Effect Of Settlement Between The Parties After Admission Of Application Under IBC Code: An Update

Going forward from the write-up on the subject-topic¹ we hereby discuss recent judgments thereafter on the issue of what happens to the proceedings initiated under Insolvency & Bankruptcy Code 2016 ("I&B Code") where the parties to the application pending before the adjudicating authority have arrived at a mutual settlement amongst themselves.

As earlier written about, on case to case basis there may be a very little scope that the application, after admission, may be permitted to be withdrawn. However, in entirety the mandate of Rule 8 of the Adjudicating Authority Rules is to be applied in letter and spirit. So far as the issue of allowing settlement between parties arising out of insolvency petitions is concerned, the NCLT and NCLAT have ruled that post admission of application, withdrawal of petitions cannot be sought on grounds that the matter has been settled between the parties. On the cost of repetition, it is reiterated that Rule 8 (Withdrawal of application)