Finsbury Global Fze vs Uttam Sucrotech International Private ...

IN THE MATTER OF: Finsbury Global FZE ...Appellant Versus Uttam Sucrotech International Pvt. Ltd. ...Respondent

Present: For Appellant : Mr. Vaijayant Paliwal, Mr. Nikhil Mathur and Ms. Mehak Nayak, Advocates. For Respondent : Mr. Pragyan Pradip Shrama, Advocate.

ORDER

(Hybrid Mode)

[Per: Justice Rakesh Kumar Jain] (Oral)

12.02.2024 : This Appeal is directed against the order dated 04.05.2023,

by which an application filed by the Appellant under Section 60(5) of the

Insolvency and Bankruptcy Code, 2016, (for short the Code) read with Rule

11 of the National Company Law Tribunal Rules, 2016, (for short the Rules)

for revival of C.P.(IB)No.1013 (PB)/2020 has been dismissed.

2. Shorn of unnecessary details, the Appellant filed an application under

Section 9 of the Code for the Resolution of debt of 598,548 USD. During the

pendency of the application, a settlement was arrived at between the parties

on 09.11.2021, which was reduced into writing. In terms of the settlement,

the Corporate Debtor had to pay 578,148 USD in place of 598,548 USD. The

relevant Clauses of the Agreement are reproduced as under:

"1. The Parties hereto agree that the Second Party shall pay to the First Party USD 578,148 (USD five hundred seventy eight thousand and one hundred forty eight only) in full and final settlement of all dues (USD 598,148) payable to First Party by the Second Party in the schedule as follows on or before 15th February, 2022 in the following manner:

a. within 7 working days : USD 100,000.00 from the signing of settlement agreement b. Before December 15, : USD 150,000.00 2021 c. Before January 15, : USD 150,000.00 2022 d. Before February 15, : USD 178,148.00 2022

It is agreed by the Second Party that the above payments shall be made within the agreed time schedule as mentioned without any delay or demur.

2. The Second Party undertakes and warrants that it shall discharge its liability to pay the amount as agreed upon in this Agreement as per the amounts & dates stated in the Clause 1 above and further agrees that any default therein shall confer the right to the First Party to seek appropriate legal recourse, including the revival of the NCLT Application under S.9, as it deems fit and proper."

3. This settlement was placed on record on 30.11.2021 and is thus part

of record of the Tribunal. The Tribunal, on the basis of the settlement between

the Parties passed the order on 03.12.2021, which read as under:

"The Learned Counsel for the Operational Creditor/Petitioner has submitted that the matter has already been settled and a schedule of payment has been agreed. In view of the same, the Learned Counsel for the Operational Creditor/Petitioner submitted that she does not want to pursue the matter anymore and she want to withdraw the Petition. In view of the statement made by the Learned Counsel for the Petitioner, the main matter stands dismissed as withdrawn. Affidavit to that affect be filed within three days.

In view of the same, all these applications have now become infructuous."

4. In pursuance of the aforesaid order, the appellant also filed an affidavit

on 12.12.2021, which read as under:

"I, Amla Mazumdar, Daughter of Late Mr. Shailendra, aged about 68 years, residing at Meadows 5, Villa 47, Compt. App. (AT) (Ins.) No. 796 of 2023 2 of 5 Street 3, Dubai, UAE, do hereby solemnly state and affirm as follows:

1. I am the power of attorney holder of the abovenamed Operational Creditor/Applicant in the above matter and am therefore competent swear this affidavit.

2. The present affidavit is being filed pursuant to the directions of this Hon'ble Tribunal dated 03.12.2021.

3. I state that the Operational Creditor and the Corporate Debtor have entered into a Settlement Agreement dated 09.11.2021 ("Agreement") and the Corporate Debtor has agreed to pay a sum of USD 578,148 as per an agreed payment schedule under the Agreement. In light of the same, the Operational Creditor do not wish to continue with the above Application and under instructions, the same was withdrawn. A copy of the Agreement is already placed on record before this Hon'ble Tribunal."

