Case Note & Summary
The case involves an appeal filed by Smt. Kandala Vijaya, Director of the suspended board of Deepika Infratech Private Limited, against an order dated 08.03.2023 of the NCLT, Hyderabad bench, which admitted a Section 7 application under the Insolvency and Bankruptcy Code, 2016, initiated by SREI Equipment Finance Limited (the financial creditor), and initiated Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The appellant challenged this admission before the National Company Law Appellate Tribunal (NCLAT), Chennai. During the pendency of the appeal, the parties explored settlement. On earlier occasions, the parties had indicated that settlement was in progress. On 11.09.2024, the tribunal recorded this. On 01.10.2024, the matter was taken up on mention by the appellant's counsel. The appellant's counsel submitted that a memorandum of settlement had been filed in IA No. 912/2024 under Rule 11 of the NCLAT Rules, detailing the settlement between the appellant and the financial creditor (Respondent No.2). The counsel for Respondent No.2 confirmed the settlement. The tribunal, noting the settlement and that it was between the appellant and the financial creditor, allowed the appeal to be disposed of in terms of the settlement. The impugned order of the NCLT was set aside, and the appeal was disposed of accordingly. The tribunal also directed that the settlement be recorded and the CIRP proceedings be closed.
Headnote
A) Insolvency and Bankruptcy Code - Section 7 Application - Settlement - The appeal challenged the admission of a Section 7 application by the NCLT, Hyderabad bench. The parties subsequently settled the dispute and filed a memorandum of settlement. The NCLAT allowed the settlement and disposed of the appeal in terms of the settlement, noting that the settlement was between the appellant and the financial creditor (Respondent No.2). (Paras 1-3)
Issue of Consideration
Whether the appeal against admission of Section 7 application under IBC can be disposed of based on settlement between the appellant and the financial creditor.
Final Decision
The appeal is disposed of in terms of the memorandum of settlement dated 01.06.2024. The impugned order dated 08.03.2023 of the NCLT, Hyderabad bench in CP (IB) No.27/7/HDB/2022 is set aside. The CIRP proceedings against the corporate debtor are closed. The settlement is recorded.
Law Points
- Settlement between parties
- Withdrawal of appeal
- Rule 11 of NCLAT Rules
- Section 7 of Insolvency and Bankruptcy Code
- 2016
Case Details
2024 LawText (NCLAT) (01) 63
Company Appeal (AT) (CH) (Ins) No.74/2023
Mr. PH Aravindh Pandian (Senior Advocate for Appellant), Mr. Ashlin Christo & Mr. Roshan Rajasekaran (for R1), Mr. Anant Merathia, Ms. Poornima Devi & Mr. Rishi Srinivas (for R2)
Shri. Khabhmmettu Sri Vamsi (Interim Resolution Professional) & SREI Equipment Finance Limited
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Nature of Litigation
Appeal against admission of Section 7 application under IBC and initiation of CIRP against corporate debtor.
Remedy Sought
Appellant sought to challenge the NCLT order admitting the corporate debtor into CIRP.
Filing Reason
The NCLT, Hyderabad bench allowed the Section 7 application filed by SREI Equipment Finance Limited and initiated CIRP against Deepika Infratech Private Limited.
Previous Decisions
NCLT, Hyderabad bench order dated 08.03.2023 in CP (IB) No.27/7/HDB/2022 admitting the Section 7 application.
Issues
Whether the appeal can be disposed of based on settlement between the appellant and the financial creditor.
Submissions/Arguments
Appellant's counsel submitted that a memorandum of settlement has been filed in IA No. 912/2024 under Rule 11 of NCLAT Rules, detailing the settlement between the appellant and Respondent No.2 (financial creditor).
Counsel for Respondent No.2 confirmed the settlement.
Ratio Decidendi
When parties settle the dispute underlying a Section 7 application under IBC, the appellate tribunal may allow the appeal and set aside the admission order, disposing of the matter in terms of the settlement.
Judgment Excerpts
This Company Appeal seeks to challenge the order dated 08.03.2023 of the Learned Adjudicating Authority NCLT, Hyderabad bench in CP (IB) No.27/7/HDB/2022 by virtue of which Section 7 application was allowed and consequentially the corporate debtor was admitted under the CIRP Proceedings.
The counsel for the appellant has submitted that they have filed a memo of settlement, in IA No. 912/2024 under Rule 11 of NCLAT rules detailing the settlement arrived at between him and Respondent (Financial Creditor) and therefore the matter may be closed in terms of the memorandum of settlement.
Procedural History
The NCLT, Hyderabad bench admitted a Section 7 application under IBC on 08.03.2023, initiating CIRP against Deepika Infratech Private Limited. The appellant (director of the corporate debtor) filed an appeal before NCLAT, Chennai. During the appeal, the parties settled the dispute and filed a memorandum of settlement. On 01.10.2024, the NCLAT disposed of the appeal in terms of the settlement, setting aside the NCLT order and closing the CIRP.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: Section 7
- National Company Law Appellate Tribunal Rules, 2016: Rule 11
