The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), while adjudicating a petition filed in Delta Electro Mechanical Pvt. Ltd. v Sahara Hospitality Ltd., has permitted withdrawal of insolvency proceedings and termination of Corporate Insolvency Resolution Process ("CIRP") against Sahara Hospitality Ltd., as Parties enter full and final settlement. The order was passed on 28.07.2022.
Sahara Hospitality Ltd. ("Corporate Debtor") had awarded Delta Electro Mechanical Pvt. Ltd. ("Operational Creditor") a work order for supplying, installation, testing and commission of HVAC and electrical system at Hotel Sahara Star, Mumbai, for an amount of Rs. 32 crore (approx.).
When the Corporate Debtor defaulted in payments, the Operational Creditor in 2018 had filed a Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of CIRP against the Corporate Debtor against default of Rs. 51,77,97,495/- (Principal Amount of Rs. 32,72,03,256 and Interest @ 18% Rs. 19,05,94,239/-). The petition was disposed of in 2021 by the NCLT when Parties entered into settlement terms on 23.04.2019, as per which the Corporate Debtor was to pay Rs. 20 Crore to the Operational Creditor in 14 installments. The NCLT Bench had granted liberty to the Operational Creditor to revive the Petition in case of breach of settlement terms.
The Corporate Debtor failed to adhere to the settlement terms and the Operational Creditor filed MA 2649 of 2019 seeking revival of the earlier Company Petition. Subsequently, a Second Terms of Settlement were drawn between the Parties on 21.11.2019. Nonetheless, the Corporate Debtor yet again failed to oblige with the payment commitments.
Initiation Of CIRP
The NCLT Bench observed that there was a debt and default and the Corporate Debtor had acknowledged it's liability in view of its Settlement Agreement and no denial had been made. Hence it was clear that the liability to repay was on the Corporate Debtor. The Bench admitted the Petition under Section 9 of the IBC and initiated CIRP against the Corporate Debtor. Ms. Mamta Binani was appointed as the Interim Resolution Professional ("IRP").
Application For Withdrawal
The IRP filed an application under Section 12A of the IBC seeking withdrawal of the petition filed by the Operational Creditor, in view of full and final settlement entered between parties for an amount Rs. 8,00,00,000/- to be paid by the Corporate Debtor.
The Operational Creditor confirmed before the Bench that the entire amount as indicated in the settlement agreement has been received by it. Accordingly, the Bench observed that taking the consent terms into account, nothing survives in the Company Petition and the same is out of the rigour of the CIRP. The Application for withdrawal was allowed and CIRP was terminated against the Corporate Debtor.
Counsel for Operational Creditor: Mr. Abhay Itagi
Counsel for Corporate Debtor: Mr. Nausher Kohli
Counsel for erstwhile management: Mr. Sandeep Bajaj