TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 846
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Adjudicating Authority has permitted revival of the original Section 7 Company Petition of the Financial Creditor-Anchor Point Developers Pvt. Ltd. for initiation of CIRP of the Corporate Debtor- Transcon Skycity Pvt. Ltd. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant. 2. Coming to the brief factual matrix of the case, the Corporate Debtor- Transcon Skycity Pvt. Ltd. had launched a real estate project named Transcon Fortune Five Hundred Tower-I Project (hereinafter referred to as the "Project"). The Financial Creditor-Anchor Point Developers Pvt. Ltd. had invested in the Project of the Corporate Debtor following which the Corporate Debtor had issued an Allotment Letter on 18.10.2022. Since the development of the Project did not see any significant progress, the Respondent-Financial Creditor filed a Section 7 application against the Corporate Debtor (hereinafter referred to as "First CP"). Subsequently a Settlement Agreement was executed between the Corporate Debtor and the Financial Creditor on 03.02.2024 following which the Financial Creditor filed an IA for withdrawal of the First CP on 14.02.2024 (hereinafter referred to as "Withdra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has acted in a manner which is not in sync with the understanding arrived at amicably in the out of court Settlement Agreement. Much emphasis was laid on the fact that the Settlement Agreement was neither incorporated in the Withdrawal IA by the Financial Creditor nor was the Settlement Agreement incorporated in the Withdrawal Order dated 08.04.2024. It was vehemently contended that the Financial Creditor therefore did not have the right to revive/restore the First CP or file the new Company Petition in respect of the cause of action of the First CP. The impugned order therefore suffered from grave infirmity since the Adjudicating Authority did not have the authority to revive the First CP which had already been dismissed as withdrawn and the Withdrawal Order did not extend any liberty to the Financial Creditor to revive the proceedings of the First CP. 4. It was also pointed out that once the Settlement Agreement had been entered into, the original debt no longer subsisted and hence there was no valid ground for filing the revival application. The Appellant also adverted attention to the lack of transparency and bonafide on the part of the Financial Creditor in that in their Rest....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... In the present case, when the Settlement Agreement has suffered a breach, the debt liability does not get wiped out. Since debt and default is established, the Adjudicating Authority did not commit any error in admitting the Section 7 application. 7. We have duly considered the arguments advanced by the Learned Counsel for the parties and perused the records carefully. 8. It is the case of the Appellant that the terms of Settlement Agreement dated 03.02.2024 did not provide in specific terms for revival of the First CP upon failure to perform the settlement. Hence, the Financial Creditor was not entitled to seek revival of the First CP on grounds of non-performance of obligations in the Settlement Agreement. The impugned order has also been assailed on the ground that the Adjudicating Authority did not have the authority to revive the First CP since First CP had already been dismissed as withdrawn and the Withdrawal Order did not extend any liberty to the Financial Creditor to revive the proceedings of the First CP. 9. To buttress their arguments, the Appellant pointed out that there is a clear distinction between a simpliciter and unconditional withdrawal of Company Petition a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onal withdrawal. It was submitted that Clause 6 of the Settlement Agreement clearly contemplated that the parties agreed to abstain from initiating or continuing with legal proceedings only if obligations stipulated under Clause 3 of the Settlement Agreement were fully met by the Appellant. However, it was contended that the Appellant-Corporate Debtor had failed to fulfil the obligations envisaged under Clause 3 since they had only made partial payment to the Financial Creditor. As certain amounts still remained outstanding for payment by the Corporate Debtor, this constituted sufficient ground for reviving the original petition. 12. On the contention raised by the Appellant that the Settlement Agreement was entirely an 'outside the court' settlement, it was controverted by the Financial Creditor that this was not an accurate depiction. It was pointed out that the Settlement Agreement between both the parties had been brought to the notice of the Adjudicating Authority at the time of filing of withdrawal I.A. Thus, Adjudicating Authority was pretty much aware and conscious of the Settlement Agreement between the two parties. The Adjudicating Authority while taking note of the Sett....
X X X X Extracts X X X X
X X X X Extracts X X X X
....draw the same as the matter has been settled amicably out of the Court between the Parties. 3) As the issue involved in the present Company Petition has been settled out of the Court between the Parties; hence, nothing remains to be adjudicated in the present Company Petition and thus, this Bench is not insisting for the Formal Interlocutory Application to have it on record for withdrawal of the present Company Petition. 4) In that view of the matter, the Company Petition bearing CP (IB) No. 1166 of 2023, is thus, disposed of as dismissed as allowed to be withdrawn." (Emphasis supplied) 16. When we read the above order, it is clear that while allowing the withdrawal of the Company Petition No. 1166 of 2023, the Adjudicating Authority had expressly waived the need to formally file the settlement terms even after the factum of settlement was brought to the knowledge of the Adjudicating Authority. This, therefore, does not discount the fact that the Settlement Agreement had been brought to the knowledge of the Adjudicating Authority. 17. Now we come to the relevant terms of the Settlement Agreement of 03.02.2024 which is reproduced hereunder: "3(b)(iv) Waiver of other outsta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat Clause 6 clearly provided that the parties had agreed to forbear either initiating or continuing a legal action contingent upon compliance to the terms laid down under Clause 3 of the Settlement Agreement. We now proceed to find out if the terms of the Settlement Agreement stood complied to or was breached by the Corporate Debtor. It is the case of the Financial Creditor that pursuant to the Settlement Agreement, the Corporate Debtor had only paid Rs 23.75 Cr. and an amount of Rs 34.27 Cr. (Principal: Rs 13,01,57,725/- and interest: Rs 21,25,78,904/-) was still due and payable by the Corporate Debtor. When we look at the material placed on record, we find that the Financial Creditor had purportedly sent a letter dated 26.07.2024 to the Corporate Debtor mentioning all the breaches committed by it alongwith details of breaches as placed at page 126-130 of Appeal Paper Book ("APB" in short). The Corporate Debtor had also been asked by the Financial Creditor to remedy the failure. We also note that the terms contemplated in the Settlement Agreement not having been fully complied to by the Corporate Debtor has not been controverted by the Corporate Debtor. In fact when we peruse the....