The NCLT has the inherent power to restore a petition that has been withdrawn with its permission, and this power is derived from Rule 11 of the NCLT Rules and the residuary jurisdiction conferred on the Tribunal under Sec. 60(5)(c) of the IBC.

JUDGMENT

R.RAGHUNANDAN RAO, J. - The 3rd respondent had initiated a Corporate Insolvency Resolution Process against the petitioner herein, before the National Company Law Tribunal Amaravati Bench (for short 'NCLT'), by way of CP(IB)No.28/9/AMR/2020, under Sec. 9 of the Insolvency and Bankruptcy Code, 2016. This application was filed on the ground that the petitioner had defaulted an operational debt of Rs.8,98,12,678.00.

2. While the matter was pending before the NCLT, the petitioner and the 3rd respondent executed a Memorandum of Understanding, dtd. 20/7/2020, under which it was recorded that :-

a) The 3rd respondent agreed to withdraw the application filed before the NCLT immediately.

b) On withdrawal of the application, the petitioner was to pay an amount of Rs.5,00,00,000.00 to the 3rd respondent as full and final settlement.

c) This amount of Rs.5,00,00,000.00 was to be paid in installments of Rs.20,00,000.00 each in 25 installments, within 45 days from the date of withdrawal of the application.

d) The mode of payment was to be online banking through RTGS to the account of the 3rd respondent.

3. The Memorandum of Understanding also contained a term that the above compromise was towards full and final settlement of all the claims of the parties against each other and no further claims would remain.

4. On the basis of the above Memorandum of Understanding, the 3rd respondent filed a memo of withdrawal before the NCLT. In this memo of withdrawal it was stated that the parties had entered into a joint Memorandum of Understanding dtd. 20/7/2020 and the details of the understanding were set out. The Memo also stated that the 3rd respondent be permitted to withdraw the application with liberty to continue the proceedings, if the above Memorandum of Understanding failed for any reason. The NCLT passed an order on 23/7/2020 recording the amicable settlement, with the observation that the case is disposed of as withdrawn with a liberty to the petitioner to come back, in case of default by the respondent.

5. The 3rd respondent had subsequently filed I.A.(IBC).No.5 of 2021 in CP(IB).No.28/9/AMR/2020 on 27/1/2021, under Sec. 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, to restore and reopen CP(IB).No.28/9/AMR/2020, on the ground that the petitioner herein had only paid an amount of Rs.2,65,00,000.00 leaving a balance of Rs.2,35,00,000.00 out of the amount of Rs.5,00,00,000.00 and as such the petitioner herein had defaulted.

6. The petitioner herein opposed the said application contending that -

a) A petition, which has been withdrawn, cannot be restored and a fresh petition has to be filed.

b) Once a Memorandum of Understanding is executed without any default conditions, the 3rd respondent herein would be entitled to claim the entire amount if the petitioner commits default, if the petition is restored and that would be contrary to the terms of the Memorandum of Understanding.

c) Execution of the Memorandum of Understanding outside the Tribunal, has resulted in a fresh contract between the parties, which supersedes the earlier transactions and as such the 3rd respondent would seek to traverse beyond the conditions in the Memorandum of Understanding, if the petition is restored and such a course of action would result in Memorandum of Understanding being frustrated.

7. The National Company Law Tribunal Amaravati Bench, after considering the rival submissions and the judgments cited by the respective parties, held that the contention of the petitioner that the applicant would be entitled to claim the entire amount mentioned in the claim petition, which he cannot do, in view of the fresh Memorandum of Understanding is not cogent, and upon failure of the terms of the Memorandum of Understanding, the situation, as before the Memorandum of Understanding, would revive in toto. In that view of the matter, the NCLT had restored the main petition by order dtd. 28/4/2022. Aggrieved by the said order