Section 9 IBC maintainable after settlement default where prior debt and default findings had attained finality.

A Section 9 IBC petition was treated as maintainable after earlier CIRP withdrawal because the debt and default findings had already attained finality. The settlement memorandum, forming part of the withdrawal arrangement, provided that on later default the operational creditor could pursue civil and criminal remedies, including reopening the earlier CIRP or filing a fresh petition. In that setting, the absence of an express recital granting leave did not bar a renewed insolvency action on subsequent default. The objection based on alleged claim inflation was not re-examined because debt and default had already been adjudicated; the CIRP admission was therefore upheld.

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Issues: Whether the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable in the absence of an express liberty granted while permitting withdrawal of the earlier CIRP proceedings.

Analysis: The debt and default had already been found and those findings had attained finality. The settlement embodied in the memorandum of understanding specifically contemplated that, on default in payment of instalments, the operational creditor could initiate civil and criminal proceedings, including reopening the earlier CIRP or filing a fresh petition. Since the memorandum formed part of the settlement order, the absence of an express recital granting leave did not defeat the creditor's right to proceed again on subsequent default. The objection regarding alleged inflation of the claim was not examined afresh because the existence of debt and default had already been adjudicated.

Conclusion: The petition was maintainable and the application for initiation of CIRP was admitted.

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