The New Delhi Bench of the National Company Law Appellate Tribunal ( NCLAT ) held that the no bar in fling the second petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( IBC) if the corporate debtor ( CD ) defaulted in settlement agreement pending Section 7 petition.
The appeal was filed by the erstwhile Director of Angel Promoters Pvt. Ltd. (Corporate Debtor) to challenge the order, passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi) by which an application filed under Section 7 of IBC by Respondent No. 2 to 10 (Financial Creditors) against the Corporate Debtor for the resolution of an amount of Rs. 3,34,07,686/- including interest, has been admitted, moratorium under Section 14 of the Code has been imposed and Abhay Kumar was appointed as the Interim Resolution Professional (‘IRP’).
The Counsel for the Appellant has submitted that unpaid instalment as per the settlement agreement cannot be treated as debt and breach of settlement agreement cannot be made a ground to file an application under Section 7 of the IBC.
It was further argued that at the time when the order was passed in the first petition, no permission was sought of the Adjudicating Authority to revive the petition. It is further submitted that during the pendency of the proceedings, the Appellant has paid Rs. 87 lakhs out of the court which cannot be appropriated by Respondent in the component of interest as the amount for which the petition under Section 7 was filed had already been crystallised.
In reply, Counsel for Respondent No. 2 to 10 has submitted that it is an apparent case of fraud having been played by the Corporate Debtor because there was no dispute that the loan was disbursed by the Financial Creditors to the Corporate Debtor which was to be returned alongwith interest. It was further submitted that the Appellant has not denied that the CD had defaulted in repayment of loan or was liable to pay unpaid loan amount to the Financial Creditors.
A Three-Member Bench comprising Justice Rakesh Kumar Jain, Member (Judicial), Naresh Salecha, Member (Technical) and Indevar Pandey, Member (Technical) observed that “We would like to observe that if this kind of tricks, played by the CD with the FC are allowed and the plea raised by the Appellant is accepted that the second petition on the ground of settlement agreement is not maintainable then it would give a premium to the unscrupulous CD to get the petition filed under Section 7 withdrawn on the basis of the settlement which was not to be ultimately followed. Definitely, this kind of attitude and act on the part of the CD is not appreciated.”
“In so far as the issue raised by the Appellant about the amount of Rs. 87 Lac. which has been paid out of the court during the pendency of this appeal to be adjusted in the amount which is stated to be due is concerned, suffice it to say that the Appellant has not brought on record any writing/ agreement in this regard that the said amount has been paid towards the adjustment of the principal amount otherwise the Financial Creditor is entitled to adjust the amount towards the payment of interest component at the first instance” the Tribunal noted.
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