2025 (11) TMI 962 - HC - IBC

Defendant ordered to pay Rs.21,28,000 as unpaid settlement balance; lost right to file written statement, trial to decide interest claim

Jones Lang Lasalle Property Consultants (India) Private Limited Versus B.P. Suraj Business Combines Private Limited

HC directed the defendant to pay Rs. 21,28,000 within four weeks, representing the unpaid balance under a settlement in prior insolvency proceedings, ... Application praying for summary judgment - intent to take commercial premises on lease for a period of 15 years on a monthly rent - HELD THAT:- The plaintiff initiated proceeding under Section 9 of the Insolvency and Bankruptcy Code, 2016 and in the said proceeding, the defendant came to a settlement with the plaintiff and agreed to pay total sum of Rs. 31,28,000/- and as per the settlement, the Insolvency proceeding was dropped. Out of the total settlement amount, the defendant has paid only 10,00,000/-. The defendant lost its chance to file written statement as the application for extension of time to file written statement was rejected by this Court and the same was affirmed by the Hon’ble Supreme Court in its order dated 1st July, 2025. The defendant cannot produce evidence in defence and the statements which are in the nature of factual assertion cannot be proved by leading evidence. The defendant is confined to cross-examine the plaintiff’s witness. In the present suit, the plaintiff has claimed Rs. 44,28,000/- being the balance amount standing along with interest at the rate of 12% per annum from 22nd February, 2018 of the original claim. This Court finds that though the defendant has not filed written statement but whether the plaintiff can claim the original principal amount of Rs. 54,28,000/- along with interest, or the settlement amount of Rs. 31,28,000/- along with interest after the settlement agreement dated 16th July, 2022. This is the issue which is to be decided in trial and not in an application under Order XIIIA of the Code of Civil Procedure, 1908. This Court finds that as per settlement agreement, the defendant has agreed to pay Rs. 31,28,000/- to the plaintiff but the defendant has paid only Rs. 10,00,000/-, thus the defendant is directed to pay the remaining balance amount of Rs. 21,28,000/- to the plaintiff within four (4) weeks and the remaining claim of the plaintiff along with interest is relegated to trial. Application disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether an application under Order XIIIA (Summary Judgment) is maintainable to recover an admitted and partly settled monetary claim where the plaintiff seeks summary enforcement of the balance admitted under a settlement made during insolvency proceedings. 2. Whether the plaintiff is entitled to summary relief for the balance of a settlement sum acknowledged by the defendant to have been agreed upon but partly paid. 3. Whether the original principal claim (invoiced amount) and interest arising prior to the settlement can be summarily adjudicated alongside or in place of the settlement claim, when the defendant raises factual disputes about formation/completion of the underlying commercial lease. 4. Whether the defendant's change of defence (asserting non-materialisation of the lease and non-cooperation by the proposed lessee), absence of a written statement and purported non-authorization of the settlement signatory are obstacles to summary judgment on any part of the claim. 5. What orders are appropriate under Order XIIIA when part of a commercial claim is incontrovertibly admitted/settled and other parts raise triable issues. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of summary judgment to enforce an admitted/settled monetary claim Legal framework: Order XIIIA (Order XIII-A) provides procedure for summary judgment in commercial disputes; summary judgment may be given where a party has no real prospect of succeeding or defending and there is no other compelling reason to proceed to oral evidence. The rules require disclosure of material facts and documentary evidence and permit various orders including judgment, conditional orders or dismissal. Precedent Treatment: The Court applied the statutory summary judgment standard as set out in Order XIIIA. No distinct earlier authority was cited or overruled; the Court adhered to the statutory criteria for summary disposal. Interpretation and reasoning: The Court observed that the settlement agreement reached during CIRP, which reduced the original claim to a specified settlement sum, constitutes an unequivocal admission of liability in relation to that settled amount. The defendant paid part of the settlement but defaulted on the balance; that admitted balance is not subject to the defendant's later factual contentions about the underlying lease. The Court treated the settlement as determinative for that portion of the claim and found no real prospect of defence to the admitted settlement balance. Ratio vs. Obiter: Ratio - a summary judgment is appropriate to enforce a defendant's admitted contractual obligation under a settlement, where the settlement sum is definite and part payment has been made but the balance remains unpaid and no real prospect of successfully defending that admitted obligation exists. Conclusions: The Court held summary enforcement of the unpaid balance of the settlement (Rs.21,28,000/-) was proper and directed payment within four weeks. Issue 2 - Scope of summary judgment as to original invoiced claim vis-à-vis settlement Legal framework: Order XIIIA permits disposal of a claim or part of a claim; it also mandates that the Court record reasons for its orders and allows relegation of unresolved aspects to trial. Precedent Treatment: The Court relied on the scope of Order XIIIA to distinguish between admitted/settled portions and contested portions of the plaintiff's demand. Interpretation and reasoning: The Court analysed whether the plaintiff could, by way of