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TMI Blog2024 (7) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... ged properties of the Corporate Debtor. It is understood that if the contract is altered in material particulars to change its essential character, the modified contract must be read as doing away with the original contract but if the modified contract has no independent contractual force, no new contract comes into play. There are no such wording in settlement agreement dated 27.08.2019. It is found that in case of Manohur Koyal vs. Thakur Das Naskar [ 1888 (1) TMI 2 - CALCUTTA HIGH COURT ], the plaintiff sued the defendant to recover Rs. 1100 due on a bond and after the due date of the bond, the plaintiff agreed to accept from the defendant, in satisfaction of the bond, Rs. 400/- in cash and a fresh bond for Rs. 700/-. The defendant failed to pay the Rs. 400 and to give the fresh bond of Rs. 700/-. In a suit by the plaintiff to recover the amount of original bond, the defendant contended that the subsequent agreement was a novation. It was held that Section 62 did not apply, as the subsequent agreement was made after the breach of the original contract, and that the defendant having failed to perform satisfactorily which he had promised to give, remained liable on the original, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Development Bank of India (in short IDBI) of Rs. 3.67 Crores and further entered into agreement for foreign currency loan for Rs. 1.83 Crores. It has been alleged by the Appellant that the entire problem of the Corporate Debtor began since the IDBI release only Rs. 3.29 Crores against sanction loan of Rs. 3.67 Crores and similarly release only Rs. 1.25 Crores (Foreign Currency Loan) against Rs. 1.83 Crores. 4. The Appellant could not service the debt and repay the loan and IDBI issued legal notice on 10.06.1998. The IDBI also filed OA No. 445/1998 before Debt Recovery Tribunal (in short DRT) for recovery of outstanding amount of Rs. 6,19,87,815/- and the Corporate Debtor, during pendency of such proceedings before DRT, approached IDBI for One Time Settlement (in short OTS) and agreed to settle the outstanding at Rs. 2.50 Crores. 5. It has been submitted that the Appellant could not pay even the OTS amount and thus OTS failed. The IDBI assigned its outstanding debts to Kotak Mahindra Bank Ltd. on 31.06.2006 and Kotak Mahindra Bank Ltd. further assigned the debt to the Respondent No. 1 on 16.04.2008 by registered deed of assignment. Thus, the Respondent No. 1 became the Financial C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tite agreement with proposed buyers at mutually decided price and subsequently distribute the sale proceeds into equal proportion between the Appellant of the Respondent No. 1. 12. It has been alleged that the Appellant sent an e-mail on 26.07.2021 cancelling the settlement agreement which was replied by the Respondent No. 1 on 04.08.2021 alleging that the Appellant is trying to escape his liabilities to repay the loan to the Respondent No. 1 by way of unilateral suo-moto cancellation of the settlement agreement dated 27.08.2019 which was not permissible. 13. The Respondent No. 1 filed an application under Section 7 of the Code before the Adjudicating Authority, which was allowed and the Corporate Debtor came into CIRP w.e.f. 22.02.2024. 14. The Appellant submitted that Section 62 of the Contract Act, 1872 provides that if parties to a contract agree to substitute a new contract for it, the original contract need not be performed. The Appellant stated that there was novation of contract and the old contract, therefore, ceased to exist between the Corporate Debtor and the Respondent No. 1. The Appellant also argued that in the present case, the Settlement Agreement dated 27.08.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single judge of the Hon ble Delhi High Court dated 22.05.2015 wherein it was held that the Financial Creditor has confined its claim only to a sum of Rs. 250 Lacs and interest thereon. The relevant part of this Appellate Tribunal s earlier order dated 18.09.2023 reads as follows: 21. When the Company Petition was dismissed with the observation as observed, we fail to see that how the Respondent can contend that claim of the Appellant is limited to only Rs. 250 Lakhs. 20. It is the case of the Respondent No. 1 that this Appellate Tribunal while allowing the Appeal filed by the Respondent No. 1 had held that the Adjudicating Authority committed error in rejecting Section 7 Application filed by the Respondent No. 1 as barred by time. 21. The Respondent No. 1 alleged that the Appellant failed to bring out all relevant facts including the balance sheets relevant for the disposal of the Appeal and is trying to mislead this Appellate Tribunal in the present appeal. 22. The Respondent No. 1 refuted the plea of the Appellant about novation of contract and also refuted the plea of the Appellant that the Settlement Agreement dated 27.08.2019 modified the earlier contracts between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e National Company Law Tribunal, Bench-IV, New Delhi (in short Tribunal ) vide its order dated 24.03.2021 passed in Appeal No. 533/252/ND/2019. The relevant portion of the order is reproduced as under :- 10. ***The name of the petitioner company shall then stand restored in the Register of the Registrar of Companies (RoC) as if its name of the company had not been struck off. ( Emphasis Supplied ) 27. It is significant to note that the Tribunal specifically mentioned the name of the Respondent No. 1 is restored as if its name had not been struck off. We note that the legal implication of this would be that all action taken by the Respondent No. 1 would remain valid including signing of the settlement agreement dated 27.08.2019 and therefore the pleadings of the Appellant on this ground stand rejected. 28. We understand that if the contract is altered in material particulars to change its essential character, the modified contract must be read as doing away with the original contract but if the modified contract has no independent contractual force, no new contract comes into play. We do not find any such wording in settlement agreement dated 27.08.2019 29. The question whether a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the Tribunal gave clear specific verdict that the restoration would have effect as if the name was never struck off would enable the Respondent No. 1 to enforce the agreements. 33. The pleadings of the Appellant that the original term loan/ foreign currency loan agreement which was later assigned by the registered deed in favour of the Respondent No. 1 ceased to exist after signing the settlement agreement dated 27.08.2019 and which the Appellant choose to unilaterally terminate on 26.07.2021, by sending an e-mail to Respondent No. 1 on the plea that the name of the Respondent No 1 was struck off by the Ministry of Corporate Affairs and therefore there is no debt and default and the application filed under Section 7 of the Code could not have been allowed. We wonder, if such types of pleadings of the Appellant are to be accepted then whether any agreement would ever be honoured. Such submissions are legally not tenable and stand rejected. 34. Incidentally we note that the loan was sanctioned by the IDBI somewhere in 1996 and even OTS was approved by the IDBI way back in the year 2006. We also note that IDBI assigned its outstanding debts to Kotak Mahindra Bank Limited on 31.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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