The Weekly Obiter

SETTLEMENT AFTER ADMISSION OF CASE BY NATIONAL COMPANY LAW APPELLATE TRIBUNAL:SC: NOVEMBER 13, 2017

November 24, 2017

The Hon’ble Supreme Court in the matter of “Uttara Foods and Feeds Private Limited vs. Mona Pharmachem in Civil Appeal No. 18520 of 2017” arising out of SLP (C) No. 26824 of 2017 suggested amendment of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 wherein settlement between the parties can be recorded by the Tribunal after admission of case under the Insolvency and Bankruptcy Code, 2016 (hereinafter “IBC”).
The Appeal was filed after the National Company Law Appellate Tribunal (hereinafter “NCLAT”) refused to grant any relief as the IBC and the Rules only permit withdrawal of the case before its admission by NCLAT.
The Bench comprising of Justice R.F. Nariman and Justice S.K. Kaul ob-served that, “In view of Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the NCLAT prima facie could not avail of the inherent powers recognized by Rule 11 of the NCLAT Rules, 2016 to allow a compromise to take effect after admission of the insolvency petition. We are of the view that instead of all such orders coming to the Supreme Court as only the Supreme Court may utilise its powers under Article 142 of the Constitution of India, the relevant Rules be amended by the competent authority so as to include such inherent powers. This will obviate unnecessary appeals being filed before this Court in matters where such agreement has been reached.”
The Hon’ble Supreme Court while taking on record the settlement between the parties had set aside the NCLAT order. 

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