38.6c New Delhi, India, Wednesday, April 17, 2024

Insolvency Proceedings Can Be Closed Where Parties Have Settled The Matter Before The Constitution Of CoC: NCLAT

By LawStreet News Network      14 February, 2019 12:00 AM      0 Comments

The National Company Law Appellate Tribunal (NCLAT) on February 8, 2019, in the case of Mr. Ashish Garodia v. Impact Event Management & Anr., has asked the Kolkata Bench of National Company Law Tribunal to close an insolvency proceeding on finding that the Corporate Debtor and the Operational Creditor have settled the matter before the constitution of the Committee of Creditors (CoC).

A Bench comprising of Chairperson Justice S.J. Mukhopadhaya and Judicial Member Justice Bansi Lal Bhat has also found that there was a ‘pre-existing dispute’ between the parties, and hence the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, was not maintainable.

The appellate tribunal was hearing an appeal filed by Ashish Garodia, the Director and Shareholder of 'M/s. Garodia Automobiles Pvt. Ltd'. (Corporate Debtor) against the order passed by the Kolkata Bench of NCLT on January 14, 2019, wherein it had admitted the application under Section 9 of IBC filed by the Operational Creditor – ‘Impact Event Management’.

On hearing the parties, the NCLAT took note of the fact that there was a pre-existing dispute and the Operational Creditor accepted that the parties have settled the matter.

The appellate tribunal setting aside the order passed by the Kolkata Bench of NCLT said that " In effect, order (s), passed by the Adjudicating Authority appointing any ‘Interim Resolution Professional’, declaring moratorium, freezing of Bank accounts, and all other order (s) passed by the Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution Professional’, including the advertisement published in the newspaper calling for applications and all other orders and actions taken are declared illegal and are set aside. The application preferred by Respondent under Section 9 of the 'I&B Code' 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.”

With this view, the NCLAT allowed the appeal and asked the Kolkata Bench of NCLT to fix the fee of 'Interim Resolution Professional', directing the Corporate Debtor to pay the fees for the period Interim Resolution Professional has functioned.

Read the order below.

Share this article:

User Avatar

Leave a feedback about this

Trending Judiciary
Baba Ramdev, Acharya Balkrishna offer to make public apology in SC for misleading advertisements

Baba Ramdev and Acharya Balkrishna offer public apology in SC for misleading ads, court deliberates acceptance.

16 April, 2024 01:57 PM
Trending Judiciary
Non-tear of the hymen is of no consequence in cases of penetrative sexual assault: Guwahati HC in POCSO case [Read Judgment]

Hymen tear or genital injuries are not a sine qua non to prove penetrative sexual assault, the Guwahati High Court has held in a case under the POCSO Act, 2012.

16 April, 2024 05:06 PM


Trending Business
SC sets aside judgment upholding arbitral award against DMRC [Read Judgment]

Supreme Court overturns arbitral award favoring Reliance Infrastructure subsidiary against DMRC, citing grave miscarriage of justice.

11 April, 2024 11:43 AM
Trending Political NEWS
Delhi HC rejects third plea for Arvind Kejriwal's removal as Delhi CM, blasts petitioner for abuse of judicial process [Read Judgment]

Delhi High Court dismisses the third PIL plea before it seeking Aam Aadmi Party leader Arvind Kejriwal’s removal as Chief Minister of Delhi, imposes Rs. 50,000 cost on petitioner.

11 April, 2024 03:29 PM
Trending Judiciary
Use of social media to interfere with administration of justice needs serious consideration: SC [Read Judgment]

Supreme Court warns against social media misuse in legal matters, cautions against prejudicial posts interfering with justice.

11 April, 2024 05:44 PM
Trending Legal Insiders
Two-day conference on April 13-14 on Technology and Dialogue between SC and Singapore

Explore AI's role in law at the India-Singapore Supreme Court conference on technology, enhancing judicial processes and access to justice, April 13-14, 2024.

12 April, 2024 06:16 PM


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email