The NCLAT New Delhi Bench ruled that once a settlement plan under Section 12A of the IBC is approved and the CIRP is closed, any amount proposed in the plan cannot be refunded. In this case, the appellant's settlement plan, which included a ₹3 crore payment to financial creditors, was approved.
The appeal challenged the Adjudicating Authority's dismissal of I.A. 1370/2021. TJSB Sahakari Bank Ltd. had filed a Section 7 application against M/s. Unimetal Castings Limited (UCL) for a debt of ₹6,38,78,417/-, which was admitted on 25.01.2019, leading to the appointment of an Interim Resolution Professional (IRP). On 15.07.2019, the CoC resolved to liquidate UCL, but Respondent No. 4, a promoter of UCL and its sister concern JDECL, expressed intent to submit a Resolution Plan. Following the filing of IAs, the Tribunal directed the CoC on 11.02.2020 to consider a settlement proposal, leading to the execution of a Memorandum of Understanding (MoU) on 16.03.2020.
The revised MoU set a deadline of 30.09.2020 to close the CIRPs of UCL and JDECL. A Section 12A application was filed for JDECL, and ₹3 crore was paid. The Adjudicating Authority approved the application, and by 02.11.2020, JDECL's CIRP was closed. On 12.09.2020, Respondent No. 4 submitted a Resolution Plan for UCL, which the CoC approved on 22.12.2020, contingent on a ₹25 lakh deposit. However, the appellant later withdrew from the settlement and filed I.A. No. 1370/2021 seeking a refund of ₹3.25 crore, which was rejected by the Adjudicating Authority on 26.07.2022.
The NCLAT upheld the Adjudicating Authority's decision, ruling that the claim for a refund of ₹3.25 crore, including the ₹3 crore paid for JDECL's CIRP, was both dishonest and legally impermissible. The tribunal emphasized that the CIRP of JDECL was closed after full payment of its debt, leaving no basis for refund. However, the tribunal found no clause in the MoU forfeiting the ₹25 lakh paid for UCL’s CIRP, and ordered the Financial Creditors to refund this amount to the appellant. The appeal was allowed only to this extent.
Globomet Engineering Private Limited Versus Shri Tejas J Parikh and Ors.
Company Appeal (AT) (Insolvency) No. 1080 of 2022
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