Plea U/S 9 IBC Can't Be Admitted Once Affidavit Confirming Settlement Between Corporate Debtor & Operational Creditor Is Filed: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that once the Corporate Debtor entered into a settlement with the Operational Creditor to discharge its liability, for which an affidavit confirming the settlement was also filed, the Adjudicating Authority cannot, overlooking these facts, admit an application under Section 9 of the IBC. The present appeal has been filed against an order by which an application under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) was admitted. The Appellant submitted that there being pre-existing dispute between the parties, regarding the lease rental, the application under Section 9 ought not to have been admitted. It was further contended that in view of the suit having been filed under Section 23 by the Operational Creditor on 12.01.2023, for the same amount with regard to which suit was dismissed Section 9 proceeding has been initiated. The Adjudicating Authority although was of the view that amount claimed prima facie seems to be inflated, still admitted the Section 9 application. Per contra, the Respondent submitted that suit under Section 23 was not dismissed on merits and letter dated 13.08.2022 relied by the Appellant cannot be treated to be pre-existing dispute. The Tribunal observed that the Appellant contested the application filed under section 9 of the IBC. There were issues of inflated rent during section 10A period. Despite this the Adjudicating Authority overlooked all these issues and admitted the application. Subsequently, the Appellant entered into a settlement agreement with the Operational Creditor for which an affidavit confirming the settlement was also filed. In light of this, the application under section 9 is closed and the Appellant was directed to pay Rs. 4.5 lakhs to the Interim Resolution Professional and discharge dues to the Operational Creditor as per the settlement. Accordingly, the present appeal was disposed of. Case Title:Dr. Indu Singh Suspended Director of G.V. Meditech Pvt. Ltd. Versus Prime Tower – A Partnership Firm & Anr. Case Number:Company Appeal (AT) (Insolvency) No. 704 of 2024 Judgment Date: 12/09/2025 Click Here To Read/Download The Order

Plea U/S 9 IBC Can't Be Admitted Once Affidavit Confirming Settlement Between Corporate Debtor & Operational Creditor Is Filed: NCLAT

Mohd Malik Chauhan

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