Application u/s. 7 admitted as One-Time Settlement was not final settlement

Puneet Resutra Vs Jammu & Kashmir Bank Ltd. (NCLAT Delhi)

NCLAT Delhi held that application under Section 7 of the Insolvency and Bankruptcy Code for initiation of CIRP duly admissible since One-Time Settlement with guarantors didn’t amount to full and final satisfaction of loan vis-à-vis the Corporate Debtor.

Facts- The present appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, by the Appellant, Mr. Puneet Resutra (erstwhile Director of M/s Ace Engineering (India) Private Limited), challenging the impugned order dated 06.03.2023 passed by the National Company Law Tribunal (Adjudicating Authority). By the said impugned order, the Adjudicating Authority admitted the application filed by the Jammu & Kashmir Bank Ltd./Financial Creditor under Section 7 of the Code and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s Ace Engineering (India) Private Limited.

Conclusion- In the present case, there is no document showing that the Bank agreed to waive its claims against the Corporate Debtor, rather the documents confirm the contrary that the bank specifically stated that the liability of Corporate Debtor for balance payment remains. The Bank continued to treat the debt as unpaid by the borrower and even filed a suit and initiated SARFAESI action against its assets. The Corporate Debtor submitted fresh settlement proposals even after the so-called discharge.