Appeal allowed, order set aside for Section 9 Application, debt from certified RA Bills, further proceedings revived

The Tribunal allowed the appeal, setting aside the order that dismissed the Section 9 Application as not maintainable due to a breach of the Settlement Agreement not constituting operational debt. The Tribunal held that the debt arose from certified RA Bills and the Settlement Agreement confirmed the debt, distinguishing previous judgments cited. The Tribunal revived the Section 9 Application for further proceedings against the Corporate Debtor.

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Issues Involved:
1. Maintainability of Section 9 Application under the Insolvency and Bankruptcy Code (IBC).
2. Nature of the debt claimed by the Operational Creditor.
3. Impact of Settlement Agreement on the operational debt.
4. Relevance of previous judgments cited by both parties.

Summary:

1. Maintainability of Section 9 Application:
The Operational Creditor filed an appeal against the order dated 12.01.2023 by the Adjudicating Authority (NCLT, New Delhi Court III), which dismissed the Section 9 Application as not maintainable. The Adjudicating Authority held that the breach of a Settlement Agreement does not constitute an operational debt under Section 5(21) of the IBC.

2. Nature of the Debt:
The Operational Creditor raised RA Bills between 04.11.2011 and February 2016 for work done under a contract with the Corporate Debtor. Despite reminders, payment was not made, leading to a demand notice under Section 8 and a subsequent Section 9 Application. A Settlement Agreement dated 16.12.2017 was reached, but the Corporate Debtor failed to comply, resulting in a fresh Section 9 Application on 01.08.2019. The Adjudicating Authority dismissed this application, stating the debt arose from the breach of the Settlement Agreement, not from the supply of goods or services.

3. Impact of Settlement Agreement:
The Appellant argued that the debt was due based on RA Bills issued under the contract and that the Settlement Agreement was merely a mode of payment. The Tribunal in "Ahluwalia Contracts (India) Limited vs. Logix Infratech Pvt. Ltd." held that a Memorandum of Understanding regarding payment does not absolve the Corporate Debtor from its debt and default. The Tribunal found that the Adjudicating Authority erred in dismissing the Section 9 Application on technical grounds.

4. Relevance of Previous Judgments:
The Adjudicating Authority relied on "Amrit Kumar Agrawal vs. Tempo Appliances Pvt. Ltd.," which dealt with financial debt and was not applicable to the present case. The Tribunal distinguished this case, noting that the operational debt arose from certified RA Bills and the Settlement Agreement confirmed the debt. The Tribunal also addressed the Respondent's reliance on "Trafigura India Private Limited vs. TDT Copper Ltd.," stating that the facts were distinguishable as the operational debt in the present case arose from a construction contract.

Conclusion:
The Tribunal concluded that the filing of a claim in the CIRP of 'VentaRealtech Pvt. Ltd.' does not affect the maintainability of the Section 9 Application against the Corporate Debtor. The Tribunal allowed the appeal, setting aside the order dated 12.01.2023, and revived the Section 9 Application for further proceedings in accordance with the law.

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