Bagh Bahar Appliances Pvt. Ltd. Vs Unity Small Finance Bank Ltd. (NCLAT Delhi)
National Company Law Appellate Tribunal (NCLAT), Delhi, has dismissed an appeal by Bagh Bahar Appliances Pvt. Ltd. (the Corporate Debtor), thereby upholding an order that revived the Corporate Insolvency Resolution Process (CIRP). The NCLAT’s decision confirms that a CIRP, which was withdrawn based on a settlement, can be reinstated if the terms of that settlement are breached.
Case Background
Unity Small Finance Bank Ltd. (the Financial Creditor) had filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate CIRP against Bagh Bahar Appliances Pvt. Ltd. The National Company Law Tribunal (NCLT), the adjudicating authority, admitted the petition and initiated CIRP on January 7, 2024.
However, the CIRP was immediately stayed as the parties were in the advanced stages of a settlement. A formal One-Time Settlement (OTS) was sanctioned on January 18, 2024. Based on this settlement, the NCLT issued an order on January 21, 2025, allowing the withdrawal of the company petition. The order explicitly noted that the withdrawal was subject to specific clauses of the OTS letter. Clauses 6 and 7 of the OTS were critical, as they reserved the bank’s right to “reinstate the proceedings in case of default/breach” and to “continue / withhold all legal proceedings…till the entire dues…are paid in full.” With the petition withdrawn, the CIRP was closed, the Interim Resolution Professional (IRP) was discharged, and the moratorium ceased to be in effect.
