Inherent powers under Rule 11 can restore an insolvency petition after breach of recorded settlement terms.

An insolvency application disposed of on recorded settlement terms may be restored under Rule 11 of the NCLT Rules, 2016 when the settlement is breached. The Tribunal treated non-compliance with the payment terms as sufficient cause to invoke its inherent powers and rejected the objection that the applicant was confined to filing a fresh application. It held that a liberty to initiate a fresh proceeding does not, by itself, bar restoration where enforcement of the recorded settlement is sought. The objection based on disqualification of directors was also rejected, and the application was allowed with restoration of the insolvency matter to the file.

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Issues: Whether an application under Rule 11 of the NCLT Rules, 2016 was maintainable to restore an insolvency application disposed of on settlement, after alleged default in compliance with the settlement terms.

Analysis: The insolvency application had been disposed of on the basis of a settlement recorded before the Tribunal, with liberty to file a fresh application in the event of non-compliance. The subsequent default in payment under the settlement was treated as sufficient cause to invoke the Tribunal's inherent powers. The objection that the applicant must only file a fresh application was rejected as a technical plea that could not defeat enforcement of the settlement recorded before the Tribunal. The objection regarding disqualification of the directors was also repelled.

Conclusion: The application was allowed and the insolvency application was restored to file.

Ratio Decidendi: Where a proceeding is disposed of on recorded settlement terms, the Tribunal may exercise inherent powers under Rule 11 to restore the proceeding upon breach of the settlement, and a liberty to file a fresh application does not preclude restoration in appropriate cases.

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