Indian Overseas Bank vs R.D.Rubber Reclaim Limited

Rajasekhar V.K., Member (Judicial)

This court convened via video conference today.

The present application has been field by Mr. Santanu Bhattacharjee, the Interim Resolution Professional (IRP) of New Kolkata International

Development Private Limited, the Corporate Debtor, praying for â€

a. Direction on the Operational Creditor and the Corporate Debtor to execute the agreement of the settlement and the Corporate Debtor to deposit such

consideration as per the settlement agreement.

b. Recall of the order dated 16th March, 2020 passed by this Hon’ble Tribunal upon settlement of disputes between the parties;

c. Ad interim reliefs for stay of operation of the corporate insolvency resolution process till disposal of the present proceedings;

The Applicant’s case in brief is as follows:-

a. By the order of this Adjudicating Authority, the Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (CIRP) on 16.03.2020 and the

Applicant was appointed as the IRP in the matter. The Adjudicating Authority’s order dated 16.03.2020 is annexed with the application as Annexure B at pages

41-48.

b. The Applicant published a public announcement in Form A on 19.03.2020 in Financial Express (English) and Ekdin (Bengali) fixing 30.03.2020 as the last date of

submission of claims.

c. On 07.04.2020, the Applicant received an email issued on behalf of the Corporate Debtor that the parties have settled the dispute amicably on 24.03.2020 upon

payment of ₹4,10,00,000/- (Rupees four crore ten lakh only) and have requested him not to proceed with the CIRP. A copy of email dated 07.04.2020 is annexed to the

application and marked as Annexure E at pages 52 & 53.

d. On 06.06.2020, the IRP received an email from the Operational Creditor that the parties had arrived at a settlement, therefore, the IRP should not proceed with the

CIRP. A copy of email dated 06.06.2020 is annexed to the application and marked as Annexure F at page 54.

e. On 21.07.2020, the IRP received an email from the Corporate Debtor reminding him of the settlement; the email also contained a draft copy of Memorandum of

Understanding (MoU). A copy of email dated 21.07.2020 is annexed to the application and marked as Annexure G at page 55.

f. Moreover, the IRP did not receive any claim in response to the Form A published on 19.03.2020. Further, the CIRP could not proceed due to the lockdown imposed

on account of the global pandemic.

g. The IRP has not been able to comply with the order of this Adjudicating Authority due to aforementioned circumstances and prays for directions on the parties to

execute the agreement of settlement.

We have heard the parties and perused the records.

The Applicant’s case is that a settlement has been arrived between the Operational Creditor and the Corporate Debtor on 24.03.2020 whereby

an amount of ₹4,10,00,000/- (Rupees four crore ten lakh only) has been paid Para (e) at page 11 of the application. against the total amount of debt

being ₹4,04,23,264/- (Rupees four crore four lakh twenty-three thousand two hundred sixty-four only). Page 28 of the application

However, upon perusal of the email dated 07.04.2020, it appears that it has only been agreed between the parties that the Corporate Debtor would

pay an amount of Rs.4,10,00,000/- (Rupees four crore ten lakh only) as full and final settlement and the same had not been paid at least till the said

date.

The mail further reads that due to the lockdown imposed, they could not execute a formal settlement agreement and the Operational Creditor could

not file the application for withdrawal of the underlying Company Petition. They would execute the MoU and the Operational Creditor would

withdraw the underlying Company Petition soon. Therefore, the IRP should not proceed with the CIRP.

As per Regulation 30A of the Insolvency And Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

(CIRP Regulations), an application for withdrawal may be made before constitution of Committee of Creditors (CoC) under section 12A of the Code

through the IRP to the Adjudicating Authority.

The aforesaid application for withdrawal shall be filed in Form FA of the Schedule of the CIRP Regulations accompanied by a bank guarantee

towards estimated expenses incurred on or by the IRP for purposes of regulation 33, till the date of filing of the application.

However, more than a year has passed since the Corporate Debtor was admitted into the CIRP. Although, it is the contention of the Applicant

that a settlement has been arrived at, there is neither a settlement agreement nor an application under section 12A for withdrawal of the underlying

Company Petition before this Adjudicating Authority.

This appears to be a classic case of wastage of time. The lockdown had been lifted long before the application under consideration had been filed.

If there had been a settlement at all, an application under section 12A should have been filed.

Unless an application for withdrawal were filed, it was IRP’s duty to conduct the CIRP in the time bound manner. However, nothing seems to

have moved in the present case expect for publication or Form A after the admission of the Corporate Debtor into CIRP. All the parties involved have

taken the CIRP proceedings for a ride.

The submissions made and the documents produced by the Applicant do not disclose that a settlement has been arrived at.

Even if a settlement has been arrived at, the prayers made by the Applicant herein do not fall within the ambit of powers of this Adjudicating

Authority. It is our understanding that under section 12A of the Insolvency and Bankruptcy Code, 2016, this Adjudicating Authority may allow an

application for withdrawal of the underlying Company Petition, however, the Adjudicating Authority cannot direct the parties either to execute the

agreement of settlement or to deposit the consideration as per the settlement agreement which has not been produced before us.

In the light of aforesaid discussions the present application is misconceived and is an abuse of process. Resultantly, IA (IB) No.1462/KB/2020

shall stand dismissed as being devoid of merit.

Needless to say, the parties and the Applicant, however, are at liberty to take recourse under appropriate provisions of law for withdrawal of the

underlying Company Petition. Until it is done, the IRP is directed to proceed with the CIRP as per the provisions of the Code.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking

necessary steps.

A certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.