2021 (9) TMI 737 - Tri - Companies Law

Compliance with the Mutual Settlement Agreement between the Petitioner and the Respondent or not - release of collateral security provided - HELD THAT - Considering the fact that the Unit is an MSME one, the prayer made by the Respondent to grant some time to discuss the matter with the concerned Bank for implementation of the conditions/release of the land, guarantees and Fixed Deposits of the Petitioner, is accepted. Fifteen (15) days' time is granted as prayed, for negotiation/discussion with the Bank/Petitioner. Both the parties are at liberty to negotiate with each other/with the concerned Bank in the light of the CGTMSE Guarantee Cover available for MSME Unit for resolution of the issues advanced - List the matter on 24.03.2021.

Summary

Issues:
Compliance with terms of Mutual Settlement Agreement, difficulties faced by Respondent in complying with terms, outstanding loan repayment, release of collateral security, negotiation for implementation of settlement terms.

Analysis:
The judgment of the National Company Law Tribunal, Guwahati Bench, involved a case where the Respondent faced challenges in meeting the terms of a Mutual Settlement Agreement with the Petitioner. The Respondent had taken control of a company and was making partial payments towards a loan liability of over ?1.00 Crore. However, the Respondent encountered obstacles in liquidating the entire outstanding loan amount, which affected the release of collateral security held by the Bank. On the other hand, the Petitioner had largely complied with the stipulated terms, except for the return of a deposit from the Bank. The Petitioner had fulfilled various conditions, such as appointing directors, releasing fixed deposits, waiving loans, transferring shares, and changing the board of directors as per the agreement.

The Respondent explained that negotiations were ongoing with the Bank to address the outstanding loan amount and sought time to discuss the way forward for implementing the settlement. The Respondent faced difficulties in arranging funds to clear the loan and release collateral security. Considering the Respondent's plea, the Tribunal granted a 15-day extension for negotiation with the Bank and the Petitioner. Both parties were allowed to engage in discussions to resolve the issues, taking into account the CGTMSE Guarantee Cover available for MSME Units. The matter was scheduled for further listing on a specific date to monitor progress and ensure compliance with the settlement terms.