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 The Operational Creditor had withdrawn the aforesaid Application on the ground of settlement between the Parties.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

Mere Agreement To Sell The Leased Property To Tenant Would Not Terminate Landlord-Tenant Relationship

In CIVIL APPEAL Nos. 1237­1238 OF 2019, Dr. H.K. Sharma vs Shri Ram Lal, the tenant had objected against the eviction suit filed by the landlord, claiming that the landlord-tenant relationship between them had ceased to exist by virtue of an agreement for sale entered between them and that he has already paid some money in advance based on the agreement. The tenant contented as the landlord-tenant relationship did not exist, the landlord cannot evict him. The matter went through various forums and finally landed before the Supreme Court in appeal. The Supreme Court referring to the judgment in Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors., held that in the instant case the lease agreement included no clauses on the fate of the tenancy. A fortiori, the parties did not intend to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property. In other words, if the parties really intended to surrender their tenancy ...
2 comments
Read more

Valuation Report of Jewellery once made is effective for Four Assessment Years

The division Bench of the Delhi High Court in Pr.Commissioner of Wealth Tax vs. Raghu Hari Dalmia held that a valuation report made by a registered valuer once adopted shall be in effect for four assessment years unless an event has occurred whereby the value is increased or decreased. The High Court made it clear that the event of “search” under Section 132 of the Income Tax Act, 1961 cannot compel the assessee to undertake a fresh valuation.
2 comments
Read more