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2026 Supreme(Online)(NCLT) 2549
NATIONAL COMPANY LAW TRIBUNAL
Rajeev Bhardwaj, Judicial Member, Sanjay Puri, Technical Member
GP Harmon Recycling LLC – Appellant
Versus
Tirumala Venkateshwara Paper and Board Pvt Ltd – Respondent
Rst.A (IBC)/06/2025 in CP (IB) No.160/9/HDB/2020
For the Appellants/Petitioners: Shahezad Kazi, Gladwin Issac, Sanjay Suraneni
For the Respondents: Maharshi Viswaraj
A petition disposed of based on a settlement that subsequently fails due to a party's default can be restored under inherent powers. Discharge of debt occurs only upon actual realisation, not mere issuance of an instrument.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 9 and Section 60(5) - National Company Law Tribunal Rules, 2016 - Rule 11 - Restoration of Company Petition - Petition under Section 9 filed by Operational Creditor for default - During pendency, Corporate Debtor issued Demand Draft in INR which could not be encashed by OC in USA - Petition dismissed based on settlement - Subsequent failure of settlement and non-cooperation of CD - Application for restoration - Inherent powers under Rule 11 read with Section 60(5)(c) can be invoked to secure ends of justice and prevent abuse of process. (Paras 44, 63)
(B) Discharge of liability - Mere issuance of a negotiable instrument does not constitute satisfaction of debt - Discharge occurs only upon actual realisation of payment. (Para 58)
(C) Threshold limit - Notification dated 24.03.2020 enhancing threshold is prospective and does not affect petitions filed prior to that date. (Para 60, 61)
Facts of the case:
GP Harmon Recycling LLC (OC) entered into offshore agreements with Tirumala Venkateshwara Paper and Board Pvt. Ltd. (CD) and supplied goods. Invoices totalling USD 95,815.25 were raised. Partial payments were made, leaving a balance of USD 39,965.18. OC filed a Company Petition under Section 9 of IBC on 17.02.2020. During pendency, CD furnished a Demand Draft for Rs. 30,28,148.05, and the Petition was dismissed. However, the DD, being in INR, could not be encashed in USA. Despite multiple directions, CD failed to facilitate encashment or reissue the DD. Only a partial payment of Rs. 5,00,000/- was made.
Findings of Court:
The settlement recorded in the order dated 30.03.2022 has failed, the operational debt remains unpaid. The restoration application is allowed, and the Company Petition is restored.
Issues: Whether the Company Petition disposed of on the basis of a settlement that subsequently failed can be restored in exercise of inherent powers.
Ratio Decidendi: The court held that where the disposal of a petition is based on a settlement that fails due to default of one party, the tribunal, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016 read with Section 60(5)(c) of IBC, can restore the petition to secure the ends of justice and prevent abuse of process. Discharge of debt occurs only upon actual realisation of payment, not upon mere issuance of an instrument. Result : Restoration Application allowed. Company Petition restored.
| Table of Content |
|---|
| 1. application for restoration of company petition (Para 1 , 1) |
| 2. facts leading to default and non-compliance (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 3. respondent's objections and contentions (Para 30 , 31 , 32 , 33 , 34 , 35) |
| 4. rejoinder and counter-arguments by applicant (Para 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43) |
| 5. court's analysis and findings on facts and law (Para 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62) |
| 6. exercise of inherent powers and restoration order (Para 63) |
1. The present Application is filed by GP Harmon Recycling LLC (Operational Creditor/OC) against M/s. Tirumala Venkateshwara Paper and Board Pvt. Ltd. (Corporate Debtor/CD), seeking restoration of the Company Petition bearing C.P. (IB) No. 160 of 2020.
Application
2. It is submitted that the Operational Creditor entered into three offshore agreements with the Corporate Debtor through its agent in India, Nathani Continental LLP, pursuant to which the OC agreed to supply certain goods to the CD.
3. It is submitted that the OC dispatched goods from the United States of America along with the original title documents to the Corporate Debtor’s banker, namely State Bank of India (SBI), with instructions to release such documents only upon proof of payment. However, SBI allegedly released the original documents to the CD without securing payment.
4. It is submitted that the OC raised invoices amounting to USD 95,815.25 between January 2017 to May 2017. It is further submitted that after 2 years, the CD remitted a sum of USD 15,728.54 and failed to make the remaining amount USD 80,086.71.
5. It is submitted that the OC issued a legal notice dated 13.08.2019 and a demand notice dated 11.10.2019 calling upon the CD to clear the outstanding dues. The CD, vide letters dated 09.09.2019 and 10.01.2020, admitted its liability and proposed to discharge the same in four instalments on or before 30.03.2020; however, the said proposal was not honoured. It is further submitted that the CD remitted USD 40,121.53 to the OC on 15.02.2020.
6. It is submitted that the OC filed a Company Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 on 17.02.2020 for an amount of USD 39,965.18. During the pendency of the said Petition, the CD admitted outstanding dues of Rs. 28,57,111/- and proposed repayment in four instalments, with the first instalment of Rs. 5,00,000/- payable upon acceptance of the proposal by the OC.
7. It is submitted that the OC made a counter-offer proposing payment in two equal instalments of USD 19,982.50 each, payable on 15.10.2021 and on or before 31.12.2021, respectively. However, the CD, vide email dated 18.11.2021, proposed a revised schedule wherein, upon acceptance, it would pay Rs. 5,00,000/- upfront and the balance of Rs. 23,57,111/- in weekly instalments, to be completed on or before 15.01.2022.
8. It is submitted that the OC accepted the revised proposal. However, on 29.11.2021, the OC informed the CD that no payment had been received. In response, the CD, vide email dated 06.12.2021, stated that it was facing technical difficulties in remitting funds in USD due to a change in its banking arrangements from SBI to IndusInd Bank.
9. It is submitted that the CD enquired whether payment could be made through a third-party bank account, which was declined by the OC. On 10.12.2021, when the matter was listed before this Authority, the CD sought one week’s time to effect payment. This Authority granted a final opportunity to clear the entire operational debt on or before 17.12.2021. However, the CD failed to comply. Consequently, vide order dated 21.03.2022, this Authority directed the CD to deposit a demand draft in favour of the OC in Indian Rupees before the Registry.
10. It is submitted that on 30.03.2022, the CD furnished a banker’s demand draft issued by IndusInd Bank for Rs. 30,28,148.05/
