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Judgment
O R D E R
Per: Justice Rakesh Kumar Jain:
This appeal is filed by the Suspended Director of the Corporate Debtor against the order dated 06.06.2024, passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench – IV) by which an application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) bearing CP (IB) No. 373/MB-IV/2021 against the Corporate Debtor, has been admitted.
The Operational Creditor filed an application under Section 9 of the Code on 19.03.2021 for the resolution of an amount of Rs. 2,30,57,100/-payable as on 01.03.2021.
The Operational Creditor issued demand notice under Section 8 of the Code on 23.01.2020 in respect of four invoices detail of which is under:-
| Invoice No. | Date | Amount (Rs.) |
| RA/2019/Wind/111 | 11.02.2019 | 18,36,000/- |
| RA/2019/Wind/111 | 04.04.2019 | 4,59,000/- |
| RA/2019/Wind/020 | 12.06.2019 | 2,07,62,100/- |
| RA/2019/Wind/028 | 10.12.2019 | 4,09,967/- |
During the pendency of the application, the parties entered into a settlement on 13.12.2022 as per which against the amount of Rs. 2,30,57,100/-, the Corporate Debtor agreed to pay Rs. 1,77,00,000/-.
Consequent upon the settlement, both the parties jointly made a statement before the Tribunal that the matter has been amicably settled, therefore, the Operational Creditor did not choose to proceed with the Company Petition and thus, the same was dismissed as not pressed. The order passed in this regard on 03.01.2023 is reproduced as under:-
“1.Ms. Shreya Jha, Ld. Counsel for the Operational Creditor present. Ms. Kalyani Wagle, Ld. Counsel for the Corporate Debtor present. 2. Both sides submitted that the matter has been amicable settled between the parties and hence, seek to withdraw of the present Company Petition. Permission granted. 3. At the request made by both the Counsel. C.P. (IB)j373(MB)2021 is dismissed as not pressed.”
However, the Corporate Debtor did not abide by the terms of the settlement, therefore, in view of clause 3 of the memo of withdrawal of the petition which read that “In view of the above, it is humbly requested that the captioned matter be allowed to withdraw in terms of the settlement with liberty to revive the same in the event of any default in the payment schedule”, the Operational Creditor filed an application for restoration in the main company petition bearing 7 of 2024 which was allowed on 06.02.2024 with the following order:-
“1.Mr. Vishal Shriyan a/w Riddhi W., Ld. Counsel for the Applicant/Operational Creditor present. None present for the Respondent. 2. The Applicant/Operational Creditor has filed this Application to restore and revive the C.P.(IB)/373(MB)2021, which was dismissed as withdrawn by this Bench vide order dated 03.01.2023 on the ground of settlement. 3. The Ld. Counsel for the Applicant submits that both the parties entered into a settlement Agreement on 13.12.2022 whereby the Corporate Debtor agreed to pay the full and final settlement amount of Rs.1,77,00,000/- to the Applicant. However, the Corporate Debtor started defaulting on the payment schedule right from the beginning. The Corporate Debtor vide emails dated 16.06.2023 and 20.11.2023 and beyond, addressed to the Applicant, made several requests for extension of time on account of purported shortage of funds and also gave assurances to bring the payment schedule up to date. On the request of Corporate Debtor, the Applicant repeatedly extended the time given to the Corporate Debtor for clearing all the due payments. 4. Ld. Counsel for the Applicant further submits that till date the Corporate Debtor has made payment of only Rs.56,40,000/-. Even after repeated follow-ups through emails, meetings, phone calls, etc. by the Applicant, the Corporate Debtor miserably failed to clear its pending amounts, therefore the Applicant has filed the present application for restoration of C.P.(IB)/373(MB)2021. The settlement agreement dated 13.12.2022 contains in clause 1.4 that “In the unlikely event that Respondent is unable to honor the payment of any of the instalment amounts as per the aforesaid schedule, Petitioner is at liberty to restore and/or revive the aforesaid Company Petition 373 of 2021 with the Hon’ble National Company Law Tribunal for the full claim amount of Rs.2,30,00,000/-(Rupees Two Crore Thirty Lac Only) after deducting any and all payment(s) made under this Agreement.”
5.In view of the above facts, this Bench allows the restoration of C.P. (IB)/373(MB)2021. The Registry is directed to number the C.P. (IB)/373(MB)2021 as RCP and list the matter for hearing on 27.03.2024.
6.The Applicant is directed to serve the petition to the Respondents again. The Registry as well as Applicant are directed to issue Court Notice to the Respondents in C.P.(IB)/373(MB)2021 intimating them the next date of hearing and requiring them to file their reply within two weeks after receipt of the Notice and file proof of service before the next date of hearing.
