Bahadur Ram Mallah Vs Assets Reconstruction Company (India) Limited (NCLAT Delhi)
NCLAT Delhi held that financial creditor entitled to file an application under section 7 of the Insolvency and Bankruptcy Code even after breach of settlement agreement since nature of debt doesn’t change. Thus, order admitting section 7 application sustained.
Facts- The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 by the Appellant arises out of the Order dated 14.11.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench-I). By the impugned order, the Adjudicating Authority has admitted the Section 7 petition filed by the Financial Creditor admitting the Corporate Debtor into Corporate Insolvency Resolution Process. Aggrieved by the impugned order, the present Appeal has been preferred by the Suspended Director of the Corporate Debtor.
Conclusion- The nature of debt which has been claimed under Section 7 application is a financial debt. Simply because an GSA was entered into between the parties which GSA suffered breach, the nature of debt shall not get changed. That does not in any way destroy the character of ARC as a creditor or the character of the money due to it from the Corporate Debtor as a debt. Hence the contention of the Appellant that the Section 7 petition is not maintainable lacks force. The right of the financial creditor would not be wiped out nor the nature and character of the financial debt would change by the mere fact of entering into the GSA and any contrary interpretation would provide undue advantage to the Corporate Debtor and frustrate the objective of IBC.
