M/S Shraddha Enterprises vs Simplex Infrastructures Limited

Shraddha Enterprises ...Appellant Through its proprietor Archana Singh

Versus

Simplex Infrastructures Ltd. ...Respondent

Present: For Appellant: Mr. Shivam Kumar, Mr. Saurabh pandey, Advocates. For Respondent: Mr. Siddhant Jaiswal, Advocate.

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain (Oral)

24.07.2024: This appeal is directed against the order dated

14.07.2023 by which an application filed by the appellant bearing

I.A No. 1439 of 2023 filed in C.P. (IB) 253/(KB)2022 has been

dismissed on the ground that the order dated 18.04.2023 by which

the CP was dismissed on the basis of a settlement cannot be

restored/revived.

2. The brief facts of the case are that the appellant filed an

application under Section 9 of Insolvency & Bankruptcy Code, 2016

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('Code') for resolution of an amount of Rs.1,35,40,097/- before the

National Company Law Tribunal, Kolkata Bench (in short

'Tribunal').

3. The appellant and the respondent entered into a settlement

deed on 24.03.2023 as per which the respondent (Simplex

Infrastructure Ltd.) undertook to pay the settlement amount of

Rs.1,35,40,097/- by way of 7 installments. The said payments were

to be made as under:

"That SIMPLEX shall make payment of the Settlement Amount to SHRADDHA in 7 Installments in the following manner:

1. Rs. 17,00,000/-to be paid at the time of the signing of this Agreement, By a D.D.

2. Rs. 20,00,000/- on or before 28.04.2023 by RTGS

3. Rs 20,00,000/-on or before 28.05.2023 by RTGS

4. Rs. 20,00,000/-on or before 28.06.2023 by RTGS

5. Rs 20,00,000/-on or before 28.07.2023 by RTGS

6. Rs 20,00,000/-on or before 28.08.2023 by RTGS

7. Rs. 18,40,097/-on or before 28.09.2023 by RTGS"

4. The parties also agreed that in case of a breach in the payment

of the aforesaid amount by the respondent, appellant shall be

entitled to file an application for restoration of the application or

could file a fresh application under Section 9 for the unpaid dues.

The said clause in the agreement is as under:

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"Further, if SIMPLEX fails to pay any of the instalment amount to

SHRADDHA in scheduled time as stated hereinabove, then it will

be treated as breach of the entire Agreement. SHRADDHA will be

free to initiate any legal proceeding and litigations and file suit

against SIMPLEX Including application for restoration of C.P. (IB)

No. 253/KB/2022 or filing a fresh application u/s 9 of Insolvency

and Bankruptcy Code, 2016., for its unpaid dues."

5. It so happened that the respondent paid the 1st installment of

Rs.17 lakhs and thereafter stopped making the payment and as a

result thereof, there was a breach of settlement, arrived at between

the parties, by way of a written agreement dated 24.03.2023. As a

consequence, the appellant filed an application for restoration of the

application filed under Section 9 bearing C.P. (IB)253/(KB)2022.

The said application has been dismissed by the impugned order

dated 14.07.2023 and hence the present appeal has been filed.

6. Counsel for the appellant has submitted that the Ld. Tribunal

has committed a patent error in dismissing the application for

restoration only because of the reason that at the time when the

order was passed for withdrawal of the application on 18.04.2023,

reference to the agreement was not made. However, it is submitted

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that in the order dated 18.04.2023 it has been categorically

mentioned by the Ld. Tribunal that "Ld. Counsel for the Operational

Creditor states that the matter has been settled between the

parties, this is admitted by the Ld. Counsel appearing for the

Corporate Debtor. In view of this position this petition is dismissed

as withdrawn''.

7. It is submitted that once it has been recorded by the Ld.

Tribunal that the matter has been settled between the parties than

obviously it was on the basis of the settlement dated 24.03.2023 as

there was no other settlement. In support of his contention, he has

relied upon a decision of this Court in the case of IDBI Trusteeship

Services Limited Vs. Nirmal Lifestyle, Company Appeal (AT) (Ins.)

No. 117 of 2023.

8. On the other hand, counsel for the respondent has vehemently

argued that there is no error in the impugned order which may call

for any interference by this Court because the order dated

18.04.2023 was not passed with reference to the settlement

agreement dated 24.03.2024. In support of his submission, he has

relied upon a decision of this Court rendered in the case of SRLK

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Enterprises LLP v. Jalan Transolutions India Limited in Company

Appeal (AT) (Ins.) No. 294 of 2021 decided on 08.04.2021.

9. We have heard counsel for the parties and perused the record

with their able assistance.

10. We have come across yet another case in which the

respondent (Corporate Debtor) has shown his dishonesty. The

Corporate Debtor/Respondent had agreed to bury the hatchet by

way of settlement agreement dated 24.03.2023 and assured the

appellant that he would pay the amount in question in 7

installments. Believing the Respondent, the appellant agreed to sign

the settlement agreement and allowed him to pay the amount in

seven installments but the 1st Respondent only paid the

1st installment and stopped the payment of rest of the installments.

However, the appellant was vigilant at that time when he entered

into agreement because he added a clause that in case of a breach

of payment the appellant would be entitled to file the restoration

application of the CP.

11. Since the payment was not made by the respondent, therefore,

the appellant took recourse to clause 4 to file the application which

has wrongly been dismissed by the Ld. Tribunal only on the ground

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that the order passed was not on the basis of the settlement

agreement, though, the Ld. Tribunal in its order dated 08.04.2024

has categorically mentioned that the matter has been settled

between the parties and settlement agreement was placed on record

at that time.

12. Thus, in our considered opinion, the Ld. Tribunal has

committed a patent error in dismissing the application of the

appellant because if this procedure is allowed to be adopted then

the unscrupulous Corporate Debtor like the respondent may keep

on cheating the gullible operational creditors who would believe

them that they would make their payment in installments and thus

entered into the settlement. We strongly condemn the act and

conduct of the respondent in this case because such type of cases

are increasing day by day specially in the matter of operational

creditors, where the corporate debtor like the respondent first

enters into a settlement and then after paying one or two

installments stop making the payment and when the application is

filed for revival then the same is dismissed by the Tribunal on the

hyper technical grounds. The judgment relied upon by the appellant

is not applicable. Therefore, in the aforesaid discussion we allow

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this appeal and set aside the impugned order and restore the

application filed under Section 9 by the appellant.

13. The respondent shall pay cost of Rs. 2 lakhs to the appellant

by way of bank draft within a period of one month from the date of

passing of this order. In case, the cost is not paid, the appellant

shall be free to file an appropriate petition in accordance with law.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

sa/rr

Company Appeal (AT) (Ins) No. 1661 of 2023