TaxTMI 
TaxTMI 
2026 (4) TMI 312
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.... initiated accordingly, under Section 9 of the I & B Code, 2016. 3. When the process of those proceedings were being carried before the Ld. Adjudicating Authority its that, on 11.01.2021 a Deed of Settlement was arrived at between the Operational Creditor and the Corporate Debtor, which was duly signed and verified by the parties including the witnesses who was signatories to the document. 4. It's based upon the said Settlement Deed, that the Ld. Tribunal proceeded to pass an order on 29.01.2021 observing thereof that, qua the recovery of the said amount, which is said to be treated as debt and due amounting to Rs. 7,93,49,287/-, which according to the Operational Creditor was shown to have been falling due as on 26.10.2020. 5. It was observed that since the parties have filed a memo, seeking withdrawal of the Application and in the memo, which was thus preferred by the Appellant herein, the Appellant had submitted that owing to the mutual discussions, which had been taken place between the parties, a settlement has been arrived at under the terms as narrated in the Settlement Deed of 11.01.2021 wherein the Corporate Debtor had agreed to make the payment of Rs. 2,20,00,000....
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.... payables as per the terms of the Settlement Deed dated 11.01.2021 and as directed to be followed in the light of the decision taken of closure of the proceedings of the Company Petition, by order dated 29.01.2021. Thereafter, the Appellant prayed that the proceedings of the Company Petition deserves to be revived. 11. It's this application, which has been rejected by the impugned order by the Ld. Tribunal observing thereof that in the light of the provisions contained under Section 425 of the Companies Act, since the provisions of the Code of Civil Procedure has been made applicable, in that eventuality, in the light of the provisions contained under Order 23 & Rule 3A of C.P.C., the recording of a compromise and consequential withdrawal of the proceedings would make the subsequent proceeding as to be not maintainable. 12. While considering the implications contained under Order 23 Rule 3A, the Tribunal observed that, reserving of a liberty as per Order 23 Rule 3A of C.P.C., to institute a fresh suit could be only when there is a defect in the Plaint or the said restriction is subject to the aspect of limitation. 13. If we go through the language contained under Order 23 ....
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.... institution of a fresh suit is only limited in the sense that, when it relates to the institution of the suit to "set aside a decree" on the ground that the compromise decree was unlawful. 16. Moving forward, there are two conditions which are to be existing that it should be a suit for setting aside of a decree; and Secondly, the basis of decision of the decree had been a compromise which has been unlawfully arrived at. Both the conditions as contemplated for the purposes of liberty for institution of a suit under Order 23 Rule 3A was not available because, it's not the case of the Appellant that the Compromise of 11.01.2021 was fraudulently entered into and further, the nature of the Restoration Application it was due to non- fulfilment of the conditions of withdrawal of Section 9 Application, particularly of the conditions as enshrined in the compromise of 11.01.2021 and that in itself will not attach a fraud towards the mutually agreed settlement though it could be said to be breach of Settlement, which is the basis of withdrawal of the suit, since the litigation consequence to the withdrawal has attained its finality, by its withdrawal, subsequent proceedings for the sa....
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.... order dated 29.01.2021, by observing thereof that it will be open for the Appellant to approach before the "Competent Authority" will not include within itself the Tribunal(s) created under the Code, Competent Authority as reserved by the Appellant in the order of 29.01.2021 would mean a Competent Authority other than the Authorities, which has been otherwise legally recognized to be created under the provisions of the Companies Act, to deal with the proceedings under the I & B Code, 2016, and since at the stage when the Appellant has preferred the Restoration Application it was before a Tribunal created under the I & B Code, it will not be treated as to be a Competent Authority before whom the Restoration Application at the behest of the Applicant could have been made applicable, when there was nothing left in the proceedings to be restored after its withdrawal. 24. The application for settlement, based on which the Company Petition was sought to be withdrawn, had particularly prescribed in Clause 8 of the said application, that if the Operational Creditor is unable to recover the amount as settled, under the Agreement or there is default in payment of amount, which was payabl....
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....s withdrawn, by the Petitioner, in fact, there was no principal lis pending and if that be so, there could not have been any restoration of the Company Petition, which has been otherwise withdrawn by the Appellant himself and that too, particularly in the light of the fact when no such right was reserved by the Ld. Tribunal, while passing the order on 29.01.2021 by leaving it open for the Appellant or reserving the rights of Appellant, to file restoration, particularly when the right reserved was to approach before the Appropriate Forum before the Competent Authority. 30. Upon closure of proceedings of the Company Petition based on settlement, the appropriate proceedings that would be open for the Appellant, would be the proceedings for the purposes of recovery of the defaulted amount by filing appropriate execution and not the total amount, which was actually falling due and was the basis of initiation of proceedings under Section 9 of the Code. 31. If under the settlement part of the amount has been paid and the balance was left to be paid due to default, in that eventuality, in accordance with the rights reserved by the Appellant, it will amount to the recovery of balance ....
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....had already been paid. 35. Since, the settlement takes the shape of a final order, it will be executable as per the provisions contained Order 22 Rule 11 of C.P.C. and further law of restoration will not apply, because, the lis has been given a quietus owing to the termination of cause of action by withdrawal of the Company Petition which, was sought for by the Appellant himself by filing of an Application before the Tribunal on the basis of the settlement of 11.01.2021. 36. Even under the normal connotation, a breach in payment of the amount under the terms of the settlement at the most would give a fresh cause of action altogether but, it will not give a cause of action to restore the proceedings, which has been already been settled between the parties by the withdrawal as by an order of 29.01.2021 and particularly when there was no reservation of rights to file a Restoration Application under law was reserved under the binding terms of settlement. 37. A restoration cannot be an appropriate recourse to recover the balance amount under the Settlement Decree or an order, as that order of settlement has to be exhausted in terms of the procedures contemplated under law, by a....