Settlement agreements must allow revival actions amidst defaults, ensuring creditors are protected from deceitful behavior.

“ORDER

1. Ld. Counsel on both sides present.

2. Ld. Counsel appearing for the parties jointly submit that the total amount of Rs.2,31,60,579/-has been agreed to be paid in instalments. Let the settlement agreement be taken on record. In view of the above statements, Ld. Counsel appearing for the Financial Creditor seeks permission to withdraw this petition. Permission is granted. C.P. is disposed of as withdrawn.

3. File be consigned to the records.”

6. The case set up by the appellant is that there was default in the payment of the instalment by the respondent, therefore, the appellant filed RST.A (IBC)/16(KB) 2023 before the Tribunal in which the following prayers were made:

“a) Company Petition Number being C.P. (I.B) No. 598/KB/2019 be revived and restored to its original file and number against the Corporate Debtor in view of the settlement having being failed;

b) Adjudicate and dispose off the pending C.P. (I.B) No.598/KB/2019 against the Corporate Debtor.”

7. In the application for restoration notice was issued and reply was filed by the respondent. Ld. Tribunal dismissed the application on the ground that the main petition i.e. C.P. (IB) No. 598/KB/2019 was withdrawn without obtaining liberty to get it revived in case of any breach. The relevant part of the impugned order read as under:

“6. In as much as no liberty was sought for on 08.06.2022 and the CP(IB)/598(KB)2019 was dismissed as withdrawn without liberty to get it revived, in our considered opinion, the prayer for restoration of CP(IB)/598(KB)2019 is not maintainable and hence not entertainable.

The CP(IB)/598(KB)2019 was dismissed as withdrawn recording settlement between the parties. No liberty was granted by this Tribunal to revive the CP(IB)/598(KB)2019 in case the Corporate Debtor fails to acknowledge the terms of settlement or fails to pay in terms of the settlement.”

8. Aggrieved against the aforesaid impugned order, the present appeal has been filed.

9. Counsel appearing on behalf of the appellant has vehemently argued that the Tribunal has committed a patent error of law in dismissing the application on the pretext that at the time when the main petition was withdrawn, in terms of the order dated 08.06.2022, the appellant did not seek liberty to file application for its revival. Ld. Senior counsel appearing on behalf of the appellant has submitted that in the settlement agreement, taken on record by the Tribunal, there is a condition that in case of breach by the Corporate Debtor of the terms and conditions of the settlement, the appellant shall have an automatic right to revive the main petition. In this regard, he has relied upon two decisions of this Court in the case of “Pooja Finlease Ltd. v. Auto Needs (India) Pvt. Ltd. & Anr.” in Company Appeal (AT) (Ins.) No. 103 of 2022 decided on 18.07.2022 and IDBI Trausteeship Services Ltd. Vs. Nirmal Lifestyle Ltd. [2023 SCC Online NCLAT 225].

10. On the other hand, counsel for the respondent, while vehemently opposing the present appeal, has submitted that there is no error in the impugned order which may call for any interference by this court. He has submitted that though the settlement agreement was taken on record but there was no application filed by the appellant with a prayer that in case of breach of any part of the settlement much less the payment of amount as agreed, the appellant shall be at liberty to seek revival nor any such liberty was granted by the Tribunal. In support of his submission, he has relied upon a decision of this Court in the case of “SRLK Enterprises LLP v. JALAN Transolutions (India) Ltd. in Company Appeal (AT) (Ins) No. 294 of 2021 decided on 08.04.2021. He has also relied upon a division bench Judgment of the Hon’ble Delhi High Court in the case of “ Mohd. Amin v. Mohd. Iqbal [2009 SCC Online Del 861:

(2009) 158 DLT 531].

11. We have heard counsel for the parties and perused the record with their able assis