Revival of withdrawn insolvency petition permitted where recorded settlement terms expressly allowed revival on default.

A financial creditor may seek revival of a section 7 insolvency petition after withdrawal under section 12A where the settlement terms recorded before the Adjudicating Authority expressly preserve a right of revival on default. The consent terms formed part of the record and were the basis of withdrawal, so the absence of an express liberty clause in the withdrawal order was not decisive. A distinction was drawn between simple withdrawal based on an outside settlement and withdrawal founded on recorded consent terms. As the corporate debtor defaulted under the settlement, revival was held to be maintainable.

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Issues: Whether a financial creditor could seek revival of a section 7 insolvency petition after withdrawal under section 12A when the settlement terms recorded before the Adjudicating Authority expressly provided for revival on default.

Analysis: The consent terms formed part of the record before withdrawal of the corporate insolvency process and specifically contemplated that any default in payment would entitle the financial creditor to revive the company application. The withdrawal order noted the settlement placed before the Adjudicating Authority, so the absence of an express liberty clause in the withdrawal order was not decisive. A distinction was drawn between a simple withdrawal on the basis of an outside settlement and a withdrawal founded on consent terms brought on record and adopted as the basis of disposal. Since the corporate debtor defaulted in performance of the settlement, denial of revival would defeat the contractual undertaking embodied in the consent terms.

Conclusion: The application for revival was maintainable and ought to have been allowed.

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