IBC Section 9 maintainability fails where settlement terms were being acted upon and no cause of action arose for CIRP.

A Section 9 IBC application was found not maintainable where the parties had already settled the debt and the settlement terms provided for payment in instalments by cheque or RTGS. The record showed an attempted RTGS transfer of the first instalment, but the remittance failed because the beneficiary account had been closed, and the material indicated an intention to comply with the agreed mode of payment. On that basis, the Tribunal held that no cause of action had arisen to initiate CIRP and that the applicant had not approached the Tribunal with clean hands. The application was rejected.

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Issues: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable in view of the settlement between the parties and the alleged default in the agreed mode of payment.

Analysis: The settlement deed contemplated payment of the settled amount in instalments through cheques or RTGS. The record showed an attempted RTGS transfer of the first instalment and supporting bank communication indicating that the remittance could not be completed because the beneficiary account had been closed. The settlement amount was to be paid over future instalments, and the material on record indicated an intention to comply with the settlement terms. In these circumstances, the Tribunal held that no cause of action had arisen to initiate CIRP and that the applicant had not approached the Tribunal with clean hands.

Conclusion: The Section 9 application was held to be not maintainable and was rejected.

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