Amrik Cranes and Infrastructure Vs Simplex Infrastructures Limited (NCLT Kolkata)
Breach of the terms and conditions of payment in accordance with a settlement agreement does not constitute an “Operational Debt” as per the definition under Section 5 (21) of the I&B Code and accordingly that cannot be a ground to trigger CIRP against the Corporate Debtor.
The National Company Law Tribunal (NCLT) Kolkata recently deliberated on a crucial matter involving Amrik Cranes and Infrastructure (Operational Creditor) versus Simplex Infrastructures Limited (Corporate Debtor). This case pertained to the invocation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code), highlighting a dispute arising from a settlement agreement.
The genesis of the dispute lay in a work order issued by Simplex Infrastructures to Amrik Cranes for crane services, resulting in an outstanding debt of Rs. 3,29,01,959. Following this, Amrik Cranes initiated CIRP proceedings against Simplex Infrastructures under Section 9 of the I&B Code. However, during the pendency of these proceedings, the parties entered into a settlement agreement on April 5, 2022. Per this agreement, Simplex Infrastructures agreed to pay Rs. 2,86,27,594 in six equal monthly installments starting April 25, 2022.
Despite paying the first installment, Simplex Infrastructures defaulted on subsequent payments, prompting Amrik Cranes to issue a demand notice under Section 8 of the I&B Code. The matter was brought before the NCLT Kolkata to determine whether such defaults constituted “Operational Debt” under Section 5 (21) of the I&B Code, thereby justifying the initiation of CIRP.