7.Accordingly, RST.A/07(MB)2024 is allowed and disposed of.”
After restoration of the main petition, the CD was asked to file the reply but no reply was filed and thus right to file reply was forfeited. Ld. Tribunal found that pursuant to the settlement deed, the CD paid only Rs. 56,40,000/-out of Rs. 2,30,57,100/-, since the liability of the CD was much more than Rs. 1 Cr. was found due and payable and there was no pre-existing dispute existing between the parties, therefore, it was found to be a fit case for admission and thus, the application filed under Section 9 of the Code was admitted by the impugned order on 06.06.2024 and Prakash Naringrekar was appointed as the IRP while imposing the moratorium.
Counsel for the Appellant has submitted that after the withdrawal of the petition on the basis of the settlement agreement, the outstanding amount cannot be claimed and has relied upon a decision of this Court rendered in the case of SRLK Enterprises LLP Vs. Jalan Transolutions (India) Ltd., CA (AT) (Ins) No. 294 of 2021 decided on 08.04.2021.
It is contended that no liberty was given at the time when the application was withdrawn or dismissed as not pressed on 03.01.2023, therefore, it could not have been restored.
On the other hand, Counsel for the Respondent has submitted that the order dated 03.01.2023 was passed on memo of withdrawal dated 22.12.2022 in para 3 of which it was categorically mentioned that the application is being withdrawn because of the settlement agreement with liberty to file the same in the event of default in making the payment as per schedule. It is further submitted that it has also come in the order dated 03.01.2023 that the matter has been amicably settled between the parties which refers to the settlement agreement dated 13.12.2022. He has also argued that the order passed in the restoration application bearing no. 7 of 2024 on 06.02.2024 has not been challenged in appeal by the Appellant and the same became final and now the Appellant cannot raise the issue of the revival of the petition by referring to the decision in the case of SRLK Enterprises LLP (Supra). He has further submitted that it is otherwise a dishonesty on the part of the CD in contesting this petition on the ground that the settlement amount cannot be claimed because if this plea is accepted then the CD may get the petition dismissed on a false pretext that it will pay the admitted dues and after paying one or two instalments stop making payment of the rest of the amount. In support of his submissions, he has relied upon two decisions in the case of Desh Bhushan Jain Vs. Abhay Kumar, CA (AT) (Ins) No. 124 of 2024 and Finsbury Global FZE Vs. Uttam Sucrotech International Pvt. Ltd. CA (AT) (Ins) No. 796 of 2023.
We have heard Counsel for the parties and perused the record.
The facts of this case are not much in dispute as the Corporate Debtor had conceded to pay the dues of the Operational Creditor and entered into a settlement agreement dated 13.12.2022. However, the Corporate Debtor paid only Rs. 56,40,000/- and despite repeated request and reminders did not pay the remaining amount and adhered to the payment schedule. However, believing the CD, the OC filed the memo of withdrawal of the main petition on the basis of the settlement deed but in the said memo reserved its rights to get the main petition revive in case the amount is not paid by the CD. The Tribunal also, while passing the order of dismissal, observed that the matter has been settled between the parties. Thereafter, an application was filed by the OC for restoration of the main petition which was allowed vide order dated 06.02.2024 which remained unchallenged. Thereafter, the CD was given time by the Court to file reply to the main petition but it did not choose to file and ultimately the Tribunal forfeited the right of the CD to file reply. The order of forfeiture of right to file reply was also not challenged by the CD in appeal. Since, it is a case where the debt and default has been admitted by the CD by entering into a settlement deed, part payment was made but the remaining amount was not paid despite repeated emails, therefore, the Tribunal has rightly admitted the application which is above the threshold provided under Section 4 of the Code and there was no pre-existing dispute. The argument of the Appellant that settlement amount cannot be claimed as an operational debt is totally inconsequential as it has been held by this Court in the case of IDBI Trausteeship Services Limited Vs. Nirmal Lifestyle Limited, Company Appeal (AT) (Insolvency) No. 117 of 2023.
At this stage, we may add that the CD, especially in the cases of Section 9, are adopting this modus operandi by entering into a settlement with the OC in respect of its dues which arises either from the goods supplied or services provided, some payment is made and then there is a breach in the settlement thereafter all sorts of pleas are raised by the CD to deny the right of the OC regarding the resolution of its dues for which the application under Section 9 is filed. In this regard, reference may be had to the decision of this Court in the case of Desh Bhushan Jain (Supra) and Finsbury Global FZE (Supra) which are squarely on this issue.
Thus, in view of the aforesaid facts and circumstances, we hardly find any merit in the present appeal for the purpose of interference and the same is hereby dismissed though without any order as to costs.