National Company Law Appellate Tribunal, New Delhi: The Division Bench of Ashok Bhushan*, J., and Barun Mitra (Technical Member) held that any settlement after constitution of CoC is only permissible when the same is approved with 90% vote share of CoC.
In the instant matter, after the Corporate Debtor failed to reply to the demand notice issued under S.8 IBC claiming principal amount with interest, the Operational Creditor (‘Respondent’) filed an application under S. 9 IBC claiming principal amount with interest. The Adjudicating Authority vide order dated 11-11-2022 admitted S. 9 application, after giving due time to the Corporate Debtor to file reply. Aggrieved by the impugned order passed by the Adjudicating Authority admitting S. 9 IBC application filed by the Operational Creditor, the Appellant (‘Suspended Director of the Corporate Debtor’) preferred an appeal before this Tribunal challenging the same.
The appellant contended that the appellant and Operational Creditor had entered into a settlement on 07-12-2021 and settled the dues. The appellant further contended that the Operational Creditor failed to bring the same into the notice of the Adjudicating Authority which resulted in passing of the impugned order. The appellant also contended that he is ready to clear all dues of the Operational Creditor.
On the other hand, the respondents contended that the Adjudicating Authority has rightly admitted S. 9 application as there was no settlement between the parties. The respondents further contended that any settlement with the Operational Creditors can be recognized only when it is approved by the CoC by 90% vote share since the CoC was constituted even before filing of this appeal as per S. 12-A IBC read with Regn. 30-A of the CIRP Regulations, 2016.
NCLAT observed that the Corporate Debtor neither appeared before the Adjudicating Authority nor raised any defence regarding the debt and default, therefore the Adjudicating Authority has not committed any error in admitting S. 9 application.
NCLAT observed that in the present case, the CoC was constituted on 02-12-2022 and the settlement which is relied on by the appellant in this appeal was dated 08-12-2022. NCLAT further contended that as per S. 12-A read with CIRP Regn. 30-A, if CoC is constituted then for any settlement between the parties, needs to be approved by the CoC with 90% of vote share.
“After constitution of the CoC, settlement if any, needs to be approved by the CoC with 90% of vote share as per Section 12-A read with CIRP Regulation 30-A.”
While dismissing the appeal, NCLAT held that there are no grounds made out in this Appeal to interfere with the impugned order passed by the Adjudicating Authority.
[Rajendra Pandurang Barde v. Amit Steels, 2023 SCC OnLine NCLAT 164, order dated 19-04-2023]
*Judgment by Justice Ashok Bhushan
Advocates who appeared in this case :
Mr. Abhijeet Sinha, Counsel for the Appellants;
Mr. Kunal Godhwani, Mr. Saurabh Kalia, Mr. Madhav Goel, Mr. Dhaval Deshpande, Mr. Anuj Singh, Mr. Gaurav H Sethi and Mr. Anant Bajpai, Counsel for the Respondents.