2020 (2) TMI 52 - Tri - Insolvency and Bankruptcy

Permission for withdrawal of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - debt and default due or not - HELD THAT - Since the Company Petition is not yet admitted by the Adjudicating Authority, and the parities themselves have settled the issue, we are inclined to permit the Petitioner to withdraw the instant Company Petition with a liberty to file fresh Company Petition in case the Corporate Debtor failed to comply with the terms and conditions of the payment as mentioned in the said Joint Memo Settlement Terms dated 27.11.2019. Petition disposed of as withdrawn by directing the Corporate Debtor to strictly adhere to the terms and conditions as mentioned in the said Joint Settlement Terms dated 27.11.2019 without fail failing which the Petitioner is at liberty to file fresh Company Petition in accordance with law.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under IBC, 2016 for default in payment.

Analysis:
The case involved a petition filed by the Financial Creditors seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to default in payment amounting to ?31,81,30,887 as on 31.12.2016. The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, along with Rule 4 of I&B (AAA) Rules, 2016. The parties had multiple adjournments to settle the outstanding issue.

The Financial Creditor and the Corporate Debtor reached a settlement agreement wherein the Corporate Debtor agreed to pay ?20,00,00,000 along with applicable interest as a full and final settlement. The repayment schedule was detailed, and additional amounts for legal expenses and interest were also agreed upon. The terms of the settlement included specific deadlines for payment and consequences for non-compliance.

Both parties presented a Joint Memo dated 27.11.2019 outlining the agreed terms, including the payment schedule, legal expenses, and consequences of default. The Adjudicating Authority considered the settlement and permitted the Petitioner to withdraw the Company Petition with the liberty to refile if the Corporate Debtor failed to adhere to the settlement terms. The judgment emphasized strict compliance with the settlement terms and allowed for the filing of a fresh Company Petition if necessary.

Therefore, the case was disposed of with the direction for the Corporate Debtor to strictly adhere to the terms of the settlement agreement dated 27.11.2019. The judgment highlighted the importance of honoring the settlement terms to avoid further legal action, providing the Petitioner with the option to refile the petition if needed.