IMPORTANT POINT
Corporate Insolvency Resolution Process (CIRP) – Settlement cannot be stifled before constitution of Committee of Creditors in anticipation of claims against Corporate Debtor from third persons – Withdrawal of application for CIRP by applicant would not prevent any other financial creditor from taking recourse to a proceeding under IBC.

JUDGMENT :

INDIRA BANERJEE, J.

1. This Appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) is against an interim order dated 18th August 2021 passed by the National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi in Company Appeal (AT) (Insolvency) No. 598 of 2021, filed by the Appellant, whereby the NCLAT issued notice of the Appeal, but did not restrain the Interim Resolution Professional (IRP) from proceeding with Corporate Insolvency Resolution Process (CIRP) of M/s Seya Industries Limited (hereinafter referred to as “Corporate Debtor”). The NCLAT, however, restrained the IRP from constituting a Committee of Creditors (CoC) till the next date of hearing. In the meanwhile, the Appellant and the Respondents were given the opportunity to settle their disputes before the Adjudicating Authority (NCLT) in terms of Section 12A of the IBC read with Rule 11 of the National Company Law Tribunal Rules, 2016 (NCLT Rules). The appeal was directed to be listed for hearing on 13th September 2021.

2. The Appellant is an erstwhile Director of Respondent No. 4, that is the Corporate Debtor. The Corporate Debtor, a company incorporated under the Companies Act, 1956 has been carrying on business, inter-alia, of manufacture of benzene based Speciality Chemicals since 1990. It is stated that the Corporate Debtor had invested about Rs. 400 Crores in its existing manufacturing facilities and had further invested about Rs. 900 Crores in an integrated Greenfield Mega Project for Speciality Chemicals.

3. According to the Appellant, the Corporate Debtor is the source of livelihood for about 150 workmen, 40 unskilled workers and 75 employees on its payroll and is engaged with more than 200 Customers/Vendors. It is claimed that the Corporate Debtor has a net worth of Rs. 972 Crores and fixed assets worth more than Rs. 1500 Crores.

4. In order to expand its chemical manufacturing plant at Tarapur, Palghar (Maharashtra), the Corporate Debtor raised capital and the Respondent No. 1-M/s Beacon Trusteeship Limited (hereinafter referred to as “Beacon Trusteeship”) committed to invest Rs. 100 Crores in the said integrated Greenfield Mega Project, in the form of Rs. 20 Crores, towards Compulsorily Convertible Preference Shares (CCPS) and Rs. 80 Crores, by way of Non-Convertible Debentures (NCDs). Thereafter the Appellant, the Corporate Debtor and Respondent-Beacon Trusteeship executed a Debenture Trust Deed (DTD), inter-alia, recording the terms and conditions of the issue of said NCDs. The Respondent No. 1 was appointed, the Debenture Trustee as recorded in the DTD. The DTD laid down the obligations of the Corporate Debtor towards the NCDs.

5. On or about 11th March 2019, Beacon Trusteeship released a sum of Rs. 72,00,00,000/- (INR Seventy Two Crores) toward subscriptions of 360 Series A debentures and 360 Series B Debentures (“First tranche Debentures”). The aforesaid amount was to be invested in capacity expansion of the company and hence not available as cashflow. The service of interest for the first tranche had to be met out of the second tranche of Rs. 8 Crores to be invested by the Beacon Trusteeship which would have created the cash flow for the same and the remaining amount was to be invested for Capex investment. Beacon Trusteeship, however, defaulted in making payment of the second tranche of Rs. 8 Crores.

6. In addition to the DTD dated 8th March 2019, the parties entered into a Supplemental Deed dated 14th March 2019 revising certain terms set out in DTD including the timelines and schedule for the Interest Payment Dates.

7. On 31st May 2019, the Corporate Debtor sent an email to the Respondent Nos. 1 to 3, requesting payment of the second tranche of Rs. 8 Crores in terms of the DTD. The Corporate Debtor also issued notice to the Respondent Nos.1 to 3 to make payment of second tranche of Rs. 8 Crores.

8. On 12th September 2019, the Corporate Debtor took recourse to Arbitration Proceedings against the other Respon