2021 (1) TMI 1111 - Tri - Insolvency and Bankruptcy

Date of removal of disqualification of Director - whether the Corporate Debtor has complied with the conditions stipulated in the settlement agreement produced before this Tribunal? - HELD THAT - It is true that the IBA has been disposed of on the basis of settlement arrived between the parties stating that they have settled the matter stating that on 26.8.2020 settlement has been arrived for a total sum of Rs. 2, 25, 00, 000/- as full and final settlement of the entire claim between the Corporate Debtor M/s Sree Bhadra Parks and Resorts Limited on the terms mentioned in the settlement agreement. When a settlement has been arrived between the parties it is duty bound by the Corporate Debtor to make good the payments proposed in that settlement. They cannot go back making various allegations including maintainability of the IBA after making default in the payment agreed to between the parties. The contention regarding the application is not maintainable as the order stipulates for filing a fresh application cannot be accepted because merely on technicalities the Corporate Debtor cannot wash away their hands from complying with the conditions stipulated in the final order passed by this Tribunal - Application allowed.

Summary

Issues involved:
- Application under Rule 11 of NCLT Rules, 2016 seeking restoration of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
- Allegation of fraud and cheating by the Corporate Debtor in failing to comply with settlement terms.
- Disqualification of directors of the applicant company.
- Compliance with settlement terms and obligations of the Corporate Debtor.

Analysis:
- The Tribunal received an application under Rule 11 of the NCLT Rules, 2016 seeking to restore and revive an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016. The applicant sought to enforce a settlement agreement with the Corporate Debtor, alleging non-compliance and fraudulent activities.

- The Corporate Debtor, in response, contested the application, claiming that the applicant, a financial creditor, had obtained the order fraudulently. They argued that the applicant was not entitled to relief and made allegations regarding the financial creditor's status. Additionally, the Corporate Debtor raised issues related to the acknowledgment of debt and the disqualification of the applicant company's directors under the Companies Act, 2013.

- During the proceedings, the Senior Counsel for the applicant cited a judgment of the Madras High Court, which overturned the disqualification of the directors, thus refuting the Corporate Debtor's argument on this point. The Tribunal emphasized the importance of the Corporate Debtor adhering to the settlement terms agreed upon, highlighting that the settlement amount was finalized and the Corporate Debtor was obligated to fulfill the payment terms without resorting to technicalities or allegations.

- Ultimately, the Tribunal allowed the application under Rule 11, restoring the original application for further proceedings. The decision was based on the Corporate Debtor's failure to honor the settlement agreement and the Tribunal's view that technical objections should not absolve the Corporate Debtor from meeting its payment obligations as agreed upon in the settlement terms. The matter was listed for a future hearing to address the outstanding issues.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the proceedings and the Tribunal's decision.