Skip to main content

Failure or Breach of settlement agreement can't be a ground to CRP under the Insolvency Code

Cause Title : Bajaj Rubber Company Private Limited vs Saraswati Timber Private Limited, Company Petition No. (IB)-1441(ND)/2018, NCLT New Delhi

Date of Judgment/Order : 11.08.2022

Corum : Sh. Dharminder Singh (Judicial), Sh. L. N. Gupta (Technical)

Citied: 

  1. M/s. Alhuwalia Contracts (India) Ltd. vs. M/s. Logix Infratech Private Limited in (IB)882/ND/2022, NCLT New Delhi
  2. M/s Delhi Control Devices (P) Limited Vs. M/s Fedders Electric and Engineering Ltd., Company Petition (IB) No. 343/ALD/2018, NCLT Allahabad Bench
  3. Nitin Gupta vs Internationa Land Developers Private Limited., IB No. 507/ND/2020, NCLT Allahabad Bench

Background

M/s Bajaj Rubber Company Private Limited as the Operational Creditor, had filed an application  for initiation of CIR against the Corporate Debtor M/s. Ace Footmark Private Limited. The Operational Creditor had withdrawn the aforesaid Application on the ground of settlement between the Parties. Pursuant to the settlement post dated cheques were issued to the Applicant by the Corporate Debtor, many cheques got dishonoured. The Applicant has sought revival of the present application on the ground of breach of terms and conditions of the Settlement Agreement.

Judgment

Referring to the above judgments the bench held that as per the definition, Operational Debt means a claim in respect of provision of goods or services including employment. However, unpaid instalment as per the settlement agreement cannot be treated as operational debt as per Section 5 (21) of IBC. The failure or Breach of settlement agreement can't be a ground to trigger CRP against Corporate Debtor under the provision of IBC 2016 and remedy may lie elsewhere not necessarily before the Adjudicating Authority.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Winding-Up Petition Can’t Be Used If Bona Fide Payment Disputes Pending

The Karnataka High Court, in the case of M/s Uttam Industrial Engineering Ltd vs  M/s Shree Basaveshwar Sugars Ltd, has held that a winding-up petition has serious  ramifications on the financial standing of a company and cannot be used in cases  where there is a bona fide dispute regarding the amount owed by one party to the  other and in such cases the company court should relegate the matter either to the  civil court or arbitral tribunal. In this case, Uttam Industrial Ltd entered into a contract with Basaveshwar Sugars Ltd  to provide machinery and equipment for a sugar plant. Article referred:  http://www.livelaw.in/remedy-winding-petition-cant-relied-upon-bona-fide-payment-disputes-karnataka-hc/
Post a Comment
Read more

A liquidator must pay GST on sale of assets of a defunct company

The West Bengal Authority of Advance Ruling has ruled that a National Company Law Tribunal appointed liquidator must have the GST registration till all liabilities cease to exist and that the liquidator must pay goods and services tax (GST) on sale of assets of a defunct company under liquidation, as the sale is effectively supply of goods. 
Post a Comment
Read more