Pooja Finlease Ltd Vs. Auto Needs (India) pvt Ltd.
Company Appeal no.103 of 2022
Facts:
(1) Application filed by the Appellant under Section 7 of the I&B Code, CIRP was initiated against the Corporate Debtor by order dated 20.12.2019. In the corporate insolvency process, settlement reached between the parties and Consent Terms dated 27.01.2020 was filed.
(2) AA take on record the consent terms which included that in case of default financial creditor shall be entitled to revive the CIRP and parties were allowed to withdrawn the application in terms of section 12 of the code read with Rule 11 of the NCLT rule 2016
(3) Corporate debtor defaulted in payment terms and appellant filed for revival of CIRP against the corporate debtor which was rejected by the AA
(4) Hence this present appeal against the order of NCLAT.
Issue: Whether NCLT was right in rejecting the application ?
Arguments:
For appellant:
(1) Counsel for the appellant submitted that ‘that there is default committed by the Corporate Debtor, consequently, he filed application seeking revival of the Corporate Insolvency Resolution Process is terms of Clause 8 of the Consent Terms, which application has been rejected by the Adjudicating Authority.
(2) Counsel submitted that when Clause 8 of the Consent Terms contemplate revival of CIRP in the event of any default of the terms of the Consent Terms on the part of the Corporate Debtor, the Adjudicating Authority ought to have revived the Section 7 petition and Adjudicating Authority has committed error in rejecting the revival application.
For respondent:
(1) Counsel for respondent submitted that there was no liberty granted in the order dated 05.02.2020 to revive CIRP, hence, the Adjudicating Authority has rightly rejected the application for revival. He has also referred to judgment of this Tribunal in ‘Krishna Garg and Anr. vs. Pioneer Fabricators Pvt. Ltd.’ of the impugned order.
Decision: Hon’ble NCLAT set aside the order of NCLT and revive the petition to be heard by the AA in accordance with law.
Rationale:
(1) Consent Terms in Clause 8 as has been extracted above clearly entitle the Financial Creditor to revive the Section 7 petition in event any default of the terms of the Consent Terms.
(2) The order dated 05.02.2020 cannot be read as an order by which Consent Terms has not been taken on record when by the said order application filed along with the consent terms under Rule 11 of NCLT rules, 2016 was taken on record and was allowed. When the application was allowed in terms of the consent terms, Clause 8 itself shall be treated to be part of the order which shall entitle the Financial Creditor to revive the petition in the event of any default.
