Sankararaman Vaidyanathan vs Val-Met Engineering Pvt Ltd & Anr

Mr. Sankararaman Vaidyanathan ...Appellant

Versus

M/s. Val-Met Engineering Pvt. Ltd. & Anr. ...Respondents

Present: For Appellant : Mr. Nikhil Nayyar, Senior Advocate with Mr. Anil Kaushik, Mr. Anand Sashidharan and Mr. Abhishek Mishra, Advocates

For 1st Respondent: Mr. Arun Kathpalia, Senior Advocate with' Mr. Ravi Raghunath and Ms. Aakashi Lodha, Advocates

For 2nd Respondent : Ms. Bhavana Duhoon, Advocate for Interim Resolution Professional

ORDER

06.12.2019 'M/s. Val-Met Engineering Private Limited' moved an

application under Section 7 of the 'Insolvency and Bankruptcy Code, 2016 (for

short, 'the I&B Code') for initiation of 'Corporate Insolvency Resolution Process'

against 'M/s. Trusted Aerospace Engineering Private Limited'. The Adjudicating

Authority (National Company Law Tribunal), Single Bench, Chennai by

impugned order dated 21st June, 2019 admitted the application.

2. On 4th July, 2019 learned counsel appearing on behalf of the Appellant -

'Mr. Sankaraman Viadyanathan, Promoter of 'M/s. Trusted Aerospace

Engineering Private Limited' (Corporate Debtor) initially submitted that the

Respondent cannot be treated as 'Financial Creditor' as earlier it had issued 2

Demand Notice under Section 8(1) of the 'I&B Code' and claimed as an

'Operational Creditor'. Notices were issued and 1st Respondent had already

appeared and in view of the stand taken, the constitution of the 'Committee of

Creditors' was stayed. However, the 'Interim Resolution Professional' was

allowed to ensure that the 'Corporate Debtor' remains a going concern.

3. Subsequently on 6th August, 2019, when the matter was taken up, learned

counsel for the Appellant and the Respondent submitted that the parties are

negotiating for amicable settlement. On their request the appeal was adjourned

and we allowed the Respondent to file reply-affidavit along with 'Terms of

Settlement'.

4. On 19th September, 2019, learned counsel for the Appellant submitted

that no settlement has been reached between the parties. However, on behalf of

the Appellant it was submitted that the Appellant was ready to deposit the total

claim amount of Rs. 2.13 crores for settlement. He requested to keep that

amount with the Registrar, NCLAT and on the said date, the following order was

passed :

"It is informed that the Appellant has not

settled the matter with the Respondents.

Learned Counsel for the Appellant submits

that the Appellant is ready to deposit the total

amount of Rs.2.13 crores as claimed by

Respondent - Val-Met Engineering Private

Limited in the account of the Registrar, NCLAT.

We are not inclined to accept such oral offer. The

Appellant may give such offer to the Val-Met

Company Appeal (AT) (Insolvency) No. 675 of 2019 3

Engineering Private Limited ('Financial Creditor')

and may deposit the amount with them, who may

keep it in a separate 'Interest Bearing' account. If

the amount is deposited within 10 days, we will

look into the matter whether to allow the Val-Met

Engineering Private Limited to withdraw the

application under Section 7.

Post the case 'for orders' on 17th October,

2019 at 02:00 P.M.

In the meantime, the 'Interim Resolution

Professional' will ensure that the Company

remains a going concern and will take assistance

of the (suspended) Board of Directors, paid

Director and the employees. The person who is

authorised to sign the bank cheques may issue

cheques only after authorization of the 'Interim

Resolution Professional'. The bank accounts of

the Corporate Debtor be allowed to be operated

for day-to-day functioning of the Company such

as for payment of current bills of the suppliers,

salaries and wages of the paid Director, the

employees'/workmen electricity bills etc.

