Sachin Malde vs Hemant Nanji Chheda And Anr
- CitationCompany Appeal (AT) (Insolvency) No. 123 of 2024
Ratio decidendi
The rule this decision rests on
Where, after public announcement under the Insolvency and Bankruptcy Code, no claims are received from any creditor other than the financial creditor who has already settled its claim, and the corporate debtor has no other creditors, the Tribunal may dispense with the requirement of a Section 12A withdrawal application as an empty formality and close the insolvency proceedings in the exercise of its inherent power, as the Supreme Court's decision in GLAS Trust Company LLC v. BYJU Raveendran recognises that such power may be exercised in appropriate cases. Where a financial creditor and the corporate debtor have settled the entire claim and the settlement is brought on record, the Tribunal may set aside the admission order and close the insolvency proceedings against the corporate debtor. Where insolvency proceedings are closed, the expenses incurred by the interim resolution professional during the period of the stayed admission, including publication expenses, are to be borne jointly by the financial creditor and the corporate debtor.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE MATTER OF: Sachin Malde ...Appellant
Versus
Hemant Nanji Chheda & Anr. ...Respondents
Present: For Appellant : Mr. Krishnendu Datta, Sr. Advocate with Mr. Anish Agarwal, Mr. Tejas Agarwal and Mr. Pratik Chakma, Advocates For Respondent : Mr. Rishi Kumar Singh Gautam, Advocate for R-2. Mr. Kartik Pandey, Advocate for R-1. ORDER
(Hybrid Mode)
02.04.2025 Heard Learned Counsel for the Appellant. Learned
Counsel appearing for the Respondent - Financial Creditor as well as Learned
Counsel for the RP.
2. This Appeal have been filed challenging the order passed by the
Adjudicating Authority dated 02.01.2024 admitting Section 7 Application filed
by the Financial Creditor - Hemant Nanji Chheda. In this appeal, an interim
order was passed by this Tribunal on 19.01.2024. The following order was
passed:
"19.01.2024: Learned counsel for the Appellant submits that the Appellant has filed an application raising maintainability of the application, hence, no reply was filed. It is submitted that the statement recorded by the Adjudicating Authority in the order dated 23.11.2023 that the Corporate Debtor does not wish to file any reply was not correct recording and an application has been filed for modification of the order dated 23.11.2023, which application is pending. It is submitted that without there being defence of the Appellant - Corporate Debtor, the Adjudicating Authority has admitted Section 7 application.
Learned counsel for the Appellant submits that to show his bonafide, the Appellant is ready to deposit amount of Rs.5 Crore before this Tribunal.
Let the amount of Rs.5 Crore be deposited by way of Bank Draft in the name of Registrar, NCLAT during the course of the day.
Issue notice. Let Reply be filed by the Respondents within to weeks. Rejoinder be filed within two weeks' thereafter.
List this Appeal on 14.02.2024.
In the meantime, the impugned order dated 02.01.2024 shall remain stayed.
This is without prejudice to the rights and contentions of both the parties."
3. An I.A. have been filed being I.A. No.1617 of 2025 by the Appellant
bringing on record, settlement / consent terms between the parties dated
02.01.2024 under which the Financial Creditors has agreed to receive amount
of Rs.5,00,00,000/- deposited under the orders of this Court to settle the
entire claim.
4. Learned counsel for the Appellant submits that in pursuance of the
order admitting Section 7 Application, RP had issued a publication invited
claims. Learned Counsel for the RP submits that no claims have been received
Company Appeal (AT) (Insolvency) No. 123 of 2024 2 of 4 except the claim of Financial Creditor there are no other creditors in the
Corporate Debtor.
5. Learned Counsel for the Appellant submits that in view of the fact that
after the publication made by the RP no claims have come therefore, there are
no other creditors, hence, there is no necessary to ask the Financial Creditor
to file a Section 12A Application which shall only be an empty formality, since
there are no other creditors and Financial Creditor has already settled. We
are of the view, that in the facts of the case as noticed above, there is no
necessity to ask the Financial Creditor to file 12A Application. The judgment
of Hon'ble Supreme Court in GLAS Trust Company LLC Vs. BYJU
Raveendran & Ors. in Civil Appeal No. 9986 of 2024 also lays down that
in appropriate cases inherent power can be exercised to close the proceedings.
6. In facts of the present case, we are of the view that in view of the
settlement between the parties brought on record the proceedings of
insolvency against the Corporate Debtor need to the closed. The impugned
order is set aside. The amount deposited in the registry under the orders of
this Court shall be paid to the Respondent No.1.
7. Learned Counsel for the Financial Creditor submits that they have
already deposited Rs. 3,00,000/- the IRP to take care of his fee & expensed
and the order having been stayed on 19.01.2024 no further steps had been
taken place. In view of the aforesaid, we are of the view that the Financial
Company Appeal (AT) (Insolvency) No. 123 of 2024 3 of 4 Creditor need to pay the expenses incurred by the IRP during the aforesaid
period including the expanses for publication. The Financial Creditor as well
as the Appellant shall jointly share the expenses of the IRP. IRP may
communicate his expenses within two weeks from today, which shall be paid
within four weeks.
The Appeal is disposed of.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical)
[Arun Baroka] Member (Technical) pks/nn
Company Appeal (AT) (Insolvency) No. 123 of 2024 4 of 4
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free