Can parties approach NCLT under Insolvency, if settlement agreement does not work?

The NCLT, Jaipur Bench opined that the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) proceedings are not recovery proceedings.

In the present case, It was noted that the Section 7 application under the IBC was filed by the Financial Creditor. Thereafter, a settlement was executed between the parties. Thereafter, the main insolvency petition was withdrawn. However, in the order allowing for the withdrawal of the main petition, no such liberty was given to the Petitioner to revive the petition. Further, it was observed that the CD has paid more than 90% of the amount.

Hence, the application for reviving the main insolvency petition was rejected.

Brief Facts :

The present petition has been preferred under Rule 11 of the NCLT Rules, 2016 to restore the petition and revive the Corporate Insolvency Resolution Process (“CIRP”) against the Corporate debtor (“CD”) on account of a breach of settlement between the parties.

Observations of the Tribunal:

It was noted that the Section 7 application under the IBC was filed by the Financial Creditor. Thereafter, a settlement was executed between the parties. Thereafter, the main insolvency petition was withdrawn. However, in the order allowing for the withdrawal of the main petition, no such liberty was given to the Petitioner to revive the petition.

It was observed that the CD has paid more than 90% of the amount.

The Bench opined that the IBC proceedings are not recovery proceedings.

The decision of the Tribunal:

Case Title: Sh. Gagan Deep Singh Dugal v. M/s. Ninaniya Estates Limited

Coram:?Shri Deep Chandra Joshi (Judicial Member), Shri Prasanta Kumar Mohanty (Technical Member)

Case No.:?Rst. A (IBC) NO. 02/7/JPR/2021

·?

Dr. Ajay Kummar Pandey

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