The operational creditor and the debtor company entered into an agreement after which post-dated checks were issued to the operational creditor by the debtor company. Subsequently, the operational creditor withdrew the means of transaction. However, the debtor company did not comply with the terms of the settlement. In view of the foregoing, the operational creditor requested the revival of the means.
The National Company Law Tribunal (NCLT), New Delhi Bench, recently declined to revive a preferred plea under Section 9 of the Insolvency and Bankruptcy Code 2016. The plea had been withdrawn on an earlier occasion due to a settlement agreement reached between parties which subsequently failed.
The bench consisting of Dharminder Singh (judicial member) and LN Gupta (technical member) reiterated that breach of the terms and conditions of a settlement agreement does not fall within the scope of operational debt under the IBC and that this could not be a reason for triggering the CIRP.
The Section 9 Petition was filed by Bajaj Rubber Company, whereby the initiation of the Corporate Insolvency Resolution Process (CIRP) was requested.
The operational creditor and the debtor company entered into an agreement after which post-dated checks were issued to the operational creditor by the debtor company.
Subsequently, the operational creditor withdrew the means of transaction.
However, the debtor company did not comply with the terms of the settlement. In view of the foregoing, the operational creditor requested the revival of the means.
The bench noted that breach of terms and conditions could not be grounds for triggering CIRP.
The request to revive the petition was now rejected.
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