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Supreme Court in its recent order allowed an aggrieved creditor to revive its Section 7 petition under IBC after a settlement between the corporate debtor and another financial creditor.
The NCLT order for initiation of resolution proceedings was set aside by the NCLAT in light of the settlement leaving the appellant aggrieved. The Supreme Court said,
"it will be open to the appellant to proceed against the Respondent No.1 before the NCLT for revival of its application"
In the instant case, the question posed before the Bench of Justices Indira Banerjee and Sanjiv Khanna pertained to the remedy available to creditors after a Corporate Debtor has entered into a settlement with one of the creditors subsequent to order of initiation of resolution process.
The Court, in this case, allowed the aggrieved creditor to approach the NCLT for revival of its petition under Section 7 of the IBC noting that the settlement between one of the financial creditors and the debtor leaves open the present appellant's claims.
The appellant in the case had moved the NCLT under Section 7 of the IBC against the Respondent company. Three other similar petitions had also been filed before the NCLT Mumbai Bench, one of which was by Dalmia Group Holdings.
The petitions filed by Dalmia and two others were admitted by the Tribunal and an order was passed pursuant to the samer. Subsequently, another order was passed by the NCLT directing for the initiation of resolution process.
Thereafter, the petition of the Appellant was rejected by the NCLT on the grounds that similar petitions by Dalmia and others had been admitted and resolution process was already directed to be initiated. The Appellant, therefore, was directed to make a claim before the IRP. Pursuant to IRP's newspaper notifications, the appellant filed its claims.
The Respondent and Dalmia, however, entered into a settlement thereafter and the order of the NCLT directing initiation of resolution proceedings was set aside by the NCLAT in light of the settlement.
In light of these developments, the Appellant approached the Supreme Court and claimed that the attention of the NCLT was not drawn to the claims of other creditors.
The Supreme Court, therefore, held that in light of the settlement of the dispute vetween Dalmia and the Respondent and the setting aside of the order for initiation of resolution, the Court allowed the appellant to approach the NCLT for the revival of its Section 7 petition.