Revival Of Company Petition Permissible On Default Of Settlement Terms Despite Absence Of Liberty In NCLT's Withdrawal Order: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Mohd Faiz Alam Khan and Mr. Indevar Pandey (Technical Member) has held that a petition withdrawn pursuant to a settlement agreement between the parties can be revived if the corporate debtor fails to make payment as per the settlement terms, where the agreement clearly provides for such revival in case of default. The absence of express liberty granted by the NCLT in the withdrawal order is immaterial. The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by National Company Law Tribunal (NCLT) by which it dismissed an application seeking restoration of a company petition. The Appellant submitted that the adjudicating authority has failed to appreciate that the withdrawal order had categorically taken the consent terms on record and had permitted the withdrawal of the said company petition on the basis of the consent terms and also taking into consideration the provisions of the consent terms, specifically clause 12.3, which has reserved liberty to the appellant to seek to restore/review the said company petition upon the default of agreed payment as per the schedule by the respondent, in accordance with clause 12 of the same. The Tribunal observed that the withdrawal was not a simplictor withdrawal but was based on the settlement terms entered into between the parties in which it was cleary provided that in case of default committed by the Respondent in honoring the settlement terms, the Appellant was entitled to revive the company petition. The absence of any express liberty granted by the NCLT in its order is of no consequence as the order was passed based on the settlement terms placed on record. It held that “In our considered opinion Ld. tribunal has committed manifest illegality in dismissing the restoration application moved by the appellant on the hyper technical ground that in the withdrawal order that such liberty has not been provided to the petitioner to revive/ restoration of the petition.” Accordingly, the present appeal was allowed. Case Title: 5MF &G Private Limited Versus BMI Wholesale Trading Private Limited Case Number:Company Appeal (AT) (Insolvency) No. 521 of 2023 Judgment Date: 25/08/2025 Click Here To Read/Download The Order

Revival Of Company Petition Permissible On Default Of Settlement Terms Despite Absence Of Liberty In NCLT's Withdrawal Order: NCLAT

Mohd Malik Chauhan

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