Default of payment of settlement agreement is not an Operational debt

Ahluwalia Contracts (India) Limited Vs Logix Infratech Private Limited (NCLT Delhi)

Default of payment of installment amount as per settlement agreement do not come under the definition of operational debt

Hon’ble National Company Law Tribunal (NCLT), New Delhi Bench in Company Petition No. 882/ND/2022 [Ahluwalia Contracts (India) Ltd. (operational creditor / petitioner) VS Logix Infratech Private Limited (Corporate Debtor)], dealt with following important question whether breach of terms and conditions of the Settlement agreement with operational creditor comes within the purview of operational debt or not ?

In present case operational creditor has entered into Memorandum of understanding / Settlement Agreement dated 30.09.2019 with Corporate Debtor for full and final settlement of money payable against work done by the operational creditor under the work contracts.

Corporate Debtor has not paid the amount, which was due and payable, in terms of the settlement agreement dated 30.09.2019 and the same has been admitted by the Corporate Debtor. Therefore, operational creditor filed above petition for initiation of CIRP against corporate debtor for default in making the payment of instalment amount as per Settlement Agreement.

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