The 'Interim Resolution Professional' will

not constitute the 'Committee of Creditors' till

30th September, 2019 to enable the Appellant to

Company Appeal (AT) (Insolvency) No. 675 of 2019 4

deposit the amount with the Respondent as

ordered above, failing which, the 'Interim

Resolution Professional' will constitute the

'Committee of Creditors' w.e.f. 1st October, 2019."

5. Learned counsel for the Appellant informed that a sum of Rs. 2.13 crores

has already been deposited with the Respondent - 'M/s. Val-Met Engineering

Pvt. Ltd.'. It is also accepted by the learned counsel appearing on behalf of the

Respondent - 'M/s. Val-Met Engineering Pvt. Ltd.'. Learned counsel for the

Respondent further informs that the Respondent intends to withdraw the

application filed under Section 7 of the 'I&B Code'.

6. At this stage the learned counsel for the Appellant wanted to argue on

merit that the claim is barred by limitation. However, we are not inclined to

decide the issue in the present case in view of the stand taken by the parties that

they intend to settle the matter and claim amount have already been paid.

7. From the earlier orders, it is evident that the Appellant intended to settle

the matter with the Respondent. Finally, on 19th September, 2019 when we

noticed that the matter has not been settled, it is the Appellant who was ready

to deposit the total amount of Rs. 2.13 Crores as claimed by Respondent - 'M/s.

Val-Met Engineering Pvt. Ltd.', we allowed "to give such offer to 'M/s. Val-Met

Engineering Pvt. Ltd.' (Financial Creditor) and may deposit with them". However,

we directed the Respondent to keep the same in a separate 'interest bearing

account'. It was also made clear that if the amount is deposited within 10 days,

then this Appellate Tribunal will decide whether to allow the 'M/s. Val-Met

Engineering Pvt. Ltd.' to withdraw the application under Section 7 of the 'I&B

Company Appeal (AT) (Insolvency) No. 675 of 2019 5

Code'. Today, Respondent having agreed to withdraw the application filed under

Section 7, we are not inclined to accept such plea taken by the Appellant.

8. In the circumstances, following the decision of the Hon'ble Supreme Court

in ''Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.- '2019 SCC

Online SC 73' to ensure that the 'Corporate Debtor' - 'M/s. Trusted Aerospace

Engineering Private Limited' does not go through the rigour of the 'Corporate

Insolvency Resolution Process' , the claim amount having already settled, we

exercise power under Rule 11 of the NCLAT Rules, 2016, set aside the impugned

order dated 21st June, 2016 and allow the Respondent - 'M/s. Val-Met

Engineering Pvt. Ltd.' to withdraw the application under Section 7 of the I&B

Code. The amount of Rs. 2.13 crores paid to the Respondent - 'M/s. Val-Met

Engineering Pvt. Ltd.' should be treated as full and final payment. The

application under Section 7 filed by 'M/s. Val-Met Engineering Pvt. Ltd.' stands

withdrawn. The Company Petition No. CP/922/IB/2018 is closed. The

Adjudicating Authority will now close the process.

9. Mr. V. Senthil Kumar, 'Interim Resolution Professional'/'Resolution

Professional' had continued for a period of five months approximately and

incurred expenditure. We assess the fee and cost payable to the Interim

Resolution Professional/Resolution Professional totalling Rs. Six Lakhs. The

Respondent - 'M/s. Val-Met Engineering Pvt. Ltd.' is directed to pay after

adjusting the amount of Rupees Three Lakhs having already paid by the 'M/s.

Val-Met Engineering Pvt. Ltd.' to the 'Interim Resolution Professional/Resolution

Professional. The said 'Financial Creditor' will pay the rest of the amount i.e.

Rs. Three Lakhs to him within 15 days. The 'Interim Resolution Professional'

Company Appeal (AT) (Insolvency) No. 675 of 2019 6

will hand over the assets and the record of the 'Corporate Debtor' to the Board

of Directors/Promoters immediately.

The appeal is allowed with aforesaid observations and directions. No

costs.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

[Justice Venugopal M.] Member (Judicial)

/ns/gc

Company Appeal (AT) (Insolvency) No. 675 of 2019