Operational debt and default under insolvency law proved through settlement default, leading to CIRP admission.

An operational debt was held established where a settlement agreement recorded the corporate debtor's liability and a payment schedule it failed to honour. Repeated reminders and the debtor's own admissions of inability to pay on the agreed dates supported the finding of default. On that basis, the Tribunal found the section 9 requirements satisfied and admitted the petition, triggering commencement of CIRP, appointment of an interim resolution professional, public announcement, and the moratorium under the Code.

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Issues: Whether the operational creditor established an operational debt and default so as to warrant admission of the petition and initiation of the corporate insolvency resolution process.

Analysis: The petition was founded on a settlement agreement under which the corporate debtor acknowledged liability and agreed to pay the settled amount in instalments. The record showed repeated reminders, failure to honour the payment schedule, and admissions by the corporate debtor that it was unable to pay on the agreed dates. On the material placed before it, the Tribunal found that default was proved and that the debt remained unpaid. Once the requirements for action under section 9 were satisfied, the Tribunal proceeded to admit the petition and ordered commencement of CIRP, appointment of an interim resolution professional, public announcement, and moratorium consequences under the Code.

Conclusion: The issue was decided in favour of the petitioner. The petition was admitted and CIRP was initiated against the corporate debtor.

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