Revival of insolvency petition upheld where recorded settlement expressly permits revival on default, petition restored accordingly.

The issue concerns whether a petition withdrawn on basis of a recorded settlement containing a clause permitting revival on default can be revived despite the withdrawal order lacking an express liberty to revive. The tribunal treated the settlement as part of the record and held that an express contractual revival right in the settlement governs; absence of an explicit liberty recital in the withdrawal order does not negate that right. Consequentially the revival application succeeds and the petition is restored to permit revival per the settlement terms; costs were awarded against the respondent.

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Issues: Whether the Adjudicating Authority/Tribunal erred in rejecting the application to revive C.P. (IB) No. 1066/KB/2019 on the ground that no liberty to revive had been recorded at the time the petition was withdrawn, when a settlement agreement containing an express clause permitting revival on default had been produced and taken on record.

Analysis: The settlement agreement dated 07.06.2022 was produced before the Tribunal and taken on record and the petition was withdrawn on the basis of that settlement. The settlement expressly provided for payment in instalments and contemplated consequences on default including revival of the petition. The absence of an express recital of liberty to revive in the order of withdrawal does not negate or override an express contractual right in the settlement that was the basis for withdrawal. Prior decisions distinguishing withdrawals simpliciter from withdrawals with settlement terms taken on record support treating consent terms forming part of the record as enabling revival on breach. Arguments about maintainability of a subsequent Section 7 proceeding against the same corporate debtor were held to be premature at the present stage.

Conclusion: The appeal is allowed; the impugned order rejecting the revival application is set aside and the Section 7 petition is restored to permit revival in accordance with the terms of the settlement. Costs of Rs. 2,00,000 awarded against the respondent in favour of the appellant.

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