Delhi HC Allows Withdrawal of ₹16.71 Cr Sugar Supply Recovery Suit: Settlement via NCLT‑Approved IBC Plan Leads to Full Court Fee Refund [Read Order]

In a recent ruling, the Delhi High Court permitted the withdrawal of a ₹16.71 crore sugar supply recovery suit after noting that the dispute had effectively been settled through an NCLT‑approved resolution plan under the Insolvency andBankruptcy Code (IBC), 2016.

The case arose from a 2016 sugar supply agreement between the plaintiff Sainik Industries Pvt. Ltd. and Indian Sugar Manufacturing Company Ltd., under which the defendant was to supply 5,200 metric tons of sugar. Despite receiving substantial advance payments, the defendant supplied only part of the contracted quantity, prompting the plaintiff to file a recovery suit seeking ₹19.55 crore with 15 percent interest.

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During proceedings, counsel for the plaintiff informed the Court that insolvency proceedings had been initiated against the defendant and that the resolutionplan submitted by the consortium of Shri Dutt India Pvt. Ltd. and Shri Dutt Biofuels Pvt. Ltd. had been approved by the National Company Law Tribunal (NCLT) in February 2024. The claimant accepted the amount allotted under the plan and sought withdrawal of the suit along with a refund of the court fee.

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Justice Subramonium Prasad, referring to Section 16 of the Court Fees Act and precedents including M.C. Subramaniam v. Registrar General, Madras HC (2021 3 SCC 560), held that even though the settlement occurred through the IBC process rather than direct negotiation, it still qualified as a “settlement” for refund.

The Court pointed out that the legislative intent behind Section 16 is to encourage amicable resolution and reduce judicial backlog.

The court noted that “The Authorized Representative of the Plaintiff is present in Court today. He states that the Plaintiff has accepted the amount under the CIRP process towards full and final settlement of claims under the Suit and that the Plaintiff would not initiate any other proceedings on the basis of the cause of action on which the present Suit is premised. The statement is accepted and taken on record.”

Observing that the claimant had accepted the resolution amount as a full and final settlement, the Court ordered withdrawal of the suit under Order XXIII Rule 1(4) CPC and directed that the entire court fee be refunded.

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