In the matter of Rajesh Nagpal Vs. Gupta Ji Electric Company and Anr. CA(AT)(Ins) No. 388 of 2020

This matter was not on Board but has been taken up on mentioning.

2. Heard Advocate Shri Aviral Kapoor present for the Appellant. It is stated that the Appellant Mr. Rajesh Nagpal is also present. Advocate Shri Tejas Bhatia who appeared for Operational Creditor before Adjudicating Authority, New Delhi (See Impugned Order) is present on behalf of Respondent No. 1 - Gupta Ji Electric Company- Operational Creditor. It is stated that the authorised representative of Respondent No. 1, namely, Mr. Dhiraj Gupta is also present.

3. Learned Counsel for IRP states that Committee of Creditors (in short ‘CoC’) has not yet been constituted in this matter. It is stated that the IRP has not received claims other than from the present Operational Creditor.

4. Learned Counsel for the Appellant and Respondent No. 1 submits that they have settled the dispute between them and the Corporate Debtor has issued different Post-dated cheques to settle the claim of the Operational Creditor. It is stated that post-dated cheques have also been issued to IRP to settle the Fees of IRP including CIRP cost.

5. The learned Counsel present referred to Memorandum of Understanding (in short ‘MoU’) executed between the Appellant and Respondent No. 1 and state that the Respondent No. 1 wants to withdraw the Application which was filed under Section 9 of Insolvency and Bankruptcy Code, 2016 (in short ‘IBC’) before the Adjudicating Authority.

6. Learned Counsel for the Appellant states that the settlement has been arrived at with the consent of other Directors and Corporate Debtor will honour all the cheques issued and will ensure that the payments due to the IRP are also promptly made.

7. Learned Counsel for the Appellant furthers states that IRP has been issued cheque dated 30.03.2020 and the learned Counsel assures that the cheque would be honoured.

8. MoU entered into between the parties is as under:

9. The Appellant and Respondent No. 1 admit the contents of the MoU and the same are taken on record. The parties would be bound by the contents of this MoU.

10. Keeping in view paragraph-79 of the Judgment in the matter of “Swiss Ribbons Pvt. Ltd & Anr. Vs. Union of India & Ors”” in Writ Petition(C) No. 99 of 2018 (2019 SCC Online SC 73), exercising powers under Rule-11 of NCLAT Rule, 2016, we accept the MoU and we allow the Appeal and set aside the impugned order dated 26.02.2020. The Respondent No. 1, Original Operational Creditor is permitted to withdraw the Application which was filed under Section 9 of IBC.

11. The Appellant and the Directors of Shareholders of the Corporate Debtor/Respondent No. 2 – M/s Straight Edge Contracts Pvt. Ltd. shall remain bound by MoU/Agreement. In the case of default, they would be liable for action of contempt.

12. Liberty is also given to the Respondent No. 1 as well as IRP to move this Tribunal in case of any default on the part of Corporate Debtor in honouring the MoU/Agreement or non-payment of fees/CIRP costs of IRP for which cheque is stated to have been issued. If the Respondent No. 1 or IRP moves this Tribunal complaining default, this Tribunal may recall the present order and restore the Impugned Order.

13. In view of our Order in paragraph 10 supra, actions taken by IRP/RP in consequence of the impugned order are quashed and set aside. The Corporate Debtor is released from the rigour of law and is allowed to function independently through its Board of Directors. The IRP/RP will hand back the records and management of the affairs of Corporate Debtor, to the Board of Directors.

Appeal is disposed accordingly.

[Justice A.I.S. Cheema]

Member (Judicial)

[Justice Anant Bijay Singh]

Member (Judicial)