In the matter of Mr. Digant L. Kapadia Vs. Bank of India & Anr.Company Appeal (AT) (Insolvency) No. 1040 of 2019

The ‘Bank of India’ filed an application under Section 7 of the ‘Insolvency and Bankruptcy Code, 2016 (for short, ‘the I&B Code’) pursuant to which the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench by impugned order dated 20th September, 2019 initiated ‘Corporate Insolvency Resolution Process’ of ‘B.E. Billimoria & Company Limited’ (Corporate Debtor).

When the matter was taken up on 15th October, 2019, learned counsel for the Appellant submitted that the Appellant was ready for amicable settlement with ‘Bank of India’ (Financial Creditor), which is likely to be materialised. It is also informed that the ‘Committee of Creditors’ was not constituted.

On 15th November, 2019, learned counsel for the Appellant informs that the ‘Terms of Settlement’ has been reached between the parties. Therefore, it was allowed to file the ‘Terms of Settlement’.

The Appellant has filed the ‘Terms of Settlement’ and letter dated 1st November, 2019, which reads as follows:

Mr. Jitendra Kumar, learned counsel appearing on behalf of the ‘Bank of India’ (Respondent No. 1) accepts that the settlement has been arrived at between the parties and further submits that the ‘Bank of India’ be allowed to file application for withdrawal of the application filed under Section 7 of the ‘I&B Code’ and also submits that the ‘Committee of Creditors’ have not yet been constituted.

Learned counsel for the Appellant also informs that the fee and corporate insolvency resolution cost’ of the ‘Interim Resolution Professional’, as informed by the IRP, will be paid.

In view of the aforesaid development, in exercise of powers conferred on this Appellate Tribunal under Rule 11 of the NCLAT Rules and the decision of the Hon’ble Supreme Court in ‘‘Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.- ‘2019 SCC Online SC 73’, we set aside the impugned order dated 20th September, 2019 for initiation of ‘Corporate Insolvency Resolution Process’ against ‘B.E. Billimoria & Company Limited’ (Corporate Debtor). The ‘Corporate Debtor’ is released from the rigour of the ‘Corporate Insolvency Resolution Process’. The Appellant, Directors, Shareholders and Board of Directors of the ‘Corporate Debtor’ are directed to ensure that the payment of rest of the amount be made, as per agreed terms and as intimated by the ‘Bank of India’ by its letter dated 1st November, 2019 and quoted above. In case of default of any of the payment, the present order passed by this Appellate Tribunal shall stand automatically vacated and the ‘Corporate Insolvency Resolution Process’ against the ‘Corporate Debtor’ would revive. The ‘Interim Resolution Professional’/ ‘Resolution Professional’ will take over the assets and the records of the ‘Corporate Debtor’. It will be open to the ‘Bank of India’ to file a petition for initiation of contempt against the Appellant and other Directors, Managing Directors etc.

We further make it clear that in case the Appellant/Directors etc. objects to make the payments and the ‘corporate insolvency resolution process’ initiated and funds is found to be diverted by the Appellant or any other Directors/Shareholders/Corporate Debtor, apart from the payment of the dues to the ‘Bank of India’, other financial creditors, if any, and day to day running of the company, the Adjudicating Authority or this Appellate Tribunal may direct the Directors and ‘Promoters’ to refund such amount.

The appeal is allowed with aforesaid observations and directions.

[Justice S.J. Mukhopadhaya]

Chairperson

[Justice Bansi Lal Bhat]

Member (Judicial)