One-time settlement default does not wipe out underlying debt; proof of debt and default supports insolvency admission.

Failure to comply with a sanctioned one-time settlement does not extinguish the underlying debt under the Insolvency and Bankruptcy Code, 2016. The record showed that the corporate debtor agreed to pay the settled amount but did not follow the payment schedule, the account became non-performing, reminders were issued, and the settlement was cancelled for non-payment. On those facts, the original outstanding liability remained enforceable, and the documents and payment history were treated as sufficient to establish debt and default for admission of the section 7 petition.

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Issues: Whether the financial creditor established the existence of a debt and default so as to warrant admission of the petition under section 7 of the Insolvency and Bankruptcy Code, 2016, notwithstanding the one-time settlement and the corporate debtor's objections.

Analysis: The debt was found to be subsisting and the account had turned non-performing. The corporate debtor had agreed to pay the settled amount under the one-time settlement but failed to adhere to the payment schedule within the stipulated time. Repeated reminders were issued and the settlement was ultimately cancelled for non-payment. Once the settlement failed, the creditor was entitled to proceed on the basis of the original outstanding liability. The record, including the executed documents and payment history, was found sufficient to prove default.

Conclusion: The issue was answered in favour of the financial creditor. Existence of debt and default was held to be established, and the petition was admitted.

Ratio Decidendi: Failure to comply with a sanctioned one-time settlement does not extinguish the underlying debt, and where debt and default are established, a petition under section 7 of the Insolvency and Bankruptcy Code, 2016 is liable to be admitted.

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