The Bench of Chairperson Justice S J Mukhopadhyaya and Judicial Member Justice Bansi Lal Bhat stated that admission of a petition by a financial creditor under Section 7 of the IBC is illegal on the grounds of existence of a settlement between the parties. In the matter of Gaurav Pandey Versus Eternity Investment Services Pvt Ltd and Anr, the appeal was filed challenging the admission of a petition under Section 7 of IBC on 13th November 2018 although a settlement was arrived upon between the parties concerned and the settlement deed was produced before the NCLT on 1st November 2018.
The NCLAT observed that there was no default of payment on the part of the appellant as on 13th November, 2018 i.e. at the time of admission of the petition and therefore the Adjudicating Authority of NCLT, Chandigarh Bench had no cogent grounds to admit the application under Section 7. It was also contended by the Counsel for the Resolution Professional, so appointed, that the parties concerned have paid the fees and insolvency costs to the Resolution Professional and as such there is no claim to be paid by the parties.
On the basis of the arguments placed before it, the NCLAT admitted the appeal and passed the following order:
“The orders passed by Adjudicating Authority appointing ‘Interim Resolution Professional’, declaring moratorium, freezing of account and all other orders passed by Adjudicating Authority pursuant to impugned order and action taken by the ‘Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions were declared illegal and set aside. The application filed by the 1st Respondent under Section 7 of the I&B Code is dismissed.”
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