summary judgment, recover the full original invoice amount (and interest) despite having entered a settlement compromising that claim before the NCLT. The Court concluded that the settlement altered the parties' rights and liabilities and that the question whether the plaintiff can nevertheless claim the original principal (or claim interest from an earlier date) raises triable issues of law and fact concerning the effect, scope and consequences of the settlement, which cannot be resolved without recording oral evidence and fuller adjudication. Ratio vs. Obiter: Ratio - summary judgment cannot be used to decide the plaintiff's claim to the full original amount where the parties have entered a compromise settlement that reduces the claim and where issues remain as to whether the original claim survives or is extinguished/modified by settlement; such issues are triable. Conclusions: The Court relegated the remainder of the plaintiff's claim (original principal and interest beyond the settlement balance) to trial. Issue 3 - Effect of defendant's factual defences (non-materialisation of lease; undated/unregistered lease; alleged non-cooperation) on summary adjudication Legal framework: Under Order XIIIA, a defendant may file a reply disclosing material facts and documentary evidence and must show real prospects of defending the claim to avoid summary judgment. Precedent Treatment: The Court treated the defendant's factual contentions as matters potentially requiring oral evidence where they raise genuine triable disputes as to formation, completion or enforceability of the underlying contractual relationship (lease) upon which the original invoice claim rests. Interpretation and reasoning: The Court noted that while the defendant had earlier admitted liability in contemporaneous emails and later settled during CIRP, it later changed its defence asserting non-materialisation of the lease and defects in documentation. The Court found that such disputes about the substantive underlying transaction are matters for trial because they raise factual and documentary issues that cannot be conclusively resolved on the limited materials before a summary hearing. Ratio vs. Obiter: Ratio - where the defence raises substantive factual or documentary disputes that could realistically succeed, summary judgment is inappropriate for those disputed components of the claim. Conclusions: The Court refused to grant summary judgment on the contested original claim and specified that those issues be tried. Issue 4 - Consequences of defendant's failure to file written statement and ability to lead evidence Legal framework: Civil procedure requires parties to comply with pleadings timelines; failure to file a written statement may limit the party's ability to lead evidence and may constrain defences. Precedent Treatment: The Court observed that the defendant's application for extension to file a written statement was rejected and that the Supreme Court affirmed that rejection, thereby limiting the defendant's procedural opportunities. However, Order XIIIA requires assessment of prospects of defence on merits irrespective of procedural defaults when deciding summary judgment. Interpretation and reasoning: Although the defendant lost the chance to file a written statement and is limited in adducing evidence at trial, the Court nonetheless recognized that certain substantive factual disputes remain bonafide and require trial. The Court did not base the final outcome solely on procedural default; it dissected admitted settlement obligations from contested original claims. Ratio vs. Obiter: Obiter - comments on the defendant being confined to cross-examination and inability to produce evidence are contextual observations; the operative ratio is the Court's separation of admitted settlement balance (suitable for summary enforcement) from triable issues (requiring full trial) despite procedural defaults. Conclusions: Procedural default did not compel summary adjudication of all claims; the Court exercised discretion to enforce the settlement balance but relegated other disputed matters to trial. Issue 5 - Validity and enforceability of settlement terms reached during insolvency proceedings and consequences of partial payment Legal framework: Settlements entered during insolvency proceedings adjust creditor claims; parties' contractual agreement to a compromise is enforceable subject to proof of its terms and performance. Precedent Treatment: The Court treated the settlement agreement as operative between the parties and as evidence of an agreed reduced liability; clause permitting revival of CIRP or other remedies on breach was noted as preserving remedies for non-payment. Interpretation and reasoning: The Court found that the settlement's clear obligation to pay Rs.31,28,000/- and the defendant's partial payment created an admitted balance. The settlement clause empowering revival of CIRP or other remedies on breach supported the plaintiff's right to pursue enforcement. Because the balance was admitted and not genuinely disputed, the Court considered it appropriate to direct payment forthwith. Ratio vs. Obiter: Ratio - a settlement reducing an original claim is binding and the unpaid balance can be summarily enforced when the defendant has no real prospect of defending the admitted settlement obligation. Conclusions: The Court directed immediate payment of the unpaid settlement balance and left other remedies (including claims beyond the settlement) for trial. Overall Disposition and Practical Consequence Legal outcome distilled: The Court granted summary relief limited to enforcement of the unpaid balance of a settlement agreed during insolvency proceedings and dismissed summary adjudication of the remainder of the original claim and interest, which present triable issues; the defendant was directed to pay the settlement balance within a stipulated period and the residual claim was relegated to trial.