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Judgment
27.01.2026: Heard counsel for the appellant.
This appeal has been filed against the order dated 12.12.2025 by which Section 7 application filed by the IDBI Bank Ltd. has been admitted. IDBI Bank has filed an application under Section 7 for an amount of Rs.50,22,31,631/- till 31.03.2024; date of default was mentioned as 29.09.2019. In the Section 7 application notices were issued and application was heard and by the impugned order dated 12.12.2025 Section 7 application has been admitted. During pendency of the proceeding under Section 7 application was heard on 19.11.2025 and the order reserved. During pendency of Section 7 application, an OTS was entered between the parties and sanctioned on 29.09.2025 for an amount of Rs.18.24 crores. Upfront payment of Rs.2.90 crores on 25.09.2025 and the balance amount was to be payable in three equal monthly instalments within 90 days from the date. Till 29.12.2025 the entire amount was required to be paid as per OTS. The appeal was filed challenging this order. On 18.12.2025 this Tribunal passed following order:-
“O R D E R
(Hybrid Mode)
18.12.2025: Counsel for the appellant submits that bank has accepted an OTS for Rs.18.24 crores on 29.09.2025 under which within three months the entire amount of Rs.18.24 crores have to pay. Appellant has paid initial amount of Rs.2.9 crores only. The submission of the counsel for the appellant is that OTS has been noticed by the Adjudicating Authority in the impugned order and despite the fact that period under OTS has not come to an end, order has been passed admitting corporate debtor in the CIRP.
2.Ld. Counsel appearing for the bank submits that appellant has not paid the amount which was due in October and November. Be as it may, according to own case of the appellant the entire amount was to be paid by 29.12.2025. We are of the view that the appeal need to be taken on the reopening on 05.01.2026.
3.The appellant may file an affidavit on re-opening of the court bringing on record the details of the payments made of remaining amount in terms of the OTS.
List on 05.01.2026.
In the meantime, no steps shall be taken in pursuance of the order dated 12.12.2025.”
Again the matter was taken on 05.01.2026 where the counsel for respondent submitted that the payment has not been made as noticed in earlier order interim order was not extended.
Ld. Counsel for the appellant challenging the order submits that till the OTS continued to operate i.e; till 29.12.2025 there was no default on the part of the corporate debtor to admit Section 7 application. Ld. Counsel for the appellant has referred to terms and conditions of the OTS and submits that in view of the aforesaid terms and conditions Adjudicating Authority ought not to have admitted Section 7 application and there being no default on the part of the corporate debtor, Section 7 application could not have been admitted. Ld. Counsel for the appellant has referred to the OTS dated 29.09.2025 and certain clauses of agreement including Clause 4, Clause- 11 and Clause- 17.
We have considered submissions of the counsel for the appellant and perused the records.
Section 7 application was filed by the IDBI Bank claiming in default of Rs. 50,22,31,631/- and the date of default was mentioned on 29.09.2019 and the OTS between the parties was entered on 29.09.2025 which OTS directed as follows:
“IN DUPLICATE
WITHOUT PREJUDICE
Ref. No. IDBI/NMG/LKO/LOVPL/2025-26/1157
SEPTEMBER 29, 2025
The Director
Laxmi Oil and Vanaspati Pvt. Ltd.
Factory address: 97, Khan Chandpur,
Near Umran Dhaba, Rania Akbarpur,
Kanpur Dehat (U.P.)- 209304
Registered address: 704, Kan Chambers,
7th Floor, 14/113, Civil Lines,
Kanpur-208001
Dear Sir,
Laxmi Oil and Vanaspati Private Limited One time Settlement (OTS) of Dues- Letter of Approval
Please refer to your letter dated May 20, 2025 and September 19, 2025 offering an amount of Rs.18.24 crore towards full and final settlement of dues in respect of your loan account (A/c-0141655100000408) and subsequent discussions you / your representatives had with us on the subject. Upon considering your request, IDBI Bank is agreeable, in principle, for settlement of dues (OTS/NS) as under, subject to other terms and conditions mentioned in Annexure-I.
1 Sanction Amount Rs.18.24 Crore 2 Payment Schedule Particulars Amount (Rs. crore) Upfront payment (already paid as on September 25, 2025) 2.90 Balance amount shall be payable in 3 equal monthly instalments within 90 days from the date of LOA. 15.34 Total 18.24 3 Payment of interest 1) On OTS amount as per payment schedule – Nil 2) On delayed payment - @1 Yr MCLR+2% as on COD. Acceptance of delayed payment shall be at the absolute discretion of IDBI Bank. In case of default in adhering to the terms and conditions of OTS, IDBI Bank shall have right to revoke the OTS package and restore the original liabilities. 2.The offer is valid for 30 days from the date of this letter. You are therefore requested to return the duplicate copy of this letter, duly signed confirming acceptance of the terms and conditions of OTS within the validity period. Failing such acceptance, the approval shall stand automatically revoked unless IDBI Bank in its sole discretion expressly extends the validity.
Kindly acknowledge receipt.
Yours faithfully
For IDBI Bank Limited
Authorised Signatory
Accepted,
For Laxmi Oil and Vanaspati Pvt. Ltd.
Director”
Admittedly, under the OTS the payment schedule was provided apart from Rs.2.90 crores which was upfront payment no other payment has been made by the appellant. Under the payment schedule the balance amount was payable in three equal monthly instalments within 90 days i.e; 29.12.2025, when no monthly instalment for October and November was paid the breach of OTS was very much committed by the CD, which fact, that October and November instalment was not paid was also noticed in the argument of the bank in our order dated 18.12.2025.
It is not the CD’s case that they have complied the OTS. Reliance has been placed on para-11(ii) that it was agreed between the parties that both bank borrower and guarantor shall keep on hold the legal actions and enforcement actions during compliance of OTS. Clause -11(ii) is as follows:-
“11(ii) The Bank and the borrower/guarantor shall keep on hold the legal action proceedings and enforcement actions during compliance of OTS/NS terms. However, in the event of default/ delay, the parties are entitled to revive or continue the legal proceedings enforcement actions.” The above clause cannot come into the aid of the corporate debtor where it was clearly mentioned that in event the default/ delay, the party are entitled to revive and continue the legal proceedings. The present is not a case where borrower has taken any legal action or enforcement action during compliance of the OTS.
Present was a case where Section 7 application was initiated much before, in the year 2024 and it was not the bank which was taking any legal actions against the borrower. Moreso, when the second line of the clause 10, 11.2 itself provide that in event of default/delay, the parties are entitled to revive or continue the legal proceedings/ enforcement action. Thus there was no prohibition on the bank in proceeding with Section 7 application. The said clause does not come to the aid of the appellant and cannot be said that in view to that Clause Section 7 proceeding could not have been proceeded. The reliance of Clause of 17 by the appellant also does not help the appellant since present is a case where CD was itself in default of the OTS. We thus do not find any error in the order, admitting Section 7 application. Appellant having not complied with the OTS, the resolution of the CD is necessitated under the IBC and its Regulations.
The appeal is dismissed.