing on behalf of the Appellant submits that before

the constitution of Committee of Creditors, settlement has been reached. It is

also accepted by the learned Counsel appearing on behalf of Respondent Nos. 1

& 2. It is stated that Interim Resolution Professional, though appointed, has not

taken any step for constitution of Committee of Creditors.

4. In view of the fact that the parties have settled the matter by settlement,

Memorandum of Compromise dated 7th February, 2019 has been signed prior to

the constitution of Committee of Creditors and in view of the decision of the

Hon'ble Supreme Court in "Swiss Ribbons Pvt. Ltd & Anr. Vs. Union of India

& Ors" in Writ Petition(C) No. 99 of 2018 at paragraph 52 therein, we allow the

settlement and set aside the impugned order dated 3rd January, 2019 passed by

the Adjudicating Authority (National Company Law Tribunal), Chennai Bench,

Chennai in CP/678/IB/2018.

5. In effect, order passed by the Adjudicating Authority appointing any

'Interim Resolution Professional', declaring moratorium, freezing of account, and

all other order(s) passed by the Adjudicating Authority pursuant to impugned

order and action, taken by the 'Interim Resolution Professional', including the

advertisement, if any, published in the newspaper calling for applications all

Company appeal (AT)(Insolvency) No. 59 of 2019 Page 2 of 3 such orders and actions are declared illegal and are set aside. The application

preferred by Respondent under Section 9 of the I & B Code, 2016 is dismissed.

Learned Adjudicating Authority will now close the proceeding. The 'Corporate

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

independently through its Board of Directors from immediate effect.

6. The Adjudicating Authority will fix the fee of 'Interim Resolution

Professional', if appointed, and the 'Corporate Debtor' will pay the fees of the

'Interim Resolution Professional', for the period he has functioned as per the

decision of the Committee of Creditors after adjusting the amount already paid,

if any.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial) Akc/Gc

Company appeal (AT)(Insolvency) No. 59 of 2019 Page 3 of 3