5. Case of the Appellant is that since the Corporate Debtor did not adhere

to the payment schedule set out in the settlement, therefore, the Appellant

filed an application under Section 60(5) of the Code bearing I.A.4081/2022

on 19.08.2022. This application has been dismissed by the Tribunal with the

observation that the nature of the `debt' of the Operational Creditor has now

been changed because of the settlement which is no longer an Operational

Debt for filing of application under Section 9.

6. The Appellant has submitted that the nature of `debt' will not change

because there was a condition precedent in the settlement that in case of any

breach the Appellant shall have a right to seek revival of the application

initially filed under Section 9 of the Code. In this regard he has relied upon

decisions of this Court rendered in the case of `IDBI Trusteeship Service Ltd.'

Vs. `Nirmal Lifestyle Limited' in Comp. App. (AT) (Ins.) No.117/2023, decided

on 15.05.2023, `Vinay Gupta' Vs. `Ashika Credit Capital Limited & Anr.'

[Comp. App. (AT) Ins. No.92/2023], `Priyal Kantilal Patel' Vs. `IREP Credit Compt. App. (AT) (Ins.) No. 796 of 2023 3 of 5 Capital Private Limited & Anr.' [Comp. App. (AT) Ins. No.1423/2022] and

`Ahluwalia Contracts (India) Ltd.' Vs. `Jasmine Buildmart Pvt. Ltd.', [2023 SCC

OnLine NCLAT 579].

7. On the other hand, Counsel for the Respondent has submitted that

about 200,000 USD have already been paid in two payments made in terms

of the settlement. It is also submitted that in the case of `SRLK Enterprises

LLP' Vs. `Jalan Transolutions (India) Limited' [Comp. App. (AT) Ins.294/2021],

this Court has held that if the withdrawal has been simplicitor by making a

statement that the Parties have settled then the rest of the amount of default

cannot be recovered in the proceedings under the IBC.

8. We have heard Counsel for the Parties and perused the records with

their able assistance.

9. In this case, the facts are not much in dispute, because the matter has

been settled between the Parties through a written settlement, in which one

of the clauses permitted the Appellant to file an application for revival in case

of breach on the part of the Corporate Debtor/Respondent. It is otherwise true

that the application filed by the Applicant was initially dismissed as

withdrawn on account of the settlement between the Parties and no

permission was sought at the time for revival of the said application. However,

in the case of `IDBI Trusteeship Service Ltd.' (supra), this Court while

distinguishing the order in the case of `SRLK Enterprises LLP' (supra), in para

18 and 19 has held as under:

"18. What has been observed in paragraph 6 itself makes a clear distinction between withdrawal simplicitor making statement that parties have settled and bringing on record settlement. This Tribunal itself has recognized two separate categories. Present case

Compt. App. (AT) (Ins.) No. 796 of 2023 4 of 5 falls in the category where settlement has been brought on record. Thus, Judgement of this Tribunal in SRLK Enterprises LLP does not help the Respondent.

19. We thus in the facts of the present case are of the view that Adjudicating Authority committed error in rejecting the revival application 3196 of 2022 when the consent term itself contemplates a clause for revival in event of default and default having been committed by the Corporate Debtor, rejection of revival is to deny the Financial Creditor rightful remedy. Non-mention of specific liberty in the Order is inconsequential in view of the clear terms in the settlement which was the basis of withdrawal of Company Petition."

10. Moreover, in case of `Ahluwalia Contracts (India) Ltd.' (supra), which was

a case under Section 9 itself, the same observations have been made by this

Court for the purposes of revival of the application filed under Section 9 on

the ground that there was a provision made in the Settlement Agreement that

in case of default, the Appellant would be entitled to get the application

revived.

11. In view of the aforesaid facts and circumstances, we are of the

considered opinion that there is an error on the part of Adjudicating Authority

in dismissing the application filed by the Appellant. The Appeal thus succeeds

and the impugned order is hereby set aside. The original application filed by

the Appellant stands revived which shall now be decided in accordance with

law.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Ajai Das Mehrotra] Member (Technical) himanshu/kam

Compt. App. (AT) (Ins.) No. 796 of 2023 5 of 5