Raychem RPG Pvt. Ltd. vs Soura Natural Energy Solutions India Pvt. Ltd.

This Petition has been filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as 'Code') by M/s. Raychem RPG Pvt. Ltd. (hereinafter referred to as the 'Operational Creditor'/'Petitioner') for initiation of Corporate Insolvency Resolution Process against M/s. Soura Natural Energy Solutions India Pvt. Ltd. (hereinafter referred as the 'Corporate Debtor'/'Respondent') for alleged default in repayment of Operational Debt of Rs. 4,22,57,922/- (Rupees Four Crores Twenty Two Lakhs Fifty Seven Thousand Nine Hundred and Twenty Two).

The Brief Facts of the case are as follows:

The Respondent/Corporate Debtor filed its reply affidavit stating the following: -

The Petitioner/Operational Creditor filed its rejoinder stating the following: -

We have heard both sides and have also gone through the pleadings, documents on record, and the written submissions.

This is a case where, in its reply, the respondent raised various grounds to challenge the maintainability of the petition. However, surprisingly enough, the respondent has not raised any objection qua the nature of the debt or the maintainability of the Section 9 petition. Further, it is not the case of the respondent that there exists any pre-existing dispute. The respondent has primarily agitated the issue of laches and delay in filing the present Section 9 petition after withdrawal of the earlier petition. The respondent has further contended that this Adjudicating Authority has already decided one appeal filed by the petitioner under Rule 63 of the NCLT Rules, 2016. As such, the present petition is stated to be a misuse of the process of law. It is further contended that, at the time of withdrawal of the earlier petition, no liberty was granted by this Adjudicating Authority to revive or re-initiate CIRP upon breach of the settlement. As such, the present petition is stated to be not maintainable. The respondent has also taken the defence of limitation on the ground that, from the date of default, the present Section 9 petition is barred by limitation. Lastly, the respondent has pleaded hardship owing to certain disputes with the Kerala State Electricity Board and its inability to comply with the earlier settlement.

Having considered the submissions of both parties, we are of the opinion that the hardship pleaded on behalf of the respondent, citing its issues with KSEB, would not constitute a valid or legal ground to ward off its liability to pay the debt due to the petitioner to resist this insolvency petition, nor can it be treated as a valid defence to avoid such liability.

Upon consideration of the pleadings, submissions advanced by the learned counsel appearing for the parties, and the material available on record, the following issues arise for consideration:

The earlier petition was filed on 27.04.2021, and after initiation of CIRP, the parties entered into a settlement, which was reduced into writing vide Memorandum of Settlement dated 02.02.2022. Ultimately, vide order dated 11.03.2022, this Adjudicating Authority allowed the withdrawal of the petition. As per the settlement, the respondent agreed to repay the dues of the petitioner on the following schedule: -

The Respondent made the following payments in a phased manner, as disclosed by the Petitioner: - DEBTORS LEDGERS DETAILS

For the purpose of computation of limitation, the last payment made towards the outstanding debt constitutes a valid acknowledgement of liability. A part payment made towards the debt falls within the ambit of acknowledgement under the law. During the course of arguments, the learned Counsel for the Respondent contended that the default had occurred upon the breach of the settlement agreement entered into in August 2022, and, therefore, the period of limitation ought to be computed from the date of such default.

Having considered the said submissions, this Adjudicating Authority finds no merit in the contention so raised. It is an admitted fact that, subsequent to August 2022, the Respondent made part payments on 03.09.2022, 11.11.2022, 21.01.2023, 23.01.2023, 22.03.2023, and 20.07.2023. Further, during the intervening period, as noticed hereinafter, the Respondent sought an extension of four to five months for repayment of the outstanding dues under the settlement, citing financial difficulties arising on account of issues with KSEB. Such successive part payments, coupled with the requests for extension of time, clearly constitute acknowledgements of liability and give rise to a fresh period of limitation. Accordingly, the contention of the Respondent that limitation commenced in August 2022 is devoid of merit.

Further, in its reply dated 03.10.2023, the Respondent sought some more time, which would also fall within the ambit of Section 18 of the Limitation Act, 1963. The relevant portion of the reply dated 03.10.2023, issued by the Corporate Debtor to the Operational Creditor, is reproduced as under: -

We place reliance on the judgment of Hon'ble Supreme Court of India in Dena Bank v. C. Shivakumar Reddy and Anr., (2021) ibclaw.in 69 SC, wherein it was held as under:

In view of the aforesaid acknowledgement of liability and the undertaking contained in the reply dated 03.10.2023, the period of limitation stood extended in terms of Section 18 of the Limitation Act, 1963. The Hon'ble Supreme Court in Dena Bank v. C. Shivakumar Reddy & Anr., (2021) ibclaw.in 69 SC, has categorically held that an acknowledgement of debt made before the expiry of the prescribed period of limitation gives rise to a fresh period of limitation of three years from the date of such acknowledgement. Since the Corporate Debtor unequivocally acknowledged its liability and sought further time to discharge the outstanding dues by its reply dated 03.10.2023, the present Petition, filed on 13.07.2026 after curing the defects, is well within the period of limitation. Further, the order passed under Rule 63, and the findings recorded therein have already been set aside by the Hon'ble NCLAT. In any event, the said order having been passed on the administrative side cannot curtail or defeat the substantive right of the Operational Creditor to seek adjudication of its claim on the judicial side.

The respondent has taken a defence about the maintainability of this Section 9 Petition in the light of earlier settlement and also on the ground that no liberty was granted to the petitioner to revive or file a fresh petition as per the order dated 17.03.2022.

The petitioner has annexed the Settlement Deed dated 02.02.2022 as Annexure A5 to the petition. The terms and conditions of the said Settlement Deed are reproduced hereunder: -

So, Clause 9 of the Settlement Deed stipulates the future course of action in the event of any default or failure on the part of the respondent to comply with the terms of the settlement, including the right of the Operational Creditor to initiate civil or criminal proceedings, as well as proceedings under the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor. Further, by entering into the said Settlement Deed, the Corporate Debtor expressly waived its right to raise any objection on the ground of limitation.

We further place reliance on the order of the Hon'ble NCLAT in Pooja Finlease Ltd. v. Auto Needs (India) Pvt. Ltd. & Anr., (2022) ibclaw.in 764 NCLAT, wherein it is held as under:

Thus, Clause 9 of the Settlement Deed unequivocally reserves the right of the Operational Creditor to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 in the event of any breach of the terms of the settlement by the Corporate Debtor. The said Settlement Deed formed the very basis on which this Adjudicating Authority, vide order dated 11.03.2022, permitted withdrawal of the earlier Company Petition. Consequently, the terms of the Settlement Deed, including Clause 9, became an integral part of the order permitting withdrawal and govern the rights and obligations of the parties. The Hon'ble NCLAT in Pooja Finlease Ltd. v. Auto Needs (India) Pvt. Ltd. & Anr., (2022) ibclaw.in 764 NCLAT, has categorically held that where a petition is withdrawn on the basis of consent terms which expressly reserve the creditor's right to initiate proceedings upon breach, such consent terms form part of the order of withdrawal and remain enforceable upon default. Therefore, the respondent cannot now contend that the present proceedings are not maintainable in the absence of an express liberty granted by this Adjudicating Authority in the order dated 11.03.2022. As far as the liberty granted vide order dated 11.03.2022 to the Punjab National Bank can be viewed from a different angle, as PNB was not a party to the original Section 9 proceedings and, as such, PNB reserved its right to initiate CIRP upon commission of default. Whereas, the parties to the Section 9 petition entered into a written settlement, and their rights would be governed by the settlement so arrived at between the parties, which shall prevail qua the individual rights and obligations of the parties to that settlement. In the said settlement itself, the respondent expressly acknowledged the right of the petitioner to revive proceedings under the Insolvency and Bankruptcy Code, 2016. Accordingly, the defence taken by the respondent is not tenable.

Having consciously agreed under Clause 9 that, upon breach of the Settlement Deed, the Operational Creditor would be entitled to initiate proceedings under the Insolvency and Bankruptcy Code, the respondent is estopped from taking a contrary stand.

The respondent cannot be permitted to contend that the petitioner is using the present proceedings merely as a recovery mechanism. Once the respondent failed to fulfil the obligations undertaken in the settlement, on the basis of which the petitioner had withdrawn the earlier petition after initiation of CIRP, the petitioner became entitled to avail the remedies available in law. If this Adjudicating Authority were to entertain such a defence, it would tarnish the very scheme of the IBC and discourage genuine litigants from entering into compromise settlements.

We have considered the submissions. The original petition was filed on account of default in repayment of operational debt, and in the present petition, the respondent has failed to dispute either the genuineness or the nature of the said debt. Therefore, we find no reason to reopen this issue, particularly when this Bench has already adjudicated in favour of the petitioner regarding the nature of the debt. The respondent itself entered into the Settlement Deed with the petitioner and is bound by the terms thereof, including Clause 9, as discussed supra.

The Respondent has relied upon the order of this Adjudicating Authority dated 25.05.2026 in CP(IBC)/05/KOB/2026, wherein a petition under Section 9 of the Insolvency and Bankruptcy Code was dismissed by invoking Section 62 of the Indian Contract Act, 1872, holding that the settlement between the parties amounted to a novation of the contract and that the original cause of action ceased to survive. However, the fact remains that the scope and ambit of the adjudication in the said matter stood on an entirely different footing, and the facts of the present case are materially distinguishable. Therefore, it would not be appropriate to apply the ratio laid down in the said decision to the facts of the present case.

This Adjudicating Authority fully agrees with the contention of the Respondent that the Insolvency and Bankruptcy Code cannot be invoked as a recovery mechanism. However, it is equally evident that the earlier insolvency proceedings were initiated and subsequently withdrawn at the instance of the Respondent. The Respondent had agreed to repay the admitted amount within a stipulated period, and there was no alteration in the original terms and conditions governing the transaction, except with regard to the mode and timeline of repayment. The Respondent having failed to honour the settlement terms, the revival of the Operational Creditor's rights, as expressly contemplated under the settlement agreement, to initiate insolvency proceedings cannot be defeated on technical objections by contending that the Code is being used merely as a recovery mechanism.

It is well settled that every case must be decided on its own peculiar facts and circumstances, and no straightjacket formula can be applied to arrive at a uniform conclusion. The Respondent is estopped, by its own conduct, from raising such technical objections. The settlement agreement executed between the parties neither conferred any new rights nor altered the original liability or created fresh obligations. It was entered into solely to facilitate repayment of the existing dues. Consequently, the judgment relied upon by the Respondent in Perwali Wallace Pvt. Ltd. v. Narbada Forest Industries Pvt. Ltd. is distinguishable on facts and is, therefore, inapplicable to the present case. The ratio decidendi of the said judgment does not govern the controversy involved in the present proceedings.

The Respondent has further placed reliance upon the judgment of the Hon'ble NCLAT, Principal Bench, New Delhi, in Maldar Barrels Pvt. Ltd. v. Pearson Drums & Barrels Pvt. Ltd., Company Appeal (AT) (Ins.) No. 872 of 2020. However, the said decision is clearly distinguishable on facts. In the said case, the Corporate Debtor had admittedly paid the entire settlement amount in full and final satisfaction of the settlement agreement, but owing to delay in repayment as per the settlement agreement, the Operational Creditor invoked the original terms, and it was in those peculiar facts that the Hon'ble NCLAT held that the clause providing for reinstatement or fresh initiation of CIRP was not triggered. The Hon'ble NCLAT also expressly observed that the question as to whether Section 62 of the Indian Contract Act, 1872 would apply so as to constitute a novation of the contract was not relevant for adjudication in that appeal. In the present case, however, the Corporate Debtor has admittedly failed to honour the Settlement Deed and a substantial amount continues to remain outstanding. Further, Clause 9 of the Settlement Deed expressly reserves the right of the Operational Creditor to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 upon breach of the settlement. Therefore, the ratio of the aforesaid judgment has no application to the facts of the present case.

At the stage of admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority is required to satisfy itself that an operational debt is due and payable, that default has occurred, that the demand notice under Section 8 has been duly served, and that no pre-existing dispute exists between the parties. In the present case, the Operational Creditor has successfully established the existence of the operational debt and the occurrence of default. The liability of the Corporate Debtor stands acknowledged under the Settlement Deed dated 02.02.2022 as well as in its subsequent reply dated 03.10.2023 seeking further time to discharge the outstanding dues. The demand notice issued under Section 8 of the Code was duly served, and no notice of dispute was received from the Corporate Debtor. The Petition has been filed within the prescribed period of limitation, the amount in default exceeds the threshold prescribed under Section 4 of the Code, and the application is otherwise complete in all respects. Accordingly, this Adjudicating Authority is satisfied that the requirements of Section 9 of the Code stand fulfilled and finds it a fit case to admit the Petition and initiate the Corporate Insolvency Resolution Process against the Corporate Debtor in accordance with law.

This Adjudicating Authority finds no legal impediment to the admission of the application under Section 9. Accordingly, CP(IBC)/17/KOB/2026 is allowed with the following directions:

A. The Petition bearing no. CP(IBC)/17/KOB/2026 filed under section 9 of the Insolvency and Bankruptcy Code 2016 for initiation of the Corporate Insolvency Resolution Process is ADMITTED.

B. We declare a moratorium in terms of Section 14 of the Insolvency and Bankruptcy Code 2016. The necessary consequences of imposing the moratorium shall follow.

C. The Operational Creditor has not proposed the name of the Interim Resolution Professional. Section 9 of the Insolvency and Bankruptcy Code 2016 does not make it mandatory for the Operational Creditor to propose the name of the Interim Resolution Professional. Therefore, this Adjudicating Authority appoints Mr. C J Davis, Insolvency Professional, having Registration No. IBBI/IPA-003/ICAI-N-00343/2021-2022/13660, having address at House No 23/1223, Chandy House, Golden gate, Rareeram Road, Anchangady, East Fort, Behind Selex Mall, Thrissur, Kerala,680005, Email: [email protected], from the panel prepared in accordance with the “Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2025” issued by the Insolvency and Bankruptcy Board of India, as the Interim Resolution Professional (IRP). Therefore, the IRP shall file a valid Authorization for Assignment along with Written Consent in Form-2 and a Registration Certificate within 48 hours of receipt of this order. The designated IRP shall perform all his functions as contemplated under the Code and must take any additional actions in this regard that are mandated by the law, more specifically Sections 15, 17, and 18 of the Code.

D. In pursuance of Section 13(2) of the Insolvency and Bankruptcy Code 2016, we direct the IRP to make a public announcement immediately about the admission of this application under Section 9 of the Code. The expression immediately means within three days from the date of appointment as clarified by the explanation to Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. During the CIRP period, the management of the Corporate Debtor shall vest in the Interim Resolution Professional (IRP)/Resolution Professional (RP), as the case may be, in terms of Section 17 of the Code. The Powers of the Board of Directors of the Corporate Debtor shall stand suspended and be exercised by the IRP/RP. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within one week from the date of receipt of this order.

E. The IRP is expected to take full charge of the Corporate Debtor's assets and documents without any delay whatsoever. He is also free to take police assistance, and this Adjudicating Authority hereby directs the Police Authorities to render all assistance as may be required by the IRP in this regard. F. The IRP or the RP, as the case may be, shall submit to this Adjudicating Authority a periodical report with regard to the progress of the Corporate Insolvency Resolution Process in respect of the Corporate Debtor. G. The Operational Creditor shall deposit a sum of Rs. 2,00,000/-(Rupees Two Lakh Only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to the approval of the Committee of Creditors (CoC). H. Additionally, the Operational Creditor shall serve a copy of this Order on the IRP and on the Registrar of Companies, Kerala, by all available means for updating the Master Data of the Corporate Debtor. The Registrar of Companies shall send a compliance report in this regard to the Registry of this Tribunal within seven days from the date of receipt of a copy of this Order.

The present Company Petition bearing No. CP(IBC)/17/KOB/2026 is admitted accordingly.

The Registry is hereby directed to send e-mail copies of this order forthwith to all the parties and their counsel for information and to take necessary steps.

Let the certified copy of this order be issued upon compliance with the requisite formalities.

File be consigned to records.