Financial Creditors cannot seek revival of CIRP where the CIRP stands terminated and Moratorium withdrawn: NCLAT

Financial Creditors cannot seek revival of CIRP where the CIRP stands terminated and Moratorium withdrawn: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has dismissed the Appeal against Pioneer Fabricators Pvt. Ltd. with the declaration that the remedy for the Appellants lies somewhere else and the dismissal of this appeal would not preclude the Appellants from seeking such remedy.

Herein, the Appellants were the Financial Creditors whose application for revival of Corporate Insolvency Resolution Process (CIRP) was rejected by the Adjudicating Authority (National Company Law Tribunal), New Delhi Court-III on the ground that the CIRP initiated against Respondent- M/s. Pioneer Fabricators Pvt. Ltd.(Corporate Debtor) was recalled by withdrawing the CIRP and that the Appellants could not seek revival of CIRP under the provisions of the Insolvency and Bankruptcy Code, 2016 in a matter where the CIRP stood terminated and Moratorium withdrawn.

The Appellant drew the Tribunal's attention to the order passed in one of the Company Petitions filed by the Appellants under Section 7 of the I&B Code which brought it to fore that the CIRP was commenced against the Corporate Debtor on 12th June, 2019 with appointment of Interim Resolution Professional (IRP) and slapping of Moratorium.

However, a settlement was arrived at between the parties, in pursuance whereof the Appellants received some post dated cheques.

It was observed that it was at the instance of the parties that CIRP was sought to be terminated. The Adjudicating Authority had banked upon the judgment of the Hon'ble Apex Court in Swiss Ribbons Pvt. Ltd. & Anr. V. Union of India & Ors and allowed the Appellants-Financial Creditors to withdraw the application and terminated the CIRP.

It further emerged from the order that neither the settlement terms were filed nor the same were brought on record and incorporated in the order of the Adjudicating Authority with liberty to revive/ restore the CIRP in the event of the Corporate Debtor not adhering to the terms of the settlement or post dated cheques issued to Appellants being dishonoured.

Taking this position into consideration, the Appellate Tribunal stated that it could not be said that the Settlement Terms not incorporated in the order of the Adjudicating Authority assumed the character of the decree of the Court, breach whereof would entitle the AppellantsFinancial Creditors to come back and seek restoration/ revival of CIRP.

Hence,no legal infirmity was found in the impugned order. The appeal being devoid of any merit, was not allowed.