Silver Collections Private Limited Vs Paragon Knits Ltd. (NCLT Delhi)
The Operational Creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of CIRP against the Corporate Debtor for an alleged default of ₹2,33,45,477, comprising principal and interest, arising from the supply of yarn. The Operational Creditor stated that the Corporate Debtor had issued dishonoured cheques, demand notice proceedings were initiated, and during the pendency of the petition the parties executed a Settlement Deed dated 08.01.2025. Under the Settlement Deed, the Corporate Debtor acknowledged its liability, issued 24 cheques, but 14 cheques were subsequently dishonoured. Separate proceedings under Section 138 of the Negotiable Instruments Act were pending, and the Operational Creditor reserved its right to continue the Section 9 proceedings in case of breach of the Settlement Deed.
The Corporate Debtor contended that disputes existed regarding the quality of yarn and interest liability. It further submitted that the Settlement Deed governed the parties’ rights and liabilities, that part payments had been made, and that the original default no longer survived after execution of the settlement. It also relied on decisions of the NCLAT to contend that a settlement entered into before initiation of CIRP extinguished the debt for admission under Section 